S-4

As filed with the Securities and Exchange Commission on October 14, 2011

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

SHEA HOMES LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

1531	California	95-4240219
(Primary Standard Industrial Classification Code Number)	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

SHEA HOMES FUNDING CORP.

(Exact name of registrant as specified in its charter)

1531	Delaware	37-1635024
(Primary Standard Industrial Classification Code Number)	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

The subsidiary guarantors listed on Schedule A hereto.

(Exact name of registrant as specified in its charter)

655 Brea Canyon Road

Walnut, California 91789

(909) 594-9500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Paul E. Mosley

Vice President and General Counsel

Shea Homes Limited Partnership

655 Brea Canyon Road

Walnut, California 91789

(909) 594-9500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copy to:

Andrew L. Fabens, Esq.

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, NY 10166-0193

(212) 351-4000

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	þ	Smaller reporting company	¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issue Tender Offer)    ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)    ¨

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per unit(1)	Proposed maximum aggregate offering price(1)	Amount of registration fee
8.625% Senior Secured Notes due 2019	$750,000,000	100%	$750,000,000	$85,950
Guarantees of 8.625% Senior Secured Notes due 2019(2)	$750,000,000	N/A(3)	N/A(3)	N/A(3)

(1) Exclusive of accrued interest, if any, and estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(f) under the Securities Act of 1933, as amended.

(2) The notes are guaranteed by certain direct and indirect subsidiaries of Shea Homes Limited Partnership.

(3) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no separate fee is payable for the Guarantees. The guarantee is not traded separately.

The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Schedule A – Subsidiary Guarantors

The following direct and indirect subsidiaries of Shea Homes Limited Partnership will guarantee the 8.625% Senior Secured Notes due 2019 and are co-registrants with Shea Homes Limited Partnership and Shea Homes Funding Corp. under this registration statement.

Name	Jurisdiction of Formation	I.R.S Employer Identification No.
Highlands Ranch Development Corporation	Colorado	84-0941791
Monty Green Holdings, LLC	Delaware	20-3297164
Mountainbrook Village Company	Arizona	86-0720451
Sand Creek Cattle Company	Colorado	84-0865738
Serenade at Natomas, LLC	California	26-3917295
Seville Golf and Country Club LLC	Arizona	94-3383577
Shea Brea Development, LLC	Delaware	72-1579307
Shea Capital II, LLC	Delaware	20-3661716
Shea Communities Marketing Company	Delaware	36-3347987
Shea Financial Services, Inc.	California	03-0490610
Shea Homes, Inc.	Delaware	86-0702254
Shea Homes at Montage, LLC	California	26-3997836
Shea Homes Southwest, Inc.	Arizona	86-0533374
Shea Homes Vantis, LLC	California	45-2103204
Shea Insurance Services, Inc.	California	01-0627555
Shea La Quinta LLC	California	01-0661731
Shea Ninth and Colorado, LLC	Colorado	20-1093937
Shea Otay Village 11, LLC	California	33-0958666
Shea Proctor Valley, LLC	California	20-1412156
Shea Properties of Colorado, Inc.	Colorado	84-1058420
Shea Rivermark Village, LLC	California	95-4865301
Shea Tonner Hills, LLC	Delaware	20-0370852
Shea Victoria Gardens, LLC	Florida	26-0148229
SH Jubilee, LLC	Delaware	27-2901035
SH Jubilee Management, LLC	Delaware	27-2901082
SHI JV Holdings, LLC	Delaware	27-3677848
SHLP JV Holdings, LLC	Delaware	27-3677812
Tower 104 Gathering, LLC	Colorado	20-3384762
Tower 104 Oil, LLC	Colorado	20-3384270
Trilogy Antioch, LLC	California	20-2049392
UDC Advisory Services, Inc.	Illinois	86-0724765
UDC Homes Construction, Inc.	Arizona	86-0704849
Vistancia Construction, LLC	Delaware	20-0096025
Vistancia Marketing, LLC	Delaware	20-0096047

The information in this prospectus is not complete and may be changed. We may not complete the exchange offer and issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated October 14, 2011

PROSPECTUS

$750,000,000

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

Exchange Offer for All Outstanding

8.625% Senior Secured Notes due 2019

(CUSIP Nos. 82088K AA6 and U82091 AA4)

for new 8.625% Senior Secured Notes due 2019

that have been registered under the Securities Act of 1933

This exchange offer will expire at 5:00 p.m., New York City time,

                     on                     , 2011, unless extended.

We are offering to exchange Shea Homes Limited Partnership’s and Shea Homes Funding Corp.’s 8.625% Senior Secured Notes due 2019, which have been registered under the Securities Act of 1933, as amended (the “Securities Act”) and which we refer to in this prospectus as the “exchange notes,” for any and all Shea Homes Limited Partnership’s and Shea Homes Funding Corp.’s 8.625% Senior Secured Notes due 2019 issued on May 10, 2011, which we refer to in this prospectus as the “outstanding notes.” The term “notes” refers to both the outstanding notes and the exchange notes. We refer to the offer to exchange the exchange notes for the outstanding notes as the “exchange offer” in this prospectus.

The Exchange Notes:

• The terms of the registered exchange notes to be issued in the exchange offer are substantially identical to the terms of the outstanding notes, except that the transfer restrictions, registration rights and additional interest provisions relating to the outstanding notes will not apply to the exchange notes.

• We are offering the exchange notes pursuant to a registration rights agreement that we entered into in connection with the issuance of the outstanding notes.

• The exchange notes will bear interest at the rate of 8.625% per annum, payable semi-annually, in cash in arrears, on November 15 and May 15 of each year.

• The exchange notes will be guaranteed on a senior basis by each of Shea Homes Limited Partnership’s subsidiaries that have guaranteed the outstanding notes.

Material Terms of the Exchange Offer:

• The exchange offer expires at 5:00 p.m., New York City time, on                     , 2011, unless extended.

• Upon expiration of the exchange offer, all outstanding notes that are validly tendered and not withdrawn will be exchanged for an equal principal amount of the exchange notes.

• You may withdraw tendered outstanding notes at any time prior to the expiration of the exchange offer.

• The exchange offer is not subject to any minimum tender condition, but is subject to customary conditions.

• The exchange of the exchange notes for outstanding notes will not be a taxable exchange for U.S. federal income tax purposes.

• Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act of 1933, as amended, in connection with any resale of such exchange notes. The letter of transmittal accompanying this prospectus states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such exchange notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that for a period of 180 days after the expiration of the exchange offer, we will make this prospectus available to any broker-dealer for use in any such resale. See “Plan of Distribution.”

• There is no existing public market for the outstanding notes or the exchange notes. We do not intend to list the exchange notes on any securities exchange or quotation system.

See “Risk Factors” beginning on page 14.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or the accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Prospectus dated                     , 2011

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with any information or represent anything about us, our financial results or this offering that is not contained in this prospectus. If given or made, any such other information or representation should not be relied upon as having been authorized by us. We are not making an offer to sell these exchange notes in any jurisdiction where the offer or sale is not permitted.

The information in this prospectus is applicable only as of the date on its cover, and may change after that date. The information in any document incorporated by reference in this prospectus is applicable only as of the date of any such document. For any time after the cover date of this prospectus, we do not represent our affairs are the same as described or the information in this prospectus is correct—nor do we imply those things by delivering this prospectus or issuing exchange notes to you.

TABLE OF CONTENTS

HELPFUL INFORMATION	ii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	ii
WHERE YOU CAN FIND MORE INFORMATION	iii
MARKET INDUSTRY DATA AND FORECASTS	iii
PROSPECTUS SUMMARY	1
RISK FACTORS	14
RATIO OF EARNINGS TO FIXED CHARGES	38
USE OF PROCEEDS	39
CAPITALIZATION	40
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER INFORMATION	41
THE EXCHANGE OFFER	43
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	51
BUSINESS	81
PROPERTIES	91
LEGAL PROCEEDINGS	92
MANAGEMENT	93
EXECUTIVE COMPENSATION	95
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	99
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	101
DESCRIPTION OF OTHER INDEBTEDNESS	107
DESCRIPTION OF THE NOTES	109
BOOK-ENTRY, DELIVERY AND FORM	160
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS	162
CERTAIN ERISA CONSIDERATIONS	167
PLAN OF DISTRIBUTION	169
LEGAL MATTERS	170
EXPERTS	170

i

HELPFUL INFORMATION

As used throughout this prospectus, unless the context otherwise requires or indicates:

• “SHLP” means Shea Homes Limited Partnership, and not its subsidiaries;

• “SHI” means Shea Homes, Inc., a wholly-owned subsidiary of SHLP, and not its consolidated subsidiaries;

• “Issuers” means SHLP and Shea Homes Funding Corp., and not their subsidiaries;

• “Shea,” the “Company,” “we,” “our,” and “us” refer to SHLP and its subsidiaries, including Shea Homes Funding Corp., on a consolidated basis; and

• “Guarantors” means the direct and indirect subsidiaries of SHLP that will guarantee the exchange notes.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain parts of this prospectus and the documents incorporated by reference herein contain forward-looking statements and information relating to us that are based on the beliefs of management as well as assumptions made by, and information currently available to, us. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions of future events that may not prove to be accurate.

See the “Risk Factors” section of this prospectus for a description of risk factors that could significantly affect our financial results. In addition, the following factors could cause actual results to differ materially from the results that may be expressed or implied by such forward-looking statements. These factors include, among other things:

• changes in employment levels;

• changes in the availability of financing for homebuyers;

• changes in interest rates;

• changes in consumer confidence;

• changes in levels of new and existing homes for sale;

• changes in demographic trends;

• changes in housing demands;

• changes in home prices;

• elimination or reduction of the tax benefits associated with owning a home;

• litigation risks associated with home warranty and construction defect and other claims; and

• various other factors, both referenced and not referenced in this prospectus.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described in this prospectus as anticipated, believed, estimated, expected, intended, planned or projected. Except as required by law, we neither intend nor assume any obligation to revise or update these forward-looking statements, which speak only as of their dates.

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WHERE YOU CAN FIND MORE INFORMATION

SHLP, Shea Homes Funding Corp. and the subsidiary guarantors listed on Schedule A thereto as co-registrants (the “Guarantors”) have filed a registration statement with the Securities and Exchange Commission (the “Commission”) on Form S-4 to register the exchange offer contemplated in this prospectus. This prospectus is part of that registration statement. As allowed by the Commission’s rules, this prospectus does not contain all the information found in the registration statement or the exhibits to the registration statement. This prospectus contains summaries of the material terms and provisions of certain documents and in each instance we refer you to the copy of such document filed as an exhibit to the registration statement.

We have not authorized anyone to give any information or make any representation about us that is different from or in addition to, that contained in this prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it as authorized by us. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities offered by this prospectus are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this prospectus does not extend to you. Neither the delivery of this prospectus, nor any sale made hereunder, shall under any circumstances create any implication that there has been no change in our affairs since the date on the front cover of this prospectus.

Upon the effectiveness of the registration statement, of which this prospectus forms a part, SHLP, Shea Homes Funding Corp. and the Guarantors will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith will file annual, quarterly and other reports and information with the Commission.

The registration statement (including the exhibits and schedules thereto) and the periodic reports and other information filed by SHLP and Shea Homes Funding Corp. with the Commission may be inspected and copied at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the Public Reference Room. Such information may also be accessed electronically by means of the Commission’s homepage on the Internet at http://www.sec.gov.

You may also obtain this information without charge by writing or telephoning us at the following address and telephone number:

Shea Homes Limited Partnership

655 Brea Canyon Road

Walnut, CA 91789

(909) 594-9500

Attn: Bruce Varker, Chief Financial Officer

To ensure timely delivery, you must request this information no later than five business days before the expiration of the exchange offer.

MARKET INDUSTRY DATA AND FORECASTS

Any market or industry data contained in this prospectus are based on various sources, including internal data and estimates, independent industry publications, government publications, reports by market research firms or other published independent sources. Industry publications and other published sources generally state the information contained therein has been obtained from third-party sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such information. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and management’s understanding of industry conditions, and such information has not been verified by any independent sources. Accordingly, investors should not place undue reliance on such data and information.

iii

PROSPECTUS SUMMARY

The following summary contains information about our business and the exchange offer. It does not contain all information that may be important to you in making a decision to exchange outstanding notes for exchange notes. For a more complete understanding of our business and the offering of the notes, we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information” sections and our financial statements included elsewhere in this prospectus. All financial data provided in this prospectus are financial data of SHLP and its consolidated subsidiaries unless otherwise disclosed.

Overview

We are one of the largest private homebuilders in the United States. We design, build and market single-family detached and attached homes across various geographic markets in California, Arizona, Colorado, Washington, Nevada and Florida. We serve a broad customer base including entry, move-up, luxury and active adult buyers. We have been recognized by industry professionals and our homebuyers for quality, customer service and craftsmanship, as evidenced by receipt of some of the homebuilding industry’s most prominent awards, including being named as “Builder of the Year” in 2007 by Professional Builder magazine and one of “America’s Best Builders” in 2005 by the National Association of Homebuilders and Builder magazine. In February 2011, Shea Homes was honored as one of 40 brands in the country to be named a J.D. Power “Customer Service Champion” and is the only homebuilder to receive this honor.

For the six months ended June 30, 2011, we closed 455 homes having an average selling price of approximately $401,000. Our total revenues from sales of homes, land and homebuilding related activities for the six months ended June 30, 2011 were $189.0 million. At June 30, 2011, we were selling homes in 77 communities, with home prices ranging from approximately $117,000 to $1,100,000 and we had sold but not closed 745 homes, which comprise our sales order backlog. The value of this backlog was approximately $318.5 million of revenue anticipated to be realized at closing.

Our operating results are aggregated into three geographic segments:

• California South, consisting of the results of our Los Angeles, Ventura, Orange County, Inland Empire and San Diego communities;

• California North, consisting of the results of our northern and central California communities; and

• Mountain West/Other, consisting of the results of our Arizona, Colorado, Washington, Nevada and Florida communities.

Our communities are grouped into these segments based on similar economic and other characteristics including product types, production processes, suppliers, subcontractors, jurisdictional and political environments, land availability and values, and underlying demand and supply.

We are one of a group of companies owned by the Shea family (collectively, the “Shea Family Owned Companies”). Since 1881 in Portland, Oregon, beginning with a plumbing contractor business, the Shea Family has owned and operated homebuilding, heavy construction and commercial property businesses. The Shea Family Owned Companies have grown but remained privately held by the Shea family. The Shea family began building homes in 1968 through J.F. Shea Co., Inc. (“JFSCI”). In 1989, homebuilding under the Shea Homes brand was moved to the newly-formed SHLP, an entity under the broader umbrella of JFSCI. In all, Shea Homes has enjoyed a 40-plus year legacy of consistent family management and support.

1

We operate under three brands: Shea Homes, Trilogy and SPACES. Each reflects our value proposition: homes designed to meet the needs of our customers, with standard energy-efficient features, built in an environmentally-responsible manner.

• Shea Homes, our flagship brand, targets first-time and move-up buyers. Each segment builds and markets houses under the Shea Homes brand;

• Trilogy, master-planned communities designed and built to meet the needs and active lifestyles of the “baby boomer” generation. These communities combine quality homes with diverse resort-like amenities in each segment; and

• SPACES, our newest brand, targets 25-40 year-old buyers in each segment with contemporary, practical homes that have flexible floor plans and stylish, energy-efficient features at an affordable price point.

2

THE ISSUERS AND THE GUARANTORS

The chart below illustrates our corporate structure and is provided for illustrative purposes only and does not purport to represent all legal entities owned or controlled by the Issuers. Certain of our wholly-owned direct and indirect subsidiaries guarantee the notes. The guarantees are full and unconditional, and joint and several. The obligations under the notes are not guaranteed by our subsidiary Partners Insurance Company (“PIC”) (which is an unrestricted subsidiary under the indenture governing the notes) or by any joint venture with respect to which we do not own 100% of the economic interest, including certain of our joint ventures that are consolidated for financial reporting purposes (collectively, the “Consolidated Joint Ventures”). See “Description of the Notes—The Guarantees.”

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THE SHEA FAMILY OWNED COMPANIES

We are one of the Shea Family Owned Companies. The Shea Family Owned Companies are operated in three major groups: homebuilding, heavy construction and commercial property development and management. Much of the Shea Family Owned Companies’ business has traditionally been operated and managed through JFSCI, with each of the homebuilding, heavy construction and commercial property businesses providing management, administrative, financial and credit support to one another. Over the past several years, the Shea family and our management have made a series of changes to the business and operating structure of the Shea Family Owned Companies so that, currently:

• the Shea family homebuilding business is owned and operated primarily through SHLP, SHI and their respective subsidiaries;

• the Shea family heavy construction business is owned and operated primarily through JFSCI; and

• the Shea family commercial development and management operation is owned and operated primarily through Shea Properties, LLC and Shea Properties II, LLC.

In the future, JFSCI will continue to provide management and certain administrative support, including cash management and treasury services, to SHLP, SHI and the Shea family’s heavy construction and commercial property businesses. See “Certain Relationships and Related Party Transactions.” However, we intend that SHLP, SHI and their respective subsidiaries will not receive new financial or credit support from and will not provide new financial or credit support to the other Shea family businesses. See “Risk Factors—We have a significant number of affiliated entities, with whom we have entered into many transactions. Our relationship with these entities could adversely affect us.”

4

The chart below illustrates our ownership structure within the Shea Family Owned Companies. This chart is provided for illustrative purposes only and does not purport to represent all legal entities owned or controlled by the Shea family or the Issuers.

5

THE EXCHANGE OFFER

The summary below describes the principal terms and conditions of the exchange offer. Certain of these terms and conditions are subject to important limitations and exceptions. The section of this prospectus entitled “Description of the Notes” contains a more detailed description of the terms and conditions.

The Exchange Offer Up to $750 million aggregate principal amount of exchange notes registered under the Securities Act are being offered in exchange for the same principal amount of outstanding notes. Terms of the exchange notes and the outstanding notes are substantially identical, except that the transfer restrictions, registration rights and rights to increased interest in addition to the stated interest rate on the outstanding notes (“Additional Interest”) provisions applicable to the outstanding notes will not apply to the exchange notes. You may tender outstanding notes for exchange in whole or in part in any integral multiple of $1,000, subject to a minimum exchange of $2,000. We are undertaking the exchange offer to satisfy our obligations under the registration rights agreement relating to the outstanding notes. For a description of the procedures for tendering the outstanding notes. See “The Exchange Offer—How to Tender Outstanding Notes for Exchange.”

To exchange your outstanding notes for exchange notes, you must properly tender them before the expiration of the exchange offer. Upon expiration of the exchange offer, your rights under the registration rights agreement pertaining to the outstanding notes will terminate, except under limited circumstances.

Expiration Time The exchange offer expires at 5:00 p.m., New York City time on             , 2011, unless the exchange offer is extended. See “The Exchange Offer—Terms of the Exchange Offer; Expiration Time.”

Interest on Outstanding Notes Exchanged in the Exchange Offer Holders whose outstanding notes are exchanged for exchange notes will not receive a payment in respect of interest accrued but unpaid on such outstanding notes from the most recent interest payment date up to but excluding the settlement date. Instead, interest on the exchange notes received in exchange for such outstanding notes will (i) accrue from the last date on which interest was paid on such outstanding notes and (ii) accrue at the same rate as and be payable on the same dates as interest was payable on such outstanding notes. However, if any interest payment occurs prior to the settlement date on any outstanding notes already tendered for exchange in the exchange offer, the holder of such outstanding notes will be entitled to receive such interest payment.

Conditions to the Exchange Offer The exchange offer is subject to customary conditions (see “The Exchange Offer—Conditions to the Exchange Offer”), some of which we may waive in our sole discretion. The exchange offer is not conditioned upon any minimum principal amount of outstanding notes being tendered for exchange.

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How to Tender Outstanding Notes for Exchange You must tender your outstanding notes through book-entry transfer in accordance with The Depository Trust Company’s Automated Tender Offer Program, known as ATOP. If you wish to accept the exchange offer, you must arrange for The Depository Trust Company to transmit to the exchange agent certain required information, including an agent’s message forming part of a book-entry transfer in which you agree to be bound by the terms of the letter of transmittal, and transfer the outstanding notes being tendered into the exchange agent’s account at The Depository Trust Company.

Guaranteed Delivery Procedures If you wish to tender your outstanding notes and the procedures for book-entry transfer cannot be completed by the expiration time, you may tender your outstanding notes according to the guaranteed delivery procedures described in “The Exchange Offer—Guaranteed Delivery Procedures.”

Special Procedures for Beneficial Owners If you beneficially own outstanding notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct it to tender on your behalf. See “The Exchange Offer—How to Tender Outstanding Notes for Exchange.”

Withdrawal of Tenders You may withdraw your tender of outstanding notes at any time prior to the expiration time by delivering a notice of withdrawal to the exchange agent in conformity with the procedures discussed under “The Exchange Offer—Withdrawal Rights.”

Acceptance of Outstanding Notes and Delivery of Exchange Notes Upon consummation of the exchange offer, we will accept any and all outstanding notes that are properly tendered in the exchange offer and not withdrawn prior to the expiration time. The exchange notes issued pursuant to the exchange offer will be delivered promptly following the expiration time. See “The Exchange Offer—Terms of the Exchange Offer; Expiration Time.”

Registration Rights Agreement We are making the exchange offer pursuant to the registration rights agreement that we entered into on May 10, 2011 with the initial purchaser of the outstanding notes. As a result of making and consummating this exchange offer, we will have fulfilled our obligations under the registration rights agreement with respect to the registration of securities, subject to certain limited exceptions. If you do not tender your outstanding notes in the exchange offer, you will not have any further registration rights under the registration rights agreement or otherwise unless you were not eligible to participate in the exchange offer or do not receive freely tradable exchange notes in the exchange offer.

7

Resales of Exchange Notes We believe the exchange notes issued in the exchange offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that:

• you are not an “affiliate” of ours;

• the exchange notes you receive pursuant to the exchange offer are being acquired in the ordinary course of your business;

• you have no arrangement or understanding with any person to participate in the distribution of the exchange notes issued to you in the exchange offer;

• if you are not a broker-dealer, you are not engaged in, and do not intend to engage in, a distribution of the exchange notes issued in the exchange offer; and

• if you are a broker-dealer, you will receive the exchange notes for your own account, the outstanding notes were acquired by you as a result of market-making or other trading activities, and you will deliver a prospectus when you resell or transfer any exchange notes issued in the exchange offer. See “Plan of Distribution” for a description of the prospectus delivery obligations of broker dealers in the exchange offer.

If you do not meet these requirements, your resale of the exchange notes must comply with the registration and prospectus delivery requirements of the Securities Act.

Our belief is based on interpretations by the Commission staff, as set forth in no-action letters issued to third parties. The Commission staff has not considered this exchange offer in the context of a no-action letter, and we cannot assure you that the Commission staff would make a similar determination with respect to this exchange offer.

If our belief is not accurate and you transfer an exchange note without delivering a prospectus meeting the requirements of the federal securities laws or without an exemption from these laws, you may incur liability under the federal securities laws. We do not and will not assume, or indemnify you against, this liability.

See “The Exchange Offer—Consequences of Exchanging Outstanding Notes.”

Consequences of Failure to Exchange Your Outstanding Notes If you do not exchange your outstanding notes for exchange notes in the exchange offer, your outstanding notes will continue to be subject to the restrictions on transfer provided in the legend on the outstanding notes and in the indenture governing the notes. In general, the outstanding notes may not be offered or sold unless registered or sold in a transaction exempt from registration under the

8

Securities Act and applicable state securities laws. Accordingly, the trading market for your untendered outstanding notes could be adversely affected.

Exchange Agent The exchange agent for the exchange offer is Wells Fargo Bank, National Association. For additional information, see “The Exchange Offer—The Exchange Agent” and the accompanying letter of transmittal.

Certain Federal Income Tax Considerations The exchange of your outstanding notes for exchange notes will not be a taxable exchange for United States federal income tax purposes. You should consult your own tax advisor as to the tax consequences to you of the exchange offer, as well as tax consequences of the ownership and disposition of the exchange notes. For additional information, see “Certain Material U.S. Federal Income Tax Considerations.”

9

Summary of the Terms of the Exchange Notes

The terms of the exchange notes are substantially identical to the outstanding notes, except the transfer restrictions, registration rights and Additional Interest provisions applicable to the outstanding notes will not apply to the exchange notes. The following is a summary of the principal terms of the exchange notes. A more detailed description is contained in the section “Description of the Notes” in this prospectus.

Issuer Shea Homes Limited Partnership

Co-Issuer Shea Homes Funding Corp.

Notes Offered $750,000,000 aggregate principal amount of 8.625% Senior Secured Notes due 2019.

Maturity Date The exchange notes mature May 15, 2019.

Interest Interest on the exchange notes will accrue at a rate of 8.625% per annum and is payable semi-annually in cash in arrears on May 15 and November 15 of each year.

Holders whose outstanding notes are exchanged for exchange notes will not receive a payment in respect of interest accrued but unpaid on such outstanding notes from the most recent interest payment date up to but excluding the settlement date. Instead, interest on the exchange notes received in exchange for such outstanding notes will (i) accrue from the last date on which interest was paid on such outstanding notes and (ii) accrue at the same rate as and be payable on the same dates as interest was payable on such outstanding notes. However, if any interest payment occurs prior to the settlement date on any outstanding notes already tendered for exchange in the exchange offer, the holder of such outstanding notes will be entitled to receive such interest payment.

Optional Redemption We may redeem some or all of the exchange notes at any time on or after May 15, 2015, at the redemption prices specified under the section “Description of the Notes—Optional Redemption” plus accrued and unpaid interest, if any, to the redemption date.

At any time prior to May 15, 2015, we may also redeem the exchange notes, in whole or in part, at a redemption price of 100% of the principal amount of the exchange notes, plus a “make-whole” premium and accrued and unpaid interest, if any, to the redemption date.

At any time prior to May 15, 2014, we may also redeem up to 35% of the original aggregate principal amount of the exchange notes with the proceeds of certain equity offerings, in each case, at a redemption price equal to 108.625% of the aggregate principal amount of the exchange notes to be redeemed, plus accrued and unpaid interest, if any, to the redemption date.

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Change of Control Upon a Change of Control as described in the section “Description of the Notes—Certain Covenants—Change of Control,” we will be required to make an offer to repurchase all or part of the exchange notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of repurchase.

Guarantees The exchange notes will be guaranteed by the Guarantors. If the Issuers cannot make payments under the notes when they are due, the Guarantors must make such payments instead. PIC will not be a Guarantor and will be treated as an unrestricted subsidiary under the indenture governing the notes.

The exchange notes will not be guaranteed by any joint venture with respect to which we do not own 100% of the economic interest, including certain of our joint ventures that are consolidated for financial reporting purposes.

Ranking The exchange notes and the guarantees will be the Issuers’ and the Guarantors’ general senior secured obligations and will:

• be effectively senior to all existing and future unsecured indebtedness of the Issuers to the extent of the value of the collateral securing the notes and the guarantees;

• rank equally in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness;

• rank senior in right of payment to the Issuers’ and the Guarantors’ future subordinated indebtedness, if any;

• rank equally with the indebtedness outstanding under our letter of credit facility, but the lenders under the letter of credit facility will have the right to be repaid before the notes from the proceeds of any enforcement action taken against the collateral;

• be effectively subordinated to any existing and future indebtedness of either of the Issuers and the Guarantors that is secured by assets that do not constitute collateral, to the extent of the value of such assets; and

• be effectively subordinated to any existing and future indebtedness of subsidiaries or joint ventures of either of the Issuers that are not Guarantors.

Collateral The exchange notes and the guarantees will be secured by a lien on substantially all the assets owned by the Issuers and the Guarantors on the issue date of the exchange notes or thereafter acquired, subject to permitted liens and certain exceptions.

The collateral will also secure on a pari passu basis our obligations with respect to our letter of credit facility, but the lenders under our letter of credit facility will have the right to be repaid before the exchange notes from the proceeds of any enforcement action taken against the collateral.

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The collateral will not include:

• except to secure our letter of credit facility, the pledge of stock of subsidiaries of SHLP to the extent such pledge would result in separate financial statements of such subsidiary being required in SEC filings;

• personal property where the cost of obtaining a security interest or perfection thereof exceeds its benefits;

• real property subject to a lien securing indebtedness incurred for the purpose of financing the acquisition thereof (to the extent the creation of additional security interests in such property is prohibited by contract);

• assets, with respect to which any applicable law or contract (including certain profit and price participation arrangements) prohibits the creation or perfection of security interests therein, or that otherwise results in a default, waiver or termination of rights or privileges arising under such law or contract;

• all trademarks, trade names and other intellectual property bearing the name “Shea” or a variant thereof (provided the noteholders shall have a non-exclusive license to use such intellectual property in connection with the exercise of default remedies);

• cash collateral supporting (1) deductible, retention and other obligations to insurance carriers, (2) reimbursement claims in respect of letters of credit and surety providers, (3) contingent claims arising in respect of community facility district, metrodistrict, mello-roos, subdivision improvement bonds and similar obligations arising in the ordinary course of business of a homebuilder and (4) cash management services;

• equity interests in joint ventures where the joint venture agreement prohibits creation of such security interests;

• any leasehold interests in real property;

• any real property in a community under development with an investment at the end of the most recent quarter (as determined in accordance with GAAP) of less than $2.0 million or with less than 10 lots remaining unsold (to the extent the Issuers do not create a lien in such property);

• deposit accounts and securities accounts with aggregate balance for all such excluded accounts not to exceed $2.0 million in aggregate amount, or established solely for purposes of funding payroll, trust and other compensation benefits to employees; and

• all vehicles covered by a certificate of title.

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Certain Covenants The indenture governing the exchange notes contains covenants that limit, among other things, the Issuer and Guarantors’ ability to:

• incur additional indebtedness (including the issuance of certain preferred stock);

• pay dividends and distributions on our equity interests;

• repurchase our equity interests;

• retire unsecured or subordinated notes more than one year prior to their maturity;

• make investments in subsidiaries and joint ventures that are not restricted subsidiaries that guarantee the notes, including PIC;

• sell certain assets;

• incur liens;

• merge with or into other companies;

• expand into unrelated businesses; and

• enter into certain transactions with our affiliates.

These covenants will be subject to a number of important exceptions and qualifications. See “Description of the Notes—Certain Covenants.”

Use of Proceeds We will not receive any cash proceeds from the issuance of the exchange notes offered by this prospectus.

Risk Factors Investment in the notes involves certain risks. You should carefully consider the information under “Risk Factors” and all other information included in this prospectus before investing in the notes.

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RISK FACTORS

An investment in the exchange notes involves risks. You should carefully consider the risks described below as well as the other information contained in this prospectus prior to making an investment decision. The risks described in this prospectus are not the only ones we may face. There may be additional risks and uncertainties not currently known to us or that we may currently deem immaterial in addition to those outlined below, which could impair our financial position and results of operations. If any of the following risks occurs, our business, financial condition and results of operations could be materially adversely affected. In such case, you may lose all or part of your original investment. As used below, the term “notes” refers to both the outstanding notes and the exchange notes.

Risks Relating to Us and Our Business

The homebuilding industry, which is very cyclical and affected by a variety of factors, is in a significant downturn, and its duration and ultimate severity are uncertain. A continuation or further deterioration in industry conditions or in broader economic conditions could have additional material adverse effects on our business and financial results.

The homebuilding industry is cyclical and is significantly affected by changes in industry conditions, as well as in general and local economic conditions, such as changes in:

• employment and wage levels;

• availability of financing for homebuyers;

• interest rates;

• a lack of consumer confidence that results in a lack of urgency to buy;

• levels of new and existing homes for sale;

• demographic trends;

• housing demand; and

• government.

These changes may occur on a national scale, like the current downturn, or may acutely affect some of the regions or markets in which we operate more than others. When adverse conditions affect any of our larger markets, they could have a proportionately greater impact on us than on some other homebuilding companies that have smaller presences in such markets. Our operations in previously strong markets, particularly California and Arizona, have more adversely affected our results of operations than our other markets in the current downturn.

An oversupply of alternatives to new homes, including foreclosed homes, homes held for sale by investors and speculators, other existing homes and rental properties, can also reduce our ability to sell new homes, depress new home prices and reduce our margins on the sales of new homes. High levels of foreclosures not only contribute to additional inventory available for sale, but also reduce appraisal valuations for new homes, potentially resulting in lower sales prices.

As a result of the foregoing matters, potential customers may be less willing or able to buy our homes.

The current downturn in the homebuilding industry is in its fifth year and has become one of the most severe housing downturns in U.S. history. The significant decline in the demand for new homes, the significant oversupply of homes on the market and the significant reductions in the availability of financing for homebuyers that have marked this downturn are continuing and may continue for some time. We have experienced material reductions in our home sales and homebuilding revenues, and we have incurred material inventory impairments

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and losses from our joint venture interests and other write-offs. It is not clear when or if these trends will reverse or when we may return to profitability. The continuation or worsening of this downturn would have a further material adverse effect on our business, liquidity and results of operations.

Our ability to respond to the downturn is limited. The significant amount of home mortgage foreclosures has increased supply and driven down prices, making the purchase of a foreclosed home an attractive alternative to purchasing a new home. Homebuilders have responded to declining sales and increased cancellation rates with significant concessions, further adding to the price declines. With the decline in the values of homes and the inability of many homeowners to make their mortgage payments, the credit markets have been significantly disrupted, putting strains on many households and businesses. In the face of these conditions, the overall economy has weakened significantly, with high unemployment levels and substantially reduced consumer spending and confidence. As a result, demand for new homes remains at historically low levels.

We cannot predict the duration or ultimate severity of the current economic downturn. Nor can we provide assurance that our responses to the homebuilding downturn or the government’s attempts to address the troubles in the overall economy will be successful. Additionally, we cannot predict the timing or effect of the winding down or possible withdrawal of government intervention or support.

The reduction in availability of mortgage financing has adversely affected our business, and the duration and ultimate severity of the effects are uncertain.

During the last four years the mortgage lending industry has experienced significant instability, beginning with increased defaults on subprime loans and other nonconforming loans and compounded by expectations of increasing interest payment requirements and further defaults. This in turn resulted in a decline in the market value of many mortgage loans and related securities. Lenders, regulators and others questioned the adequacy of lending standards and other credit requirements for several loan products and programs offered in recent years. Credit requirements have tightened, and investor demand for mortgage loans and mortgage-backed securities has declined. The deterioration in credit quality has caused most lenders to stop offering subprime mortgages and most other loan products that are not eligible for sale to Fannie Mae or Freddie Mac or loans that do not meet Federal Housing Administration (“FHA”) and Veterans Administration (“VA”) requirements. Fewer loan products, changes in conforming loan limits, tighter loan qualifications and a reduced willingness of lenders to make loans have made it more difficult for many buyers to finance the purchase of our homes. These factors have served to reduce the pool of qualified homebuyers and made it more difficult to sell to first-time and move-up buyers who have historically made up a substantial part of our customers. These reductions in demand have adversely affected our business and results of operations, and the duration and severity of their effects are uncertain.

The liquidity provided by Fannie Mae and Freddie Mac to the mortgage industry has been very important to the housing market. These entities have required substantial injections of capital from the federal government and may require additional government support in the future. The federal government has proposed changing the nature of the relationship between Fannie Mae and Freddie Mac and the federal government and even eliminating these entities entirely. If Fannie Mae and Freddie Mac were dissolved or if the federal government determined to stop providing liquidity support to the mortgage market, there would likely be a reduction in the availability of the financing provided by these institutions. Any such reduction would likely have an adverse effect on interest rates, mortgage availability and our sales of new homes.

The FHA insures mortgage loans that generally have lower down payments and, as a result, it continues to be a particularly important support for financing the sale of our homes. In the last two years, more restrictive guidelines have been placed on FHA insured loans, such as increasing minimum down payment requirements. In the near future, further restrictions are expected on FHA insured loans, including but not limited to limitations on seller-paid closing costs and concessions. These or any other restrictions may negatively affect the availability or affordability of FHA financing, which could adversely affect our ability to sell homes.

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While the use of down payment assistance programs by our homebuyers has decreased significantly, some of our customers still utilize 100% financing through programs offered by the VA and United States Department of Agriculture. There can be no assurance that these programs or other programs will continue to be available or will be as attractive to our customers as the programs currently offered, which could adversely affect our sales.

Because almost all of our customers require mortgage financing, increases in interest rates could lower demand for our products, limit our marketing effectiveness and limit our ability to realize our backlog.

Most of our customers finance their acquisitions through lenders providing mortgage financing. Increases in interest rates could lower demand for new homes because the monthly mortgage costs to potential homebuyers would increase. Even if potential new home buyers do not need financing, changes in interest rates could make it harder for them to sell their existing homes to potential buyers who need financing. This could prevent or limit our ability to attract new customers as well as our ability to realize our backlog because our sales contracts generally include a financing contingency. Financing contingencies permit buyers to cancel sales contracts in the event mortgage financing is unobtainable within the period specified in the contract. This contingency period is typically four to eight weeks following the date of execution of the sales contract. Our exposure to such financing contingencies renders us vulnerable to changes in prevailing interest rates.

Cancellations of home sales orders in backlog may increase as homebuyers choose to not honor their contracts.

Notwithstanding our sales strategies, we experienced elevated rates of sales order cancellations in 2006 through 2008. Since 2008, our sales order cancellation rate has improved, and it is currently below our historical average for the period from 1997 to 2010. We believe the elevated cancellation rate experienced in 2007 and 2008 was largely a result of reduced homebuyer confidence, due principally to continued price declines, the growing number of foreclosures and continued high unemployment. A more restrictive mortgage lending environment and the inability of some buyers to sell their existing homes have also impacted cancellations. Many of these factors are beyond our control, and it is uncertain whether they will cause cancellation rates to rise again in the future.

Home prices and demand in California, Arizona, Colorado, Washington, Nevada and Florida have a large impact on our results of operations because we conduct our homebuilding business in these states.

Our operations are concentrated in regions that are among the most severely affected by the current economic downturn. We conduct our homebuilding business in California, Arizona, Colorado, Washington, Nevada and Florida. Home prices and sales in these states have declined significantly since the end of 2006 and at a greater rate than the country as a whole. These states, particularly California, continue to experience economic difficulties, including elevated levels of unemployment and precarious budget situations at the state and local government level, which may materially adversely affect the market for our homes in those affected areas. Declines in home prices and sales in these states also adversely affect our results of operations.

Inflation could adversely affect our business and financial results, particularly in a period of oversupply of homes.

Inflation can adversely affect us by increasing costs of land, materials and labor. However, we may be unable to offset these increases with higher sales prices. In addition, inflation is often accompanied by higher interest rates, which have a negative impact on housing demand. In such an environment, we may not be able to raise home prices sufficiently to keep up with the rate of inflation and our margins could decrease. Moreover, with inflation, cost of capital increases, and the purchasing power of our cash resources can decline. Efforts by the government to stimulate the economy may not be successful, but have increased the risk of significant inflation and its resulting adverse effect on our business or results of operations.

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Supply shortages and risks of demand for building materials and skilled labor could increase costs and delay deliveries.

The homebuilding industry has from time to time experienced significant difficulties that can affect the cost or timing of construction, and adversely impact our revenues and operating margins, including:

• difficulty in acquiring land suitable for residential building at affordable prices in locations where our potential customers want to live;

• shortages of qualified labor;

• reliance on local subcontractors, manufacturers and distributors who may be inadequately capitalized;

• shortages of materials; and

• increases in cost of materials, particularly lumber, drywall, cement and steel, which are significant components of home construction costs.

Notwithstanding, we have successfully reduced our labor and building material costs, as our TradePartners^® have cut their costs at the expense of profits. However, associated costs could increase and adversely affect our operating margins and results of operations.

In several of our markets in 2011 through 2013, we will need to replenish our inventory of lots for construction. If the housing market recovers, the price of improved or finished lots for construction in these markets could increase, and adversely affect our operating margins and results of operations.

Elimination or reduction of the tax benefits associated with owning a home could prevent potential customers from buying our homes and adversely affect our business or financial results.

Significant expenses of owning a home, including mortgage interest and real estate taxes, generally are deductible expenses for an individual’s federal, and in some cases state, income taxes, subject to various limitations under current tax law and policy. If the federal government or a state government changes its income tax laws, as has been discussed from time to time, to eliminate or substantially modify these income tax deductions, the after-tax cost of owning a new home would increase for many of our potential customers. The resulting loss or reduction of homeowner tax deductions, if such tax law changes were enacted without offsetting provisions, would adversely affect demand for and sales prices of new homes.

In addition, increases in property tax rates by local governmental authorities can adversely affect the ability of potential customers to obtain financing or their desire to purchase new homes.

Homebuilding is subject to home warranty and construction defect claims and other litigation risks in the ordinary course of business that can be significant. Our operating expenses could increase if we are required to pay higher insurance premiums or incur substantial litigation costs with respect to such claims and risks.

As a homebuilder, we are subject to home warranty and construction defect claims arising in the ordinary course of business. As a consequence, we maintain liability insurance in the form of a “rolling wrap-up” insurance program which insures both us and our TradePartners^®. We also record customer service and warranty reserves for the homes we sell based on historical experience in our markets and our judgment of the qualitative risks associated with the types of homes built. See the further description of “rolling wrap-up” insurance policies in the “Business—Insurance Coverage” section. Because of the uncertainties inherent in these matters, we cannot provide assurance that our insurance coverage, our TradePartners^® arrangements and our reserves will be adequate to address all of our warranty and construction defect claims in the future.

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The costs of insuring against construction defect and product liability claims are high, and the amount and scope of coverage offered by insurance companies at acceptable rates is limited. The scope of coverage may continue to be limited or be further restricted and may become more costly.

Increasingly in recent years, individual and class action lawsuits have been filed against homebuilders asserting claims of personal injury and property damage caused by a variety of issues, including faulty materials and the presence of mold in residential dwellings. Furthermore, decreases in home values as a result of general economic conditions may result in an increase in both non-meritorious and meritorious construction defect claims, as well as claims based on marketing and sales practices. Our insurance may not cover all of the claims arising from such issues, or such coverage may become prohibitively expensive. Notwithstanding, our annual policy limits are $50.0 million per occurrence and $50.0 million in the aggregate. If we are not able to obtain adequate insurance against these claims, we may experience litigation costs and losses that could adversely affect our results of operations. Even if we are successful in defending such claims, we may incur significant costs.

Historically, builders have recovered a significant portion of the construction and product defect liabilities and defense costs from their subcontractors and insurance carriers. We try to minimize our liability exposure by providing a master insurance policy and requiring our TradePartners^® to enroll in a “rolling wrap-up” insurance policy. Insurance coverage available to us and our TradePartners^® for construction and product defects is expensive and the scope of coverage is restricted. If we cannot effectively recover from our carriers, we may suffer greater losses, which could adversely affect our results of operations.

Furthermore, a builder’s ability to recover against any available insurance policy depends upon the continued solvency and financial strength of the insurance carrier that issued the policy. The states in which we build homes typically limit claims for property damage resulting from construction defects to those claims that arise within an eight- to twelve-year period from the date of close of escrow. To the extent any carrier providing insurance coverage to us or our TradePartners^® becomes insolvent or experiences financial difficulty in the future, we may be unable to recover on those policies which could adversely affect our results of operations.

Homebuilding is very competitive, and competitive conditions could adversely affect our business or financial results.

The homebuilding industry is highly competitive. Homebuilders compete not only for homebuyers, but also for desirable properties, financing, raw materials and skilled labor. We compete with other local, regional and national homebuilders, often within larger subdivisions designed, planned and developed by such homebuilders. We also compete with existing home sales, foreclosures and rental properties. In addition, consolidation of some homebuilding companies may create competitors with greater financial, marketing and sales resources with the ability to compete more effectively. New competitors may also enter the markets in which we currently conduct business. These competitive conditions in the homebuilding industry can result in:

• lower sales;

• lower selling prices;

• increased selling incentives;

• lower profit margins;

• impairments in the value of inventory and other assets;

• difficulty in acquiring suitable land, raw materials, and skilled labor at acceptable prices or terms; or

• delays in the construction of our homes.

These competitive conditions affect our business and results of operations. During the current downturn in the homebuilding industry, the reactions of our competitors may have reduced the effectiveness of our efforts to achieve pricing stability and reduce our inventory levels.

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Our success depends on the availability of suitable undeveloped land and improved lots at acceptable prices, and having sufficient liquidity to acquire such properties.

Our success in developing land and in building and selling homes depends in part upon the continued availability of suitable undeveloped land and improved lots at acceptable prices. The availability of undeveloped land and improved lots for purchase at favorable prices depends on a number of factors outside of our control, including the risk of competitive over-bidding on land and lots and restrictive governmental regulation. Should suitable land opportunities become less available, the number of homes we may be able to build and sell would be reduced, which would reduce revenue and profits. In addition, our ability to make land purchases will depend upon us having sufficient liquidity to fund such purchases. We may be at a disadvantage in competing for land due to our significant debt obligations, which require substantial cash resources, and as a result of our more limited access to capital compared to our publicly traded competitors.

Poor relations with the residents of our communities could adversely impact sales, which could cause revenues or results of operations to decline.

Residents of communities we develop rely on us to resolve issues or disputes that may arise in connection with the operation or development of their communities. Efforts made by us to resolve these issues or disputes could be deemed unsatisfactory by the affected residents and subsequent actions by these residents could adversely affect sales or our reputation. In addition, we could be required to make material expenditures related to the settlement of such issues or disputes or to modify our community development plans, which could adversely affect our results of operations.

If we are unable to develop communities successfully or within expected timeframes, results of operations could be adversely affected.

Before a community generates revenues, time and material expenditures are required to acquire land, obtain development approvals and construct significant portions of project infrastructure, amenities, model homes and sales facilities. A decline in our ability to develop and market our communities successfully and to generate positive cash flow from these operations in a timely manner would have a material adverse effect on our business and results of operations and on our ability to service our debt and to meet our working capital requirements.

Our business is seasonal in nature, and quarterly operating results can fluctuate.

Our quarterly operating results generally fluctuate by season. We typically experience the highest new home sales order activity in the spring and summer months, although new order activity is also highly dependent on the number of active selling communities and the timing of new community openings as well as other market factors. Because it typically takes us three to eight months to construct a new home, we deliver a greater number of homes in the second half of the calendar year as orders are converted to home deliveries. As a result, our revenues from homebuilding operations are higher in the second half of the calendar year, particularly in the fourth quarter, and we may experience higher liquidity demands during the first half of the calendar year as we incur the costs associated with new construction. If, due to construction delays or other reasons, we are unable to deliver our expected number of homes in the second half of the calendar year, our annual results of operations may be adversely affected.

We may be adversely affected by weather conditions and natural disasters.

Weather conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, snow storms, landslides, wildfires, volcanic activity, droughts and floods can harm our homebuilding business. These can delay home closings, increase the cost or availability of materials or labor, or damage homes under construction. In addition, the climates and geology of many of the states in which we operate present increased risks of adverse weather or natural disasters. In particular, a large portion of our homebuilding operations are concentrated in California, which is subject to increased risk of earthquakes. Any such events or any business interruption caused thereon could have a material adverse effect on our business, financial condition, results of operations and capital resources.

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Utility and resource shortages or rate fluctuations could have an adverse effect on operations.

The areas in which we operate have experienced utility and resource shortages, including significant changes to the availability of water. These areas have also experienced material fluctuations in utility and resource costs. Shortages of natural resources, particularly water, may make it more difficult for us to obtain regulatory approval of new developments. We may incur additional costs and may not be able to complete construction on a timely basis if such shortages and utility rate fluctuations continue. Furthermore, these shortages and rate fluctuations may adversely affect the regional economies in which we operate, which may reduce demand for our homes.

In addition, the cost of petroleum products, which are used both to deliver our materials and to transport our employees to our job sites, fluctuates and may increase as a result of geopolitical events or accidents. This could also result in higher prices for any product utilizing petrochemicals. These cost increases could adversely affect our operating margins and results of operations.

The IRS has disallowed certain of our income recognition methodologies. If we are unsuccessful in appealing this decision, we could become subject to a substantial tax liability from previous years.

Since 2002, SHI and SHLP have used the “completed contract method” of accounting (the “CCM”) to recognize taxable income or loss with respect to the majority of their respective homebuilding operations. The CCM allows SHI and SHLP to defer taxable income/loss recognition from their homebuilding operations until projects are substantially complete, rather than on an annual basis based on the sale of individual homes to buyers of those homes. The Internal Revenue Service (the “IRS”) has assessed a tax deficiency against SHLP and SHI contending they did not accurately and appropriately apply the relevant U.S. Treasury Regulations in calculating their respective homebuilding projects’ income/loss pursuant to the CCM for years 2004 through 2008, and years 2003 through 2008, respectively. SHI and SHLP believe their use of the CCM complies with the relevant regulations and have filed a petition with the United States Tax Court to challenge the IRS position. If, contrary to our expectations, the IRS should prevail in this matter, SHI and SHLP would be required to recognize income for prior years that would otherwise be deferred until future years. With respect to SHI, we do not expect this earlier recognition of income to result in a tax liability of more than $5.5 million (plus applicable interest) due to net operating losses that SHI experienced in 2009 and elected to carry back for five years. With respect to SHLP, the earlier recognition of income could result in the owners of SHLP incurring an additional tax liability of up to $99.0 million (including interest) for the years at issue, and SHLP would be required to make a distribution to its owners to pay a portion of such tax liability. See “Certain Relationships and Related Party Transactions—Tax Distribution Agreement.” The indenture governing the notes restricts SHLP’s ability to make such distributions in excess of a specified amount determined by a formula, unless SHLP receives a cash equity contribution from JFSCI in the amount of such excess. See “Description of the Notes—Limitations on Restricted Payments.” Such potential additional taxes imposed on SHI and tax distributions by SHLP may have a material adverse effect on the financial position, results of operations and cash flows of SHI and SHLP, respectively, which may make it more difficult for us to service our debt obligations, including under the notes.

Under our Tax Distribution Agreement, we are required to make distributions to our equity holders from time to time based on their ownership in SHLP, which is a limited partnership and, under certain circumstances, those distributions may occur even if SHLP does not have taxable income.

Under the Tax Distribution Agreement (as described under “Certain Relationships and Related Party Transactions—Tax Distribution Agreement”), SHLP will be required to make cash distributions to the partners of SHLP (or their direct or indirect holders) for taxable income allocated to them in connection with their ownership interests in SHLP. In addition, SHLP will be required under the Tax Distribution Agreement to provide tax distributions to the partners of SHLP (or their direct or indirect holders) for any additional taxable income

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allocated to them as a result of any audit, tax proceeding or tax contest arising from or in connection with any tax position taken by SHLP (or any entity treated as a “pass-through” entity under U.S. federal income tax principles in which SHLP has an ownership interest). If any audit, proceeding or contest in connection with years prior to 2011 (including those related to the CCM) ultimately results in an increase in taxable income allocated to our partners, or any disallowance of losses or deductions previously allocated to our partners, then we would be required to make additional tax distributions to them, even if the audit, proceeding or contest resulted in a reduction of a tax loss previously allocated for such period and no taxable income had been previously allocated to them for such period or would be so allocated after such reduction. Any distribution under the Tax Distribution Agreement could have a material adverse effect on our business, financial condition, results of operations and capital resources, which could compromise our ability to service our debt, including the notes.

Our ability to generate sufficient cash or access other limited sources of liquidity to operate our business and service our debt depends on many factors, some of which are beyond our control.

Our ability in the future to make payments on the notes and to fund planned capital expenditures for construction and development costs will depend on our ability to generate sufficient cash flow. Our interest incurred for the six months ended June 30, 2011 was $37.2 million. To a large extent, our cash flow generation ability is subject to general economic, financial, competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to pay principal and interest on the notes or to fund our other liquidity needs. As a result, we may need to refinance all or a portion of our debt, including the notes, on or before the maturity thereof, or incur additional debt. We cannot assure you that we will be able to do so on favorable terms, if at all. If we are unable to refinance our debt on a timely basis, we might be forced to dispose of certain assets, minimize capital expenditures or take other steps that could be detrimental to our business and could reduce the value of the collateral. There is no assurance these alternatives would be available to us, if at all, on satisfactory terms or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements. Any inability to generate sufficient cash flow, refinance our debt or incur additional debt on favorable terms could have a material adverse effect on our financial condition and could compromise our ability to service our debt, including the notes.

In addition, we use letters of credit and surety bonds to secure our performance under various construction and land development agreements, escrow agreements, financial guarantees and other arrangements. Should our future performance or economic conditions continue to make such letters of credit and surety bonds costly or difficult to obtain or lead to us being required to collateralize such instruments to a greater extent than previously, our business and results of operations could be adversely affected.

We have a significant number of contingent liabilities, and if any of such liabilities are called upon, it could have a material adverse effect on our liquidity and results of operations.

We have a significant number of contingent liabilities in respect of which we could be required to pay substantial amounts. At June 30, 2011, these contingent liabilities included:

• $16.3 million of potential liabilities pursuant to guarantees by SHLP of outstanding debt of AGS Homebuilder I, LP, an Unconsolidated Joint Venture in which SHLP has an effective 9.1% ownership interest, of which SHLP’s joint venture partners, certain investment funds managed by Angelo Gordon, are contractually obligated to reimburse SHLP for approximately 90% of any amounts required to be paid under such guarantees;

• $25.4 million of potential liabilities pursuant to certain guarantees of outstanding debt of Shea/Baker Ranch Associates, LLC, a joint venture 50% owned by other Shea Family Owned Companies in which SHLP has no ownership interest;

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• $46.7 million of potential liabilities pursuant to guarantees in respect of certain permanent financings of stabilized projects of other Shea Family Owned Companies in which SHLP has no ownership interest, which guarantees are triggered by certain “bad boy” acts of the affiliated borrower, such as voluntary bankruptcy, fraud or material misrepresentation;

• $30.0 million of remaining exposure with respect to $72.8 million of surety bond indemnifications related to Unconsolidated Joint Ventures (as defined below) and $3.7 million of remaining exposure with respect to $7.8 million of surety bond indemnifications related to other Shea Family Owned Companies;

• $70.2 million of remaining exposure in connection with $177.9 million of surety bonds issued in respect of projects of SHLP and its subsidiaries; and

• other commitments to fund certain of our joint ventures pursuant to the agreements and organizational documents governing such joint ventures.

See “Description of Other Indebtedness” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations, Commercial Commitments and Off-Balance Sheet Agreements.” The amounts set forth above do not include obligations with respect to letters of credit issued under our existing letter of credit facility as credit support for certain liabilities of our joint ventures.

Certain of our consolidated and joint ventures’ homebuilding projects utilize and may continue to utilize community facility district, metro-district and other local government bond financing programs to fund construction or acquisition of infrastructure improvements. Interest and principal on these bonds are typically paid from taxes and assessments levied on homeowners following the sale of new homes within the project. From time to time we enter into credit support arrangements where we are required to make interest and principal payments on these bonds if the taxes and assessments levied on homeowners are insufficient to cover such obligations. Furthermore, reimbursement of these payments to us is dependent on the district or local government’s ability to generate sufficient tax and assessment revenues from the sale of new homes. If the downturn in the homebuilding industry continues and results in further declines in new home sales, taxes and assessments levied on homeowners may be insufficient to cover interest and principal obligations on these bonds and we may be required to fund these shortfalls, possibly without reimbursement, and/or accrue liabilities in connection with these credit support arrangements.

In the event that we are called upon to satisfy any of these contingent liabilities, it could significantly affect our liquidity and ability to generate cash flow, which could have a material adverse effect on our financial condition and results of operations.

The indenture governing the notes and our letter of credit facility contain, and any future indebtedness may contain, financial and operating restrictions that may affect our ability to operate our business.

The indenture governing the notes and our letter of credit facility do, and any future indebtedness may, contain various covenants that, among other things, limit our ability to grant certain liens to support Indebtedness, invest in joint venture transactions, merge or sell assets. In addition, the indenture governing the notes and our letter of credit facility do, and any future indebtedness may, contain restrictions on our ability to incur indebtedness, enter into certain affiliate transactions and make certain distributions. These covenants could adversely affect our ability to finance our future operations or capital needs or engage in, expand or pursue our business activities and prevent us from engaging in certain transactions that might otherwise be considered beneficial to us. In particular, restrictions on our ability to enter into joint venture transactions may limit our ability to undertake new large scale master-planned development opportunities, including developments of our homes under the Trilogy brand, and may thereby adversely affect our growth and results of operations. In addition, these covenants may restrict our ability to meet our ongoing capital commitments under our joint venture agreements, which may result in our ownership interests in the corresponding joint ventures being reduced or eliminated.

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The risks associated with our land and lot inventory could adversely affect our business or financial results.

The risks inherent in controlling or purchasing, holding and developing land for new home construction are substantial and increase as consumer demand for housing decreases. The value of undeveloped land, building lots and housing inventories can fluctuate significantly as a result of changing market conditions. If the fair market value of the land, lots and inventories we hold decreases, we may be required to reduce the carrying value of these assets and take significant impairment charges. We may have acquired options on or bought and developed land at a cost we will not be able to recover fully or on which we cannot build and sell homes profitably. In addition, our deposits for building lots controlled under option or similar contracts may be put at risk. In certain circumstances, a grant of entitlements or development agreement with respect to a particular piece of land may include restrictions on the transfer of such entitlements to a buyer of such land, which may increase our exposure to decreases in the price of such entitled land by restricting our ability to sell it for its full entitled value. In addition, inventory carrying costs can be significant and can result in reduced margins or losses in a poorly performing community or market. In the present weak market conditions, we have sold homes and land for lower margins or at a loss and we have recorded significant inventory impairment charges, and such conditions may persist.

Historically, our goals for the ownership and control of land and building lots were based on management’s expectations for future volume growth. In light of weak market conditions encountered since 2006, we significantly slowed our purchases of undeveloped land and our development spending on land we own and made substantial land and lot sales as part of our strategy to reduce our inventory to better match our reduced rate of production. We also terminated certain land option contracts and wrote off earnest money deposits and pre-acquisition costs related to these option contracts. Because future market conditions are uncertain, we cannot provide assurance that these measures will be successful in managing our future inventory risks or avoiding future impairment charges. We could be limited in the amount of additional land we can dispose of to supplement cash flow from house sales, therefore our cash inflows attributable to land sales will likely decline. Our flexibility in responding to changes in market conditions, including our ability to respond to further declines in the housing market or to benefit from a return to growth, has been reduced as the amount of our land and lot positions controlled by option and similar contracts has declined.

Also, use of option contracts is dependent on the willingness of land sellers, availability of capital, housing market conditions and geographic preferences. Options may be more difficult to obtain from land sellers in stronger housing markets and are more prevalent in certain geographic regions.

In certain consolidated homebuilding projects, we have contractual obligations to purchase and receive water system connection rights which, at June 30, 2011, were $39.7 million. These water system connection rights are held and then transferred to homebuyers upon closing of their home or transferred upon the sale of land to the respective buyer. These water system connection rights can also be sold or leased but generally only within the local jurisdiction. The risks inherent in purchasing, controlling or holding these water system connection rights are substantial and increase as consumer demand for housing decreases. The value of these water sytem connection rights and their marketability can also fluctuate from changing market conditions. If the fair market value of these water system connection rights decreases, we may be required to reduce their carrying value which could adversely affect our results of operations.

In certain consolidated homebuilding projects, we make infrastructure improvements on behalf of community facility districts and metro-districts or advance them funds for such improvements, both reimbursable to us from tax proceeds, assessments or bond financing and dependent on the district’s ability to secure capital from these sources. If the downturn in the homebuilding industry continues and results in further declines in new home sales, then taxes and assessments levied on homeowners may be insufficient to reimburse us. Furthermore, if bond financing is unavailable, then these districts may be unable to reimburse us. In either case, we may be required to recognize a charge for uncollectible accounts which could adversely affect our results of operations.

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We conduct certain of our operations through unconsolidated joint ventures with independent and affiliated third parties in which we do not have a controlling interest. These investments involve risks and are highly illiquid.

We currently operate through a number of unconsolidated homebuilding and land development joint ventures with independent and affiliated parties in which we do not have a controlling interest (the “Unconsolidated Joint Ventures”). At June 30, 2011, we had an investment of $30.3 million in these joint ventures and guaranteed on a joint and several basis $16.3 million of outstanding liabilities for projects under development by these joint ventures. See “Description of Other Indebtedness.” In addition, we from time to time issue, and may continue to issue, letters of credit under our letter of credit facility as credit support for liabilities of our Unconsolidated Joint Ventures.

Our investments in the Unconsolidated Joint Ventures involve risks and are highly illiquid, and their success depends in part on our joint venture partners’ performance, which can be impacted by their financial strength and other factors. There are a limited number of sources willing to provide acquisition, development and construction financing to land development and homebuilding joint ventures and, as market conditions become more challenging, it may be difficult or impossible to obtain financing for our Unconsolidated Joint Ventures on commercially reasonable terms. Recently, due to tighter credit markets, we have been unable to obtain financing for newly created Unconsolidated Joint Ventures. In addition, we lack a controlling interest in our Unconsolidated Joint Ventures and, therefore, are usually unable to require that our Unconsolidated Joint Ventures sell assets or return invested capital, make additional capital contributions, or take any other action without the vote of at least one venture partner. Therefore, absent partner agreement, we will be unable to liquidate our Unconsolidated Joint Ventures investments to generate cash.

We have a significant number of affiliated entities with whom we have entered into many transactions. Our relationship with these entities could adversely affect us.

We are part of the Shea Family Owned Companies, which are operated in three major groups: homebuilding, heavy construction and commercial property development and management. See “Prospectus Summary—The Shea Family Owned Companies.” Though our business forms the core of the homebuilding group, we have historically entered into many transactions with other Shea Family Owned Companies which are not part of the homebuilding group. See “Certain Relationships and Related Party Transactions.” These transactions range from management and administrative-related matters to joint ventures, transfers of assets and financial guarantees and other credit support arrangements. We are currently party to many such affiliate transactions, not all of which are memorialized in formal written agreements. In the future, we will continue to be party to many of the affiliate transactions currently in existence, and it is likely that we will enter into new affiliate transactions.

The homebuilding group of the Shea Family Owned Companies, which is operated largely through us, has only recently been operated as a stand-alone business without credit support from the other Shea Family Owned Companies. If we are unable to continue to operate without such credit support, it could materially adversely affect our business and results of operations. In addition, though we do not expect to receive new credit support from other Shea Family Owned Companies in the future, we will still depend on our affiliates to provide us with certain management and administrative services. If such affiliates become unable to provide us with such services, we could incur significant additional costs to obtain such services through other means.

One of our affiliates, JFSCI, provides us with centralized accounting and cash management services. See “Certain Relationships and Related Party Transactions—Cash Management and Treasury Services.” As part of this centralized accounting and cash management function, SHLP and its affiliates engage in intercompany transactions and fund transfers to properly allocate and account for their portion of shared services. The resultant accounts receivables and payables from these transfers are paid monthly. In addition, SHI has a note receivable from JFSCI (the “Intercompany Debt Balance”), which bears interest at 4%, is payable in equal quarterly installments and due May 15, 2019, and has an outstanding balance at June 30, 2011 of $31.5 million. JFSCI’s inability to honor its obligation with respect to the Intercompany Debt Balance could have a material adverse effect on our financial condition, results of operations and capital resources.

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Although the indenture governing the notes prohibits us from entering into certain affiliate transactions in the future unless they are entered into on an arm’s-length basis, this prohibition is subject to many exceptions and limitations, and as a result, it may be difficult to monitor our compliance with this covenant. See “Description of the Notes—Limitations on Transactions with Affiliates.” In particular, with respect to transactions involving the transfer of real property, we will only be required to obtain third-party independent estimates of the value of such real property when the transaction involves consideration in excess of $10.0 million. With respect to all other affiliate transactions, we will only be required to obtain an independent third-party fairness opinion in connection with transactions involving consideration in excess of $5.0 million.

Finally, though the current intention with respect to the Shea Family Owned Companies is to create three stand-alone businesses that do not provide credit support to one another, it is possible that the homebuilding group would be adversely affected by future financial and other difficulties arising with respect to either the heavy construction group or the commercial property group. For example, if any of the Shea Family Owned Companies that are not a part of the homebuilding group require financial support, it is likely that the attention and financial resources of the Shea family members could be diverted away from us and towards the business in need of additional support. Moreover, in the event that any of the Shea Family Owned Companies becomes subject to a bankruptcy, liquidation or similar proceeding, such proceeding could have a substantial effect on our business because of the extensive nature of the transactions among the Shea Family Owned Companies. It is possible that, among other consequences:

• any outstanding guarantee by us of indebtedness or other obligations of such Shea Family Owned Company could be called up, which would affect our financial condition and liquidity;

• our receivable from JFSCI and the Intercompany Debt Balance could become uncollectible, which could have a material adverse effect on our financial condition and liquidity;

• any on-going affiliate transactions could be terminated, resulting in our inability to access needed services;

• prior affiliate transactions could be examined and set aside, resulting in our liability to the bankruptcy or liquidation estate; and

• such Shea Family Owned Company could be closed or sold to an unrelated buyer, resulting in a loss of any synergies from which we currently benefit as a member of the Shea Family Owned Companies.

The families and family trusts that own our equity interests may have interests that differ from yours.

Entities directly or indirectly owned by the Shea family beneficially own substantially all of the equity interests in SHLP. As a result, members of the Shea family have the ability to control SHLP and, except as otherwise provided by law or our organizational documents, to approve or disapprove matters that may be submitted to a vote of SHLP’s limited partners. All of our directors are members of the Shea family or employees of other Shea Family Owned Companies. We have been advised that Shea family members do not currently plan to appoint any nonaffiliated or independent directors.

Our ownership group and their affiliates operate businesses using the Shea Homes brand that derive revenue from homebuilding and land development, including Shea Homes North Carolina, which are not owned by SHLP. We do not receive any brand licensing or sales revenue from these businesses, although in certain circumstances we provide them with management and administrative services. Certain of these affiliated entities have also engaged, and will in the future continue to engage, in transactions with us. Shea Mortgage derives revenue from loan fees paid by our customers. Shea Properties develops commercial properties that are sometimes built on land purchased from us, and we develop properties on land purchased from Shea Properties. See “Certain Relationships and Related Party Transactions” for a description of such transactions. In addition, we may enter into other agreements with affiliates of this group in the future. The Shea family members comprising our ownership group are not restricted from engaging in homebuilding or land development activities through entities unrelated to us.

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The interests of our limited partners and of the owners of J.F. Shea Construction Management Inc., our ultimate general partner, could conflict with your interests. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our equity holders might conflict with your interests as a note holder. In addition, our equity holders may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to you as a holder of the notes. Furthermore, our equity holders currently own and may in the future own businesses, which may operate under the Shea Homes brand, that directly compete with our business. In addition, although the indenture governing the notes contains a covenant limiting transactions with affiliates, this covenant has a number of significant exceptions and, in any case, does not prohibit transactions with affiliates but only requires that they be on arm’s-length terms. None of our equity investors has any obligation to provide us with any additional debt or equity financing.

We are dependent on the services of our senior management team and certain of our key employees, and loss of their services could hurt our business.

We believe our senior management’s experience in the homebuilding industry and tenure with our company are competitive strengths, and our future success depends upon our ability to retain these executives. In addition, we believe our ability to attract, train, assimilate and retain new skilled personnel is important to the success of our business. If we are unable to retain our senior management team and certain of our key employees, particularly our lead personnel in our various markets, as well as our senior corporate officers, or attract, train, assimilate or retain other skilled personnel in the future, it could hinder the execution of our business strategy. Competition for qualified personnel in all of our operating markets is intense, and it could be difficult for us to find experienced personnel to replace our current employees, many of whom have significant homebuilding experience. Furthermore, a significant increase in the number of our active communities would necessitate the hiring of a significant number of additional field and sales personnel, who are in short supply in our markets.

We continue to consider growth or expansion of our operations, which could have a material adverse effect on our cash flows or profitability.

We continue to consider opportunities for growth, primarily within our existing markets, but also in new markets. Additional growth of our business, either through increased land purchases or the development of larger projects, may have a material adverse effect on our cash flows or profitability. Any expansion of our business into new markets could divert the attention of senior management from our existing business and could fail due to our relative lack of experience in those markets. In addition, while we do not currently intend to acquire homebuilding operations from third parties, opportunities may arise in the future, and any acquisition could be difficult to integrate with our operations and could require us to assume unanticipated liabilities or expenses.

Government regulations could increase the cost and limit the availability of our development and homebuilding projects and adversely affect our business or financial results.

We are subject to extensive and complex regulations that affect land development and home construction, including zoning, density restrictions, building design and building standards. These regulations often provide broad discretion to the administering governmental authorities as to the conditions we must meet prior to being approved, if approved at all. We are subject to determinations by these authorities as to the adequacy of water and sewage facilities, roads and other local services. New housing developments may also be subject to various assessments for schools, parks, streets and other public improvements. In addition, in many markets, government authorities have implemented no growth or growth control initiatives, often a result of local grass-roots lobbying efforts. Furthermore, restrictions on immigration can create a shortage of skilled labor. Any of these regulatory issues can limit or delay home construction and increase operating costs.

We are also subject to various local, state and federal laws and regulations concerning protection of health, safety and the environment. These matters may result in delays, may cause us to incur substantial compliance,

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remediation, mitigation and other costs or subject us to costs from fines, penalties and related litigation. These laws and regulations can also prohibit or severely restrict development and homebuilding activity in environmentally sensitive areas.

We may incur additional operating expenses or delays due to compliance requirements or fines, penalties and remediation costs pertaining to environmental regulations within our markets.

We are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning land use and the protection of health and the environment; including those governing the discharge of pollutants to water and air, the handling of hazardous materials and the cleanup of contaminated sites. The particular impact and requirements of environmental laws that apply to any given community vary greatly according to the community site, the site’s environmental conditions and the present and former use of the site. We expect that increasingly stringent requirements will be imposed on homebuilders in the future. Environmental laws may result in delays, cause us to implement time consuming and expensive compliance programs and prohibit or severely restrict development in certain environmentally sensitive regions or areas. Environmental regulations can also have an adverse impact on the availability and price of certain raw materials, such as lumber. Furthermore, we could incur substantial costs, including cleanup costs, fines, penalties and other sanctions and damages from third-party claims for property damage or personal injury, as a result of our failure to comply with, or liabilities under, applicable environmental laws and regulations. In addition, we are subject to third-party challenges under environmental laws and regulations to the permits and other approvals required for our projects and operations.

Changes in governmental regulation of our financial services operations could adversely affect our business and financial results.

We assist our customers with finding homeowners’ insurance through Shea Insurance Services, a wholly-owned subsidiary of SHLP. Through Shea Mortgage, a related entity within the Shea Family Owned Companies but not a subsidiary of SHLP or consolidated in its financial statements, we are also able to arrange mortgage origination options to our customers, helping us to ensure that our customers secure financing for their purchases.

These financial services operations are subject to numerous federal, state and local laws and regulations. There have been numerous proposed changes in these regulations as a result of the housing downturn. For example, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R.4173) (the “Dodd-Frank Act”) was signed into law. The Dodd-Frank Act will significantly impact regulation of the financial services industry, including creating new standards related to regulatory oversight of systematically important financial companies, derivatives transactions, asset-backed securitization, mortgage underwriting and consumer financial protection. Among other things, this legislation provides for a number of new requirements relating to residential mortgage lending practices, many of which are to be developed further by implementing rules. These include, among others, minimum standards for mortgages and lender practices in making mortgages, limitations on certain fees, retention of credit risk, prohibition of certain tying arrangements and remedies for borrowers in foreclosure proceedings. The effect of such provisions on our financial services business will depend on the rules that are ultimately enacted. In addition, we cannot predict what similar changes to, or new enactments of, statutes and regulations pertinent to our financial services operations will occur in the future. Any such changes or new enactments could have a material adverse effect on our financial condition and results of operations.

We could be adversely affected by negative changes in our credit ratings.

Our ability to access capital on favorable terms is a key factor in our ability to service our indebtedness to cover our operating expenses and to fund our other liquidity needs. Downgrades to our credit ratings and negative changes to the outlook for such credit ratings have in the past required and may in the future require significant management time and effort to address. Such changes have in the past made it difficult and costly for us to access debt capital and engage in other ordinary course financing transactions, including the provision of credit support to community infrastructure financing transactions relating to our new developments. Any future adverse action by any of the principal credit agencies may exacerbate these difficulties.

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Risk Factors Related to the Exchange Offer

We cannot assure you that an active trading market for the exchange notes will exist if you desire to sell the exchange notes.

There is no existing public market for the outstanding notes or the exchange notes. We do not intend to have the exchange notes listed on a national securities exchange or to arrange for quotation on any automated dealer quotation systems. Therefore, we cannot assure you as to the development or liquidity of any trading market for the exchange notes. The liquidity of any market for the exchange notes will depend on a number of factors, including:

• the number of holders of exchange notes;

• our operating performance and financial condition;

• the market for similar securities;

• the interest of securities dealers in making a market in the exchange notes; and

• prevailing interest rates.

Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market, if any, for the exchange notes may face similar disruptions that may adversely affect the prices at which you could sell your exchange notes. Therefore, you may not be able to sell your exchange notes at a particular time and the price that you receive when you sell may not be favorable.

You may have difficulty selling any outstanding notes that you do not exchange.

If you do not exchange your outstanding notes for exchange notes in the exchange offer, you will continue to hold outstanding notes subject to restrictions on their transfer. Those transfer restrictions are described in the indenture governing the outstanding notes and in the legend contained on the outstanding notes, and arose because we originally issued the outstanding notes under an exemption from the registration requirements of the Securities Act.

In general, you may offer or sell your outstanding notes only if they are registered under the Securities Act and applicable state securities laws, or if they are offered and sold under an exemption from those requirements. We do not currently intend to register the outstanding notes under the Securities Act or any state securities laws. If a substantial amount of the outstanding notes is exchanged for a like amount of the exchange notes issued in the exchange offer, the liquidity of your outstanding notes could be adversely affected. See “The Exchange Offer—Consequences of Failure to Exchange Outstanding Notes” for a discussion of additional consequences of failing to exchange your outstanding notes.

Risks Relating to the Notes and the Guarantees

Our substantial debt could adversely affect our operations and financial condition.

We have a significant amount of debt. At June 30, 2011, the total principal amount of our debt was $752.5 million. In addition, we have a substantial amount of contingent liabilities which could affect our business. See “—Risks Relating to Us and Our Business—We have a significant number of contingent liabilities, and if any such liabilities are called upon, it could have a material adverse effect on our liquidity and results of operations.”

Our substantial debt and contingent liabilities could have important consequences for the holders of the notes, including:

• making it more difficult for us to satisfy our obligations with respect to the notes;

• increasing our vulnerability to adverse economic or industry conditions;

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• limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is limited as is now the case;

• requiring a substantial portion of our cash flows from operations for the payment of interest on our debt and reducing our ability to use our cash flows to fund working capital, capital expenditures, acquisitions and general corporate requirements;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

• placing us at a competitive disadvantage to less leveraged competitors.

We may incur additional indebtedness, which indebtedness might rank equal to the notes or the guarantees thereof.

Despite our current level of indebtedness, we and our subsidiaries may be able to incur significant additional indebtedness, including secured indebtedness, in the future, including under our letter of credit facility, which is secured on a pari passu basis with the notes but will have the benefit of payment priority upon enforcement against the collateral. Although the indenture governing the notes contains restrictions on our and our subsidiaries’ ability to incur additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and, under certain circumstances, the indebtedness incurred in compliance with such restrictions could be substantial and certain of this indebtedness may be secured by the same collateral securing the notes, and the respective guarantees thereof. If new indebtedness is added to our and our subsidiaries’ current debt levels, the related risks that we and the Guarantors face would be increased, and we may not be able to meet all our debt obligations, including repayment of the notes, in whole or in part. If we incur any additional debt that is secured on an equal and ratable basis with the notes or the guarantees, the holders of that debt will be entitled to share ratably with the holders of the notes in any proceeds distributed in connection with any enforcement against the collateral or an insolvency, liquidation, reorganization, dissolution or other winding-up of the applicable Issuer or Guarantor. This may have the effect of reducing the amount of proceeds paid to holders of the notes.

The indenture governing the notes and our letter of credit facility do, and agreements governing our future indebtedness may, contain covenants that could adversely affect our ability to operate our business, as well as significantly affect our liquidity, and therefore could adversely affect our results of operations.

The indenture governing the notes and our letter of credit facility contain covenants that restrict certain of our activities. These covenants restrict, among other things, our ability to:

• pay dividends or distributions, repurchase equity or prepay subordinated debt;

• incur additional debt or issue certain equity interests;

• incur liens on assets;

• merge or consolidate with another company or sell all or substantially all of our assets;

• enter into transactions with affiliates;

• make certain investments;

• create certain restrictions on the ability of restricted subsidiaries to transfer assets;

• guarantee certain debt; and

• enter into sale and lease-back transactions.

The agreements we enter into governing our future indebtedness may impose similar or other restrictions. The restrictions contained in the indenture governing the notes and in any agreements governing future indebtedness may limit our financial flexibility, prohibit or limit any contemplated strategic initiatives, limit our ability to grow and increase our revenues or restrict our ability to respond to competitive changes.

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We may be unable to purchase the notes upon a change of control.

We may not have the ability to raise the funds necessary to fulfill our obligations under the notes following a “change of control” as defined in the indenture governing the notes. Under the indenture, upon the occurrence of a defined change of control, we will be required to offer to repurchase all outstanding notes at 101% of the principal amount thereof plus, without duplication, accrued and unpaid interest and special interest, if any, to the date of repurchase. However, we may not have sufficient funds at the time of the change of control to make the required repurchase of the notes. Our failure to make or complete a change of control offer would place us in default under the indenture governing the notes.

In addition, the definition of change of control in the indenture governing the notes includes the sale of “all or substantially all” of our assets. There is no precise established definition of the phrase “substantially all” under New York law, the law which governs the indenture. Accordingly, upon a sale of less than all of our assets, the ability of a holder of notes to require us to repurchase such notes may be uncertain.

We could enter into significant transactions that would not constitute a change of control requiring us to repurchase the notes, but that could adversely affect our risk profile.

We could, in the future, enter into certain transactions, including certain recapitalizations, that would not result in a change of control, but would increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings. Restrictions on our ability to incur additional indebtedness are contained in the covenants described under “Description of the Notes—Certain Covenants—Limitations on Indebtedness” and “Description of the Notes—Certain Covenants—Limitations on Liens.” Such restrictions in the indenture governing the notes can be waived with the consent of the holders of a majority in principal amount of the notes then outstanding. Except for the limitations contained in such covenants, however, the indenture does not contain any covenants or provisions that may afford holders of the notes protection in the event of a highly leveraged transaction.

The guarantees and security interests provided by the Guarantors may not be enforceable and, under specific circumstances, federal and state courts may void the guarantees and security interests and require noteholders to return payments received from the Guarantors.

Although the notes will be guaranteed by the Guarantors and secured by collateral provided by each Guarantor, a court could void or subordinate any Guarantor’s guarantee, or the security interest provided by any Guarantor, under federal or state fraudulent conveyance laws if existing or future creditors of any such Guarantor were successful in establishing that:

• such guarantee or security interest was incurred with fraudulent intent; or

• such Guarantor did not receive fair consideration or reasonably equivalent value for issuing its guarantee or providing collateral; and either:

• such Guarantor was insolvent at the time of the guarantee or creation of the security interest;

• such Guarantor was rendered insolvent by reason of such guarantee or the creation of such security interest;

• such Guarantor was engaged in a business or transaction or about to engage in such business or transaction for which its assets constituted unreasonably small capital to carry on its business; or

• such Guarantor intended to incur, or believed that it would incur, debt beyond its ability to pay such debt as it matured (as all of the foregoing terms may be defined in or interpreted under the relevant fraudulent transfer or conveyance statutes).

In such event, any payment by a Guarantor pursuant to its guarantee or security interest could be voided and required to be returned to the Guarantor, or to a fund for the benefit of the Guarantor’s creditors. The measures of

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insolvency for purposes of determining whether a fraudulent conveyance occurred would vary depending upon the laws of the relevant jurisdiction and upon the valuation assumptions and methodology applied by the court. Generally, however, a company would be considered insolvent for purposes of the foregoing if:

• the sum of the company’s debts, including contingent, unliquidated and unmatured liabilities, is greater than such company’s property at fair valuation;

• the present fair saleable value of the company’s assets is less than the amount that will be required to pay the probable liability on its existing debts, including contingent liabilities, as they become absolute and matured; or

• the company could not pay its debts or contingent liabilities as they become due.

We have no assurance as to what standard a court would use to determine whether or not a Guarantor would be solvent at the relevant time, or regardless of the standard used, that the guarantees or security interests would not be voided or subordinated to any Guarantor’s other liabilities. If such a case were to occur, the applicable guarantee or security interest could be subject to the claim that, since such guarantee or security interest was incurred for the benefit of the Issuers and only indirectly for the benefit of the Guarantor, the obligations of such Guarantor were incurred for less than fair consideration.

Any guarantee of the notes will contain a provision designed to limit the Guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer. However, there is some doubt as to whether this provision is effective to protect such guarantee, or a security interest provided by such Guarantor, from being voided under fraudulent transfer law. In a recent Florida bankruptcy case, a similar provision was found to be ineffective to protect the guarantors.

If a Guarantor’s guarantee or security interest is voided as a fraudulent conveyance or found to be unenforceable for any other reason, holders of the notes will not have a claim against such Guarantor and will only be a creditor of the Issuers and the remaining Guarantors, if any, to the extent the guarantee and security interest of those Guarantors are not set aside or found to be unenforceable. The notes then would in effect be structurally subordinated to all liabilities of the Guarantor whose guarantee or security interest was avoided.

Because each Guarantor’s liability under its guarantee may be reduced to zero, avoided or released under certain circumstances, you may not receive any payments from some or all of the Guarantors.

You will have the benefit of the guarantees of the Guarantors. However, the guarantee by each Guarantor is limited to the maximum amount that such Guarantor is permitted to guarantee under applicable law. As a result, a Guarantor’s liability under its guarantee could be reduced to zero, depending upon the amount of other obligations of such Guarantor. Further, under the circumstances discussed more fully above, a court under federal or state fraudulent conveyance and transfer statutes could avoid the obligations under a guarantee or further subordinate it to all other obligations of the Guarantor. In addition, you will lose the benefit of a particular guarantee if it is released under the circumstances described under “Description of the Notes—The Guarantees.”

The notes are joint and several obligations of a California limited partnership and a Delaware corporation, the latter of which has no independent operations or subsidiaries and generates no cashflow to service the notes.

Shea Homes Funding Corp. is a finance company with no operations of its own and no material assets. As a result of the foregoing, Shea Homes Funding Corp. has no cash flows and will provide no credit support for the notes.

Your right to receive payments under the notes is junior to the existing and future indebtedness and other liabilities of our subsidiaries that are not Guarantors and of our joint ventures.

The notes will not be guaranteed by all of our subsidiaries or any of our joint ventures (other than Vistancia Construction LLC and Vistancia Marketing LLC), and under certain circumstances, subsidiaries and joint

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ventures guaranteeing the notes may be released from their guarantees and the security interests securing those guarantees without the consent of holders of the notes. See “Description of the Notes—The Guarantees.” In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries or joint ventures, creditors of such subsidiaries or joint ventures, including any trade creditors, joint venture partners, debt holders or any preferred equity holders, will be entitled to payment of their claims from the assets of those subsidiaries or joint ventures before any such assets are made available for distribution to us, except to the extent that we may also have a claim as a creditor. Thus, the notes will be effectively junior to the claims of creditors of our non-guarantor consolidated subsidiaries and of our joint ventures. Our non-guarantor subsidiaries are permitted to incur substantial additional liabilities in the future under the terms of the indenture and our joint ventures will not be restricted by the covenants contained in the indenture.

Your right to receive payments under the notes is junior to our and the Guarantors’ existing and future secured indebtedness and other secured obligations to the extent that the assets that secure such indebtedness and other obligations do not secure the notes.

The notes and the guarantees will be effectively subordinated to any existing and future obligations of either of the Issuers or any Guarantor that is secured with assets that do not constitute collateral to the extent of the value of such assets securing such indebtedness. If we file for bankruptcy, liquidate or dissolve, our assets that secure indebtedness other than the notes or that secure any other obligation would be available to pay amounts owing with respect to the notes and the guarantees only after we pay all amounts owed to such other secured indebtedness or other obligation. Accordingly, we may not have sufficient assets remaining to make any or all payments in respect of the notes.

The collateral may not be valuable enough to satisfy all the obligations secured by such collateral and, in certain circumstances, can be released without the consent of holders of the notes.

The notes and guarantees are secured by substantially all the assets of the Issuers and the Guarantors, including stock of certain of their subsidiaries (subject to certain limitations), but specifically excluding certain types of assets. See “Description of the Notes—Security.” The indenture governing the notes allows us to incur additional secured debt or other secured liabilities, including under certain circumstances debt or other liabilities that share in the collateral securing the notes and the guarantees, including debt under our letter of credit facility, which are secured on a pari passu basis with the notes but will have the benefit of payment priority upon enforcement against the collateral. See “Description of the Notes—Certain Covenants—Limitations on Liens.”

There is no assurance that the fair market value of the collateral is equal to our obligations with respect to the notes. In addition, the fair market value of the collateral is subject to fluctuations based on factors that include, among others, general economic conditions and similar factors. The amount to be received upon a sale of the collateral would be dependent on numerous factors, including, but not limited to, the actual fair market value of the collateral at such time, the timing and the manner of the sale and the availability of buyers. Most of the collateral is illiquid and may have no readily ascertainable market value. Likewise, we cannot assure holders of the notes that the collateral will be saleable or, if saleable, that there will not be substantial delays in its liquidation. Accordingly, in the event of a foreclosure, liquidation, bankruptcy or similar proceeding, the collateral may not be sold in a timely or orderly manner, and the proceeds from any sale or liquidation of the collateral may not be sufficient to satisfy the Issuers’ and the Guarantors’ obligations under the notes, the guarantees, our letter of credit facility and any future debt or other liabilities that is secured by the collateral.

If the value of the collateral, or the proceeds of any sale of the collateral, are not sufficient to repay all amounts due on the notes, the holders of the notes (to the extent not repaid from the proceeds of the sale of the collateral) would have only a senior unsecured, unsubordinated claim against the Issuers’ and the Guarantors’ remaining assets. In addition, as described under “Description of the Notes—Release of Liens,” the security interests can be released without the consent of holders of the notes in certain circumstances.

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Also, certain permitted liens on the collateral securing the notes may allow the holder of such lien to exercise rights and remedies with respect to the collateral subject to such lien that could adversely affect the value of such collateral and the ability of the trustee to realize or foreclose upon such collateral. See “Description of the Notes—Certain Covenants—Limitations on Liens.”

In addition, some of the real property pledged as collateral for the notes is currently unentitled. The future value of this real property will depend on our ability to obtain entitlements in relation to it. To the extent that we are unable to obtain such entitlements, the value of such real property may be adversely affected. Also, in some of our markets, land sellers require that we enter into agreements to make future payments to such sellers after a specified period of time following such acquisition or at the time of the subsequent sale of the subject real property, which future payments (1) are based on one or more of the subsequent sale price of the subject real property, the allocated costs of developing the subject real property and an amount specified at the time of such acquisition and (2) may include fixed minimum amounts in respect of such arrangements and true-up payments. Our obligations to make these supplemental payments are secured by a first priority lien on the purchased land that will remain senior to any lien granted to secure the notes.

Certain of our housing developments are controlled by joint ventures and non-wholly owned subsidiaries in which we are a member. The properties within these housing developments may or may not be secured by separate loan facilities. We generally hold a minority interest in these joint ventures and are unable to pledge these properties as collateral. Therefore, the homebuilding and land development assets within these joint ventures are not pledged as collateral for the notes.

Other claimants may have security interests in the collateral that have priority to the security interests for the benefit of the noteholders.

Although the notes and the guarantees are secured by all the assets of the Issuers and the Guarantors other than the excluded assets described under “Description of the Notes—Security—General,” the security interest in the collateral for the benefit of the noteholders are subject to certain priority claims, including the following:

• pursuant to the Intercreditor Agreement entered into in connection with our letter of credit facility, any proceeds realized upon enforcement by the collateral agent of its rights under the various security documents and available to pay claims of the parties subject to the Intercreditor Agreement will be applied first to discharge obligations with respect to our letter of credit facility (or any replacement facility) before such proceeds will be applied to pay the claims of noteholders (or any other pari passu debt holders);

• although the indenture governing the notes contains a covenant limiting our ability to create additional liens with respect to the collateral securing the notes, this covenant has a number of exceptions and permits certain liens, some of which will have a priority claim to some of the collateral either as a matter of law or as a matter of contract, see “Description of the Notes—Definitions of certain terms used in the Indenture—Permitted Liens;” and

• included in the type of liens permitted by the indenture are Permitted Priority Liens (as defined in the indenture) which require the collateral agent, pursuant to the terms of the Intercreditor Agreement, to expressly subordinate the security interest in favor of the noteholders to certain kinds of liens that we grant in the ordinary course of our homebuilding business. See “Description of the Notes—Security— Intercreditor Agreement.”

To the extent any person has a priority interest in the collateral securing the notes and the guarantees, the proceeds realized upon enforcement with respect of such collateral will be available to satisfy our liability to such person before any such proceeds are available to satisfy the claims of the noteholders or any other holder of a pari passu security interest in such collateral.

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We will, in most cases, have control over the collateral, and the sale or pledge of particular assets by us could reduce the pool of assets securing the notes and the guarantees.

The security documents related to the notes generally allow us to remain in possession of, retain exclusive control over, freely operate, dispose of and collect, invest and dispose of any income from, the collateral securing the notes and the guarantees thereof. Therefore, the pool of assets securing the notes and the guarantees and any other debt similarly secured will change from time to time, and its fair market value may decrease from its value on the date the notes were originally issued.

The collateral is subject to casualty risk.

Even if we maintain insurance, there are certain losses with respect to the collateral that may be either uninsurable or not economically insurable, in whole or part. Insurance proceeds may not compensate us fully for our losses. If there is a complete or partial loss of any collateral, the insurance proceeds may not be sufficient to satisfy all of our obligations, including the notes and the guarantees.

Rights of holders of the notes in the collateral may be adversely affected by the failure to perfect security interests in the collateral.

Applicable law requires that a security interest in certain tangible and intangible assets can only be properly perfected and its priority retained through certain actions undertaken by the secured party. The liens on the collateral securing the notes and the guarantees may not be perfected with respect to the claims of the notes and the guarantees if the collateral agent is not able to take the actions necessary to perfect any of these liens on or prior to the date of the indenture governing the notes.

The Issuers and the Guarantors have limited obligations to perfect the security interest for the benefit of the holders of the notes in specified collateral. There can be no assurance that the trustee or the collateral agent for the notes will monitor, or that we will inform such trustee or collateral agent of, the future acquisition of assets and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. Neither the trustee nor the collateral agent for the notes has an obligation to monitor the acquisition of additional assets or rights that constitute collateral or the perfection of any security interest. Such failure to monitor may result in the loss of the security interest in the collateral or the priority of the security interest in favor of the notes and the guarantees against third parties.

The use of a collateral agent and the existence of other pari-passu indebtedness may diminish the rights that a secured creditor would otherwise have with respect to the collateral. Your right to take enforcement action with respect to the liens securing the notes is limited in certain circumstances.

The terms of the intercreditor agreement contain provisions restricting the rights of the holders of the notes to take enforcement action with respect to the liens securing such notes in certain circumstances. These provisions will generally provide that the applicable authorized representative (which may be a party other than the trustee for the holders of the notes) and the agent for the lenders under our letter of credit facility must generally engage in certain consultative processes before enforcing the liens securing the notes. In addition, disagreements between the applicable authorized representative and the agent for the lenders under our letter of credit facility could limit or delay the ability of the collateral agent to enforce the liens securing the notes. Furthermore, the collateral agent may fail to act in a timely manner after receiving instructions from the agent for the lenders under our letter of credit facility and the applicable authorized representative. Delays in the enforcement could decrease or eliminate recovery values.

In the event of a disagreement between the agent for the lenders under our letter of credit facility and the applicable authorized representative, the intercreditor agreement provides that the agent for the lenders under our letter of credit facility will ultimately have the ability to direct the collateral agent to act (or refrain from acting) with respect to the collateral. The collateral agent may be instructed to take actions that holders of the notes

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disagree with or may fail to take actions that the holders of the notes wish to pursue. The holders of the notes will not have any independent power to enforce, or have recourse to, the intercreditor agreement, or to exercise any rights or powers arising under the intercreditor agreement, except through the trustee for the holders of the notes, to the extent the trustee is the applicable authorized representative. By accepting a note, you will be deemed to have agreed to these restrictions. As a result of these restrictions, holders of the notes have limited remedies and recourse against the Issuers and the Guarantors in the event of a default. See “Description of the Notes—Intercreditor Agreement.”

In addition, the collateral agent may be subject to conflicts of interest due to its role as bailee or agent on behalf of competing classes of creditors. Moreover, the holders of the notes have limited rights against the collateral agent.

The “one action” rule in California may limit the ability of the collateral agent to foreclose on California real property that has been mortgaged to secure the notes and may provide certain defenses to the enforcement of the guarantees against the Guarantors.

A substantial portion of the collateral securing the notes consists of real property located in California. California law prohibits more than one “action” to enforce a mortgage obligation, and some courts have construed the term “action” broadly to include both judicial and non-judicial actions (i.e. non-judicial foreclosure). California also has anti-deficiency laws, which in combination with the “one action” laws, require that creditors with debt secured by real property must first seek to exhaust the secured collateral before the creditor may seek a judgment on the deficiency (if permitted at all under the anti-deficiency statutes). Further, the application of the California one-action rule may impair or limit the ability of the collateral agent to enforce its remedies on real property located outside of California prior to enforcing its remedies against the California real property in case such enforcement is perceived as an “action” to enforce the mortgage obligation under California law. If a court determines that the collateral agent has taken its “action” to enforce the mortgage obligation, the collateral agent may inadvertently waive its security interest in the property. Also, the application of the California one-action rule may result in certain defenses to the enforcement of a guarantee of an obligation if that obligation is secured by real property located in California. As a result, the collateral agent’s ability to foreclose upon any California real property that has been mortgaged to secure the notes may be significantly delayed and otherwise limited by the application of California law.

There are circumstances other than repayment or discharge of the notes under which the collateral securing the notes and the guarantees will be released without the consent of holders of the notes or the consent of the trustee under the indenture governing the notes.

The security interest and liens for the benefit of holders of the notes may, in certain circumstances, be released without the consent of such holders or the trustee under the indenture governing the notes. The security documents related to the notes will generally provide for a release of all liens on any asset constituting collateral that is disposed of in compliance with the provisions of the indenture governing the notes.

Under the indenture governing the notes and the applicable security documents, all or a portion of the collateral securing the notes will be released or holders of the notes will no longer be entitled to the benefit of the lien of the security documents on affected collateral:

• upon satisfaction of all of the conditions set forth under “Description of the Notes—Discharge and Defeasance of Indenture”;

• upon a sale, transfer or other disposal of such collateral in a transaction not prohibited under the indenture governing the notes; and

• with respect to collateral held by a Guarantor, upon release of such Guarantor from its guarantee in accordance with the terms of the indenture governing the notices.

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The indenture governing the notes will also permit the Issuers to designate one or more subsidiaries that are Guarantors as unrestricted subsidiaries. If the Issuers designate a Guarantor as an unrestricted subsidiary, holders of the notes will no longer be entitled to the benefit of the lien of the security documents on any collateral owned by such subsidiary, and the guarantee of such subsidiary will be released. Designation of an unrestricted subsidiary would effectively reduce the aggregate value of the collateral securing the notes and the guarantees to the extent of the value of the assets of the unrestricted subsidiary that constituted collateral securing the notes immediately prior to such designation. In addition, following such designation and release of the guarantee, the creditors of the unrestricted subsidiary would have structurally senior claims on the assets of such unrestricted subsidiary.

Shares of stock and other equity interests or other securities of any of the Issuers’ subsidiaries that are pledged to secure the exchange notes or the guarantees will no longer constitute collateral for the benefit of the exchange notes and the guarantees if the pledge of such stock and other equity interests or other securities would require the filing with the Commission of separate financial statements for that subsidiary.

The notes and the guarantees are secured by a pledge of the stock, or in some circumstances other securities, of certain subsidiaries of the Issuers. Under Rule 3-16 of Regulation S-X under the Securities Act as currently in effect, if the par value, book value as carried by us or market value (whichever is greatest) of the stock or other securities of a subsidiary pledged as part of the collateral is greater than or equal to 20% of the aggregate principal amount of the notes then outstanding, we would be required to provide separate financial statements of that subsidiary to the Commission if the notes were registered under the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Upon the effectiveness of the registration statement to be filed with the SEC on Form S-4, of which this prospectus forms a part, the exchange notes will become registered under the Securities Act, and, under the security documents, the stock and other securities of any subsidiary of the Issuers that had been pledged as collateral to secure the exchange notes or the guarantees will be excluded from the collateral securing the exchange notes to the extent liens thereon would trigger the requirement to file separate financial statements of that subsidiary with the Commission under Rule 3-16 of Regulation S-X (as in effect from time to time). See “Description of the Notes—Security.” As a result, holders of the notes could lose a portion of the benefit of the security interest in the stock or other securities of those subsidiaries although other creditors having the benefit of the same collateral would continue to benefit from a security interest in that portion of the stock or other securities.

In the event of a bankruptcy of an Issuer or any of the Guarantors, holders of the notes may be deemed to have an unsecured claim to the extent that obligations in respect of the notes exceed the fair market value of the collateral securing the notes.

In any bankruptcy case under Title 11 of the United States Code, as amended (the “Bankruptcy Code”), with respect to either Issuer or any of the Guarantors, it is possible that the bankruptcy trustee, the debtor-in-possession or competing creditors will assert that the value of the collateral with respect to the notes on the date of such valuation is less than the then-current principal amount of the notes and all other obligations with equal and ratable security interests in the collateral. Upon a finding by the bankruptcy court that the notes are under-collateralized, the claims in the bankruptcy case with respect to the notes would be bifurcated between a secured claim and an unsecured claim, and the unsecured claim would not be entitled to the benefits of security in the collateral. Other consequences of a finding of under-collateralization would be, among other things, a lack of entitlement on the part of the notes to receive post-petition interest and a lack of entitlement on the part of the unsecured portion of the notes to receive “adequate protection” under the Bankruptcy Code. In addition, if any payments of post-petition interest had been made prior to the time of such a finding of under-collateralization, those payments could be recharacterized by the bankruptcy court as a reduction of the principal amount of the secured claim with respect to the notes.

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Bankruptcy laws may limit the ability of holders of the notes to realize value from the collateral.

The right of the collateral agent to repossess and dispose of the collateral upon the occurrence of an event of default under the indenture governing the notes is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy case were to be commenced by or against either Issuer or any of the Guarantors before the collateral agent repossessed and disposed of the collateral. For example, under the Bankruptcy Code, pursuant to the automatic stay imposed upon the bankruptcy filing, a secured creditor is prohibited from repossessing its collateral from a debtor in a bankruptcy case, or from disposing of collateral repossessed from such debtor, or taking other actions to levy against a debtor, without bankruptcy court approval after notice and a hearing. Moreover, the Bankruptcy Code permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” is undefined in the Bankruptcy Code and may vary according to circumstances (and is within the discretion of the bankruptcy court), but it is intended in general to protect the secured creditor’s interest in the collateral from diminishing in value during the pending of the bankruptcy case and may include periodic payments or the granting of additional security, if and at such times as the court in its discretion determines, for any diminution in the value of the collateral as a result of the automatic stay or any use of the collateral by the debtor during the pendency of the bankruptcy case. A bankruptcy court could conclude that the secured creditor’s interest in its collateral is “adequately protected” against any diminution in value during the bankruptcy case without the need of providing any additional adequate protection. Due to the imposition of the automatic stay, the lack of a precise definition of the term “adequate protection” and the broad discretionary powers of a bankruptcy court, it is impossible to predict (i) how long payments under the notes could be delayed, or, if made at all, following commencement of a bankruptcy case, (ii) whether or when the collateral agent could repossess or dispose of the collateral or (iii) whether or to what extent holders of the notes would be compensated for any delay in payment or loss of value of the collateral through the requirement of “adequate protection.”

Any future pledge of collateral or guarantee in favor of the holders of the notes might be voidable in bankruptcy.

Any future pledge of collateral or guarantee in favor of the holders of the notes might be voidable in a bankruptcy case of the pledgor or Guarantor if certain events or circumstances exist or occur, including under the Bankruptcy Code, if the pledgor or Guarantor is insolvent at the time of the pledge or guarantee, the pledge or guarantee enables the holders of the notes to receive more than they would if the pledge or guarantee had not been made and the debtor were liquidated under chapter 7 of the Bankruptcy Code, and a bankruptcy case in respect of the pledgor is commenced within 90 days following the pledge (or one year before commencement of a bankruptcy case if the creditor that benefited from the lien or guarantee is an “insider” under the Bankruptcy Code).

The credit ratings assigned to the notes may not reflect all risks of an investment in the notes.

The credit ratings assigned to the notes reflect the rating agencies’ assessments of our ability to make payments on the notes when due. Consequently, real or anticipated changes in these credit ratings, or to the outlook for such credit ratings, will generally affect the market value of the notes. These credit ratings, however, may not reflect the potential impact of risks related to structure, market or other factors related to the value of the notes.

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RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth information regarding our ratio of earnings to fixed charges for the periods shown. In calculating the ratio of earnings to fixed charges, earnings are calculated as (a) income (loss) before income taxes, excluding income (loss) from joint ventures, plus (b) fixed charges, plus (c) capitalized interest included in cost of sales, plus (d) distributed income of equity investees, minus (e) interest capitalized. Fixed charges are comprised of (a) interest incurred and (b) the portion of rental expense deemed to be representative of an interest factor. For the years ended December 31, 2010, 2009 and 2008 earnings were insufficient to cover fixed charges for each such year by $9.7 million, $350.8 million and $553.9 million, respectively. For the six months ended June 30, 2011, earnings were insufficient to cover fixed charges for the period by $87.0 million.

	Six Months Ended June 30,				Year Ended December 31,
	2011		2010		2010		2009		2008		2007		2006
Ratio of earnings to fixed charges		—		0.5x		—		—		—		—		6.1x

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USE OF PROCEEDS

We will not receive any cash proceeds from the issuance of the exchange notes. In consideration for issuing the exchange notes, we will receive outstanding notes in like original principal amount at maturity. All outstanding notes received in the exchange offer will be cancelled. Because we are exchanging the exchange notes for the outstanding notes, which have substantially identical terms, the issuance of the exchange notes will not result in any increase in our indebtedness. The exchange offer is intended to satisfy our obligations under the registration rights agreement executed in connection with the sale of the outstanding notes.

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CAPITALIZATION

The following sets forth SHLP’s cash and cash equivalents and capitalization at June 30, 2011 and December 31, 2010. You should read this table in conjunction with “Selected Historical Consolidated Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements included elsewhere in this prospectus.

	June 30,              2011			December 31,         2010
	(In millions)
Cash and cash equivalents, including restricted cash and investments	$	204.5	(1)	$	190.4	(2)
Debt:
Senior Secured Notes due May 2019		750.0			—
Secured Facilities		—			805.4	(3)
Other debt		2.5			2.0
Total debt		752.5	(4)(5)		807.4	(5)
Total equity		329.1			432.3
Total capitalization	$	1,081.6		$	1,239.7

(1) Includes $13.2 million of cash of our non-guarantor subsidiaries, including PIC, and the Consolidated Joint Ventures that will not guarantee the notes.

(2) Includes $15.5 million of cash within our non-guarantor subsidiaries, including PIC, and the Consolidated Joint Ventures that will not guarantee the notes.

(3) On November 16, 2010, the Company and JFSCI, as borrowers, executed loan modifications and extensions to their unsecured revolving bank line of credit, private placement debt and term loans, resulting in the effective exchange of such indebtedness for new senior secured notes payable and senior secured subordinated notes payable (the “Secured Facilities”). The amount presented represents the face value of the Secured Facilities and includes $5.0 million principal amount that was forgiven in connection with the retirement of the Secured Facilities.

(4) On May 10, 2011, the Company issued 8.625% senior secured notes in the aggregate principal amount of $750.0 million (the “Secured Notes”) and repaid the outstanding amounts under the Secured Facilities. Principal and interest paid under the Secured Facilities was $779.6 million and $2.5 million, respectively. In connection with the repayment of the Secured Facilities, all then outstanding payable-in-kind interest, $5.0 million of principal amount, and certain fees were waived.

In addition, of $19.1 million of drawn amounts under then outstanding letters of credit, $4.0 million was returned and $15.1 million was repaid by the Company, with $14.5 million of such amount reimbursed by JFSCI for its share of the letters of credit repaid by the Company.

Concurrent with the payoff of the Secured Facilities, an $88.4 million loss on debt extinguishment was recognized in connection with a $65.0 million write-off of Secured Facilities discount, and $23.4 million of prepaid professional and loan fees incurred in connection with the Secured Facilities were written off.

(5) Total debt does not include outstanding letters of credit.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER INFORMATION

The following table sets forth our selected historical consolidated financial data at and for the years ended December 31, 2010, 2009, 2008, 2007 and 2006 and at and for the six month periods ended June 30, 2011 and 2010. The selected historical consolidated financial data at and for the six-month periods ended June 30, 2011 and 2010 are derived from our unaudited consolidated financial statements and related notes included elsewhere in this prospectus. The selected historical consolidated financial data at December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008 are derived from our audited consolidated financial statements and related notes included elsewhere in this prospectus. The selected historical consolidated financial data at December 31, 2008 and at and for the years ended December 31, 2007 and 2006 are derived from our audited consolidated financial statements and related notes not included herein. The following selected historical consolidated financial and other information should be read in conjunction with “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our consolidated financial statements included elsewhere in this prospectus.

	Six Months Ended June 30,						Year Ended December 31,
	2011			2010			2010			2009			2008			2007			2006
	(Dollars in thousands)
Consolidated Statements of Operations:
Revenues	$	188,993		$	298,252		$	639,566		$	611,463		$	1,078,330		$	1,919,393		$	2,877,722
Cost of sales		(168,302	)		(252,631	)		(609,097	)		(986,206	)		(1,317,642	)		(2,174,158	)		(2,102,902	)
Gross margin		20,691			45,621			30,469			(374,743	)		(239,312	)		(254,765	)		774,820
Selling expenses		(19,388	)		(23,302	)		(46,665	)		(48,949	)		(98,537	)		(152,126	)		(167,667	)
General and administrative expenses		(16,488	)		(18,092	)		(32,440	)		(29,459	)		(64,832	)		(79,781	)		(154,790	)
Equity in income (loss) from joint ventures		(495	)		7,069			8,613			(35,089	)		(43,621	)		(27,340	)		5,323
Loss from disposition of joint ventures		—			—			—			—			(167,805	)		—			—
Loss on debt extinguishment		(88,384	)		—			—			—			—			—			—
Interest and other income (expense) net		(5,909	)		(14,312	)		(18,759	)		19,962			(30,421	)		10,404			2,443
Income (loss) before income taxes		(109,973	)		(3,016	)		(58,782	)		(468,278	)		(644,528	)		(503,608	)		460,129
Income tax benefit (expense)		1,017			(1,497	)		3,567			45,218			35,011			(52,474	)		(78,720	)
Net income (loss)		(108,956	)		(4,513	)		(55,215	)		(423,060	)		(609,517	)		(556,082	)		381,409
Less: Net (income) loss attributable to non-controlling interests		(438	)		(6,165	)		(4,874	)		30,717			14,802			8,912			(27,457	)
Net income (loss) attributable to SHLP	$	(109,394	)	$	(10,678	)	$	(60,089	)	$	(392,343	)	$	(594,715	)	$	(547,170	)	$	353,952
Consolidated Balance Sheet Information (at end of period):
Cash and cash equivalents, including restricted cash and investments	$	204,465		$	204,271		$	190,391		$	287,989		$	266,656		$	244,297		$	186,504
Inventory		892,083			903,039			800,029			903,504			1,584,570			2,020,086			2,811,496
Total assets		1,352,851			1,544,048			1,414,886			1,618,760			2,226,115			2,768,600			3,490,430
Total debt		752,520			758,877			730,005			745,017			858,538			685,227			802,499
Total equity		329,136			484,280			432,313			481,206			884,383			1,490,684			1,996,561
Other Consolidated Financial Information:
Interest incurred(1)	$	37,244		$	30,718		$	62,290		$	59,512		$	58,912		$	79,488		$	85,334
Depreciation and amortization		4,489			5,203			11,506			10,367			23,869			20,966			22,236

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	Six Months Ended June 30,				Year Ended December 31,
	2011		2010		2010		2009		2008		2007		2006
	(Dollars in thousands)
Other Consolidated Information:
Home sales orders (units)(2)		756		800		1,316		1,708		2,114		3,275		3,921
Homes closed (units)(3)		455		703		1,489		1,446		2,463		3,672		5,105
Average selling price of homes closed	$	400.7	$	414.4	$	416.0	$	404.3	$	430.5	$	481.1	$	524.2
Backlog at end of year (units)(4)		745		681		406		579		321		665		1,121
Backlog at end of year (sales value)	$	318,471	$	290,177	$	167,319	$	241,458	$	140,917	$	312,942	$	578,900

(1) Interest incurred is interest accrued on debt, whether or not paid and independent of its capitalization treatment. Interest incurred includes debt issuance costs, modification fees and waiver fees when amortized as interest expense or capitalized as interest. Interest incurred is generally capitalized to inventory but is expensed when assets that qualify for interest capitalization do not exceed debt.

(2) Homes sales orders are contracts executed with homebuyers to purchase homes, net of cancellations.

(3) A home is closed when all escrow conditions are met, including delivery of the home title, passage and payment of the sales price and closing costs. Revenue and cost of sales for a home are recognized at date of closing.

(4) Backlog represents homes sold under sales contract but not closed.

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

This exchange offer is being made pursuant to the registration rights agreement we entered into with the initial purchasers of the outstanding notes on May 10, 2011. The summary of the registration rights agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the registration rights agreement. A copy of the registration rights agreement is filed as an exhibit to the registration statement of which this prospectus forms a part. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such exchange notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

Terms of the Exchange Offer; Expiration Time

This prospectus and the accompanying letter of transmittal together constitute the exchange offer. Subject to the terms and conditions in this prospectus and the letter of transmittal, we will accept for exchange outstanding notes that are validly tendered at or before the expiration time and are not validly withdrawn as permitted below. The expiration time for the exchange offer is 5:00 p.m., New York City time, on                     , 2011, or such later date and time to which we, in our sole discretion, extend the exchange offer.

We expressly reserve the right, in our sole discretion:

• to extend the expiration time;

• if any of the conditions set forth below under “—Conditions to the Exchange Offer” has not been satisfied, to terminate the exchange offer and not accept any outstanding notes for exchange; and

• to amend the exchange offer in any manner.

We will give oral or written notice of any extension, delay, non-acceptance, termination or amendment as promptly as practicable by a public announcement, and in the case of an extension, no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration time. In the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the offer period if necessary so that at least five business days remain in the exchange offer following notice of the material change.

During an extension, all outstanding notes previously tendered will remain subject to the exchange offer and may be accepted for exchange by us, upon expiration of the exchange offer, unless validly withdrawn.

Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

How to Tender Outstanding Notes for Exchange

Only a record holder of outstanding notes may tender in the exchange offer. When the holder of outstanding notes tenders and we accept outstanding notes for exchange, a binding agreement between us and the tendering holder is created, subject to the terms and conditions in this prospectus and the accompanying letter of transmittal. Except as set forth below, a holder of outstanding notes who desires to tender outstanding notes for exchange must, at or prior to the expiration time

• cause an agent’s message to be transmitted by The Depository Trust Company (DTC) to the exchange agent at the address set forth below under the heading “—The Exchange Agent,” and the exchange agent must receive, at or prior to the expiration time, a confirmation of the book-entry transfer of the outstanding notes being tendered into the exchange agent’s account at DTC, along with the agent’s message; or

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• if time will not permit the procedures for book-entry transfer to be completed by the expiration time, the holder may effect a tender by complying with the guaranteed delivery procedures described below.

The term “agent’s message” means a message that:

• is transmitted by DTC;

• is received by the exchange agent and forms a part of a book-entry transfer;

• states that DTC has received an express acknowledgement that the tendering holder has received and agrees to be bound by, and makes each of the representations and warranties contained in, the letter of transmittal; and

• states that we may enforce the letter of transmittal against such holder.

By transmitting an agent’s message, you will not be required to deliver a letter of transmittal to the exchange agent. However, you will be bound by the terms of the letter of transmittal just as if you had signed it.

The method of delivery of the outstanding notes, the agent’s message and all other required documents to the exchange agent is at the election and sole risk of the holder. In all cases, you should allow sufficient time to assure timely delivery. No letters of transmittal or outstanding notes should be sent directly to us.

We will determine in our sole discretion all questions as to the validity, form and eligibility (including time of receipt) of outstanding notes tendered for exchange and all other required documents. We reserve the absolute right to:

• reject any and all tenders of any outstanding note not validly tendered;

• refuse to accept any outstanding note if, in our judgment or the judgment of our counsel, acceptance of the outstanding note may be deemed unlawful;

• waive any defects or irregularities or conditions of the exchange offer; and

• determine the eligibility of any holder who seeks to tender outstanding notes in the exchange offer.

Our determinations under, and of the terms and conditions of, the exchange offer, including the letter of transmittal and the instructions to it, or as to any questions with respect to the tender of any outstanding notes, will be final and binding on all parties. To the extent we waive any conditions to the exchange offer, we will waive such conditions as to all outstanding notes. Holders must cure any defects and irregularities in connection with tenders of outstanding notes for exchange within such reasonable period of time as we will determine, unless we waive such defects or irregularities. Neither we, the exchange agent nor any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of outstanding notes for exchange, nor will any of us incur any liability for failure to give such notification.

If you beneficially own outstanding notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct it to tender on your behalf.

Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such exchange notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

WE MAKE NO RECOMMENDATION TO THE HOLDERS OF THE OUTSTANDING NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OUTSTANDING NOTES IN THE EXCHANGE OFFER. IN ADDITION, WE HAVE NOT AUTHORIZED ANYONE TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF THE OUTSTANDING NOTES MUST MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OUTSTANDING NOTES TO

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TENDER, AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR FINANCIAL POSITIONS AND REQUIREMENTS.

Book-Entry Transfers

Any financial institution that is a participant in DTC’s system must make book-entry delivery of outstanding notes by causing DTC to transfer the outstanding notes into the exchange agent’s account at DTC in accordance with DTC’s Automated Tender Offer Program, known as ATOP. Such participant should transmit its acceptance to DTC at or prior to the expiration time or comply with the guaranteed delivery procedures described below. DTC will verify such acceptance, execute a book-entry transfer of the tendered outstanding notes into the exchange agent’s account at DTC and then send to the exchange agent confirmation of such book-entry transfer. The confirmation of such book-entry transfer will include an agent’s message. An agent’s message must be transmitted to and received by the exchange agent at the address set forth below under “—The Exchange Agent” at or prior to the expiration time of the exchange offer, or the holder must comply with the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

If a holder of outstanding notes desires to tender such outstanding notes and the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if:

• at or prior to the expiration time, the exchange agent receives from an eligible institution a validly completed and executed notice of guaranteed delivery, substantially in the form accompanying this prospectus, by facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of the outstanding notes being tendered and the amount of the outstanding notes being tendered. The notice of guaranteed delivery will state that the tender is being made and guarantee that within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, a book-entry confirmation together with an agent’s message, will be transmitted to the exchange agent; and

• the exchange agent receives a book-entry confirmation, together with an agent’s message, within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

The term “eligible institution” means an institution that is a member in good standing of a Medallion Signature Guarantee Program recognized by the Exchange Agent, for example, the Securities Transfer Agents Medallion Program, the Stock Exchanges Medallion Program or the New York Stock Exchange Medallion Signature Program. An eligible institution includes firms that are members of a registered national securities exchange, members of the National Association of Securities Dealers, Inc., commercial banks or trust companies having an office in the United States or certain other eligible guarantors.

The notice of guaranteed delivery must be received prior to the expiration time.

Withdrawal Rights

You may withdraw tenders of your outstanding notes at any time prior to the expiration time.

For a withdrawal to be effective, a written notice of withdrawal, by facsimile or by mail, must be received by the exchange agent, at the address set forth below under “—The Exchange Agent,” prior to the expiration time. Any such notice of withdrawal must:

• specify the name of the person having tendered the outstanding notes to be withdrawn;

• identify the outstanding notes to be withdrawn, including the principal amount of such outstanding notes; and

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• specify the name and number of the account at DTC to be credited with the withdrawn outstanding notes and otherwise comply with the procedures of DTC.

We will determine all questions as to the validity, form and eligibility (including time of receipt) of such notices and our determination will be final and binding on all parties. Any tendered outstanding notes validly withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Properly withdrawn notes may be re-tendered by following one of the procedures described under “—How to Tender Outstanding Notes for Exchange” above at any time at or prior to the expiration time.

Acceptance of Outstanding Notes for Exchange; Delivery of Exchange Notes

All of the conditions to the exchange offer must be satisfied or waived at or prior to the expiration of the exchange offer. Promptly following the expiration time we will accept for exchange all outstanding notes validly tendered and not validly withdrawn as of such date. We will promptly issue exchange notes for all validly tendered outstanding notes. For purposes of the exchange offer, we will be deemed to have accepted validly tendered outstanding notes for exchange when, as and if we have given oral or written notice to the exchange agent, with written confirmation of any oral notice to be given promptly thereafter. See “—Conditions to the Exchange Offer” for a discussion of the conditions that must be satisfied before we accept any outstanding notes for exchange.

For each outstanding note accepted for exchange, the holder will receive an exchange note registered under the Securities Act having a principal amount equal to, and in the denomination of, that of the surrendered outstanding note. Holders whose outstanding notes are exchanged for exchange notes will not receive a payment in respect of interest accrued but unpaid on such outstanding notes from the most recent interest payment date up to but excluding the settlement date. Instead, interest on the exchange notes received in exchange for such outstanding notes will (i) accrue from the last date on which interest was paid on such outstanding notes and (ii) accrue at the same rate as and be payable on the same dates as interest was payable on such outstanding notes. Accordingly, registered holders of exchange notes that are outstanding on the relevant record date for the first interest payment date following the consummation of the exchange offer will receive interest accruing from the most recent date through which interest has been paid on the outstanding notes. However, if any interest payment occurs prior to the settlement date on any outstanding notes already tendered for exchange in the exchange offer, the holder of such outstanding notes will be entitled to receive such interest payment. Outstanding notes that we accept for exchange will cease to accrue interest from and after the date of consummation of the exchange offer.

If we do not accept any tendered outstanding notes, or if a holder submits outstanding notes for a greater principal amount than the holder desires to exchange, we will return such unaccepted or non-exchanged outstanding notes without cost to the tendering holder. Such non-exchanged outstanding notes will be credited to an account maintained with DTC. We will have such non-exchanged outstanding notes credited to DTC promptly after the withdrawal, rejection of tender or termination of the exchange offer, as applicable.

Conditions to the Exchange Offer

The exchange offer is not conditioned upon the tender of any minimum principal amount of outstanding notes. Notwithstanding any other provision of the exchange offer, or any extension of the exchange offer, we will not be required to accept for exchange, or to issue exchange notes in exchange for, any outstanding notes and may terminate or amend the exchange offer, by oral (promptly confirmed in writing) or written notice to the exchange agent or by a timely press release, if at any time before the expiration of the exchange offer, any of the following conditions exist:

• any action or proceeding is instituted or threatened in any court or by or before any governmental agency challenging the exchange offer or that we believe might be expected to prohibit or materially impair our ability to proceed with the exchange offer;

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• any stop order is threatened or in effect with respect to either (1) the registration statement of which this prospectus forms a part or (2) the qualification of the Indenture governing the notes under the Trust Indenture Act of 1939, as amended;

• any law, rule or regulation is enacted, adopted, proposed or interpreted that we believe might be expected to prohibit or impair our ability to proceed with the exchange offer or to materially impair the ability of holders generally to receive freely tradable exchange notes in the exchange offer. See “—Consequences of Failure to Exchange Outstanding Notes”;

• any change or a development involving a prospective change in our business, properties, assets, liabilities, financial condition, operations or results of operations taken as a whole, that is or may be adverse to us;

• any declaration of war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or the worsening of any such condition that existed at the time that we commence the exchange offer; or

• we become aware of facts that, in our reasonable judgment, have or may have adverse significance with respect to the value of the outstanding notes or the exchange notes to be issued in the exchange offer.

Accounting Treatment

For accounting purposes, we will not recognize gain or loss upon the issuance of the exchange notes for outstanding notes.

Fees and Expenses

We will not make any payment to brokers, dealers, or others soliciting acceptance of the exchange offer except for reimbursement of mailing expenses. We will pay the cash expenses to be incurred in connection with the exchange offer, including:

• SEC registration fees;

• fees and expenses of the exchange agent and trustee;

• our accounting and legal fees;

• printing fees; and

• related fees and expenses.

Transfer Taxes

Holders who tender their outstanding notes for exchange will not be obligated to pay any transfer taxes in connection with the exchange. If, however, exchange notes issued in the exchange offer are to be delivered to, or are to be issued in the name of, any person other than the holder of the outstanding notes tendered, or if a transfer tax is imposed for any reason other than the exchange of outstanding notes in connection with the exchange offer, then the holder must pay these transfer taxes, whether imposed on the registered holder or on any other person. If satisfactory evidence of payment of or exemption from these taxes is not submitted with the letter of transmittal, the amount of these transfer taxes will be billed directly to the tendering holder.

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The Exchange Agent

We have appointed Wells Fargo Bank, National Association as our exchange agent for the exchange offer. Questions and requests for assistance respecting the procedures for the exchange offer, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery should be directed to the exchange agent at one of its addresses below:

Deliver to:

Wells Fargo Bank, National Association

By hand delivery or overnight courier at:

Wells Fargo Bank, National Association

Corporate Trust Operations

608 2nd Ave South

Northstar East Building-12th Floor

Minneapolis, MN 55402

or

By registered and certified mail at:

Wells Fargo Bank, National Association

Corporate Trust Operations

MAC N9303-121

P.O. Box 1517

Minneapolis, MN 55480

or

By regular mail or overnight courier at:

Wells Fargo Bank, National Association

Corporate Trust Operations

MAC N9303-121

Sixth & Marquette Avenue

Minneapolis, MN 55479

By facsimile transmission

(for eligible institutions only):

(612) 667-6282

Confirm by telephone:

(800) 344-5128

Consequences of Failure to Exchange Outstanding Notes

Outstanding notes that are not tendered or are tendered but not accepted will, following the consummation of the exchange offer, continue to be subject to the provisions in the Indenture and the legend contained on the outstanding notes regarding the transfer restrictions of the outstanding notes. In general, outstanding notes, unless registered under the Securities Act, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently anticipate that we will take any action to register under the Securities Act or under any state securities laws the outstanding notes that are not tendered in the exchange offer or that are tendered in the exchange offer but are not accepted for exchange.

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Holders of the exchange notes and any outstanding notes that remain outstanding after consummation of the exchange offer will vote together as a single series for purposes of determining whether holders of the requisite percentage of the series have taken certain actions or exercised certain rights under the indenture governing the notes.

Consequences of Exchanging Outstanding Notes

We have not requested, and do not intend to request, an interpretation by the Commission staff as to whether the exchange notes issued in the exchange offer may be offered for sale, resold or otherwise transferred by any holder without compliance with the registration and prospectus delivery provisions of the Securities Act. However, based on interpretations of the Commission staff, as set forth in a series of no-action letters issued to third parties, we believe that the exchange notes may be offered for resale, resold or otherwise transferred by holders of those exchange notes without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that:

• the holder is not an “affiliate” of ours within the meaning of Rule 405 promulgated under the Securities Act;

• the exchange notes issued in the exchange offer are acquired in the ordinary course of the holder’s business;

• neither the holder, nor, to the actual knowledge of such holder, any other person receiving exchange notes from such holder, has any arrangement or understanding with any person to participate in the distribution of the exchange notes issued in the exchange offer;

• if the holder is not a broker-dealer, the holder is not engaged in, and does not intend to engage in, a distribution of the exchange notes;

• if such a holder is a broker-dealer, such broker-dealer will receive the exchange notes for its own account in exchange for outstanding notes;

• such outstanding notes were acquired by such broker-dealer as a result of market-making or other trading activities; and

• it will deliver a prospectus meeting the requirements of the Securities Act in connection with the resale of exchange notes issued in the exchange offer, and will comply with the applicable provisions of the Securities Act with respect to resale of any exchange notes. (In no-action letters issued to third parties, the Commission has taken the position that broker-dealers may fulfill their prospectus delivery requirements with respect to exchange notes (other than a resale of an unsold allotment from the original sale of outstanding notes) by delivery of the prospectus relating to the exchange offer). See “Plan of Distribution” for a discussion of the exchange and resale obligations of broker-dealers in connection with the exchange offer.

Each holder participating in the exchange offer will be required to furnish us with a written representation in the letter of transmittal that they meet each of these conditions and agree to these terms.

However, because the Commission has not considered the exchange offer for our outstanding notes in the context of a no-action letter, we cannot guarantee that the Commission staff would make similar determinations with respect to this exchange offer. If our belief is not accurate and you transfer an exchange note without delivering a prospectus meeting the requirements of the federal securities laws or without an exemption from these laws, you may incur liability under the federal securities laws. We do not and will not assume, or indemnify you against, this liability.

Any holder that is an affiliate of ours or that tenders outstanding notes in the exchange offer for the purpose of participating in a distribution:

• may not rely on the applicable interpretation of the SEC staff’s position contained in Exxon Capital Holdings Corp., SEC No-Action Letter (April 13, 1988), Morgan, Stanley & Co., Inc., SEC No-Action Letter (June 5, 1991) and Shearman & Sterling, SEC No-Action Letter (July 2, 1993); and

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• must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

The exchange notes issued in the exchange offer may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and complied with by the holders selling the exchange notes. We currently do not intend to register or qualify the sale of the exchange notes in any state where we would not otherwise be required to qualify.

Filing of Shelf Registration Statements

Pursuant to the registration rights agreement, we agreed, among other things, that if (1) we are not permitted to consummate the Exchange Offer because the exchange offer is not permitted by applicable law or Commission policy; (2) the exchange offer is not consummated on or prior to the date that is 360 days after the issue date of the outstanding notes; (3) the initial purchaser so requests with respect to outstanding notes not eligible to be exchanged for exchange notes in the exchange offer and held by it following consummation of the exchange offer; or (4) any holder of Transfer Restricted Securities (as defined in the registration rights agreement) notifies us in writing prior to the 20th business day following consummation of the exchange offer that: (a) it is prohibited by law or Commission policy from participating in the exchange offer; or (b) it is a broker-dealer and owns notes acquired directly from the Issuers, then we will under certain circumstances be required to file with the Commission a shelf registration statement to cover resales of notes by the holders thereof.

The Issuers will, in the event of the filing of the shelf registration statement, provide to each holder of outstanding notes copies of the prospectus that is a part of the shelf registration statement, notify each such holder when the shelf registration statement has become effective and take certain other actions as are required to permit unrestricted resales of the outstanding notes. A holder of outstanding notes that sells its notes pursuant to the shelf registration statement generally (1) will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, (2) will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and (3) will be bound by the provisions of the registration rights agreement that are applicable to such a holder (including certain indemnification rights and obligations thereunder). In addition, holders of outstanding notes will be required to deliver information to be used in connection with the shelf registration statement and to provide comments on the shelf registration statement within the time periods set forth in the registration rights agreement to have their outstanding notes included in the shelf registration statement.

Although we intend, if required, to file the shelf registration statement, we cannot assure you that the shelf registration statement will be filed or, if filed, that it will become or remain effective.

The foregoing description is a summary of certain provisions of the registration rights agreement. It does not restate the registration rights agreement in its entirety. We urge you to read the registration rights agreement, which is an exhibit to the registration statement of which this prospectus forms a part and can also be obtained from us. See “Where You Can Find More Information.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

OVERVIEW

We are one of the largest private homebuilders in the United States. We design, build and market single-family detached and attached homes across various geographic markets in California, Arizona, Colorado, Washington, Nevada and Florida.

Our homebuilding business, which is responsible for nearly all of our operating results, constructs and sells single-family attached and detached homes designed to appeal to first-time, move-up and active adult homebuyers. Our homebuilding business also provides management services to homebuilding ventures and projects.

The operating results of our homebuilding business are aggregated into three geographic segments:

• California South, comprised of the results of our communities in Los Angeles, Ventura, Orange County, Inland Empire and San Diego;

• California North, comprised of the results of our communities in northern and central California; and

• Mountain West/Other, comprised of the results of our communities in Arizona, Colorado, Washington, Nevada and Florida.

Our communities are grouped into these segments based on similar economic and other characteristics including product types, production processes, suppliers, subcontractors, jurisdictional and political environments, land availability and values, and underlying demand and supply.

Our Corporate segment primarily provides management services to our operating segments, and includes the results of our captive insurance provider, which primarily administers claims that are reinsured by third-party carriers. Results of our insurance brokerage services business are also included in our Corporate segment. Results of our traditional escrow services business, which ceased operations in 2010, are included in the 2010, 2009 and 2008 results presented herein for the Corporate segment.

KEY FACTORS INFLUENCING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Market Conditions

Demand for housing in the United States is driven by changes in population, household income, mortgage rates, affordability, consumer confidence and employment levels. The supply of available housing varies based on a number of factors, including housing starts, inventories of existing homes available for sale and activities of speculative investors.

The downturn in the homebuilding industry is in its fifth year and is one of the most severe in U.S. history. Significant declines in new home demand, oversupply of homes and reductions in available homeowner financing continue. It is unclear when or if these trends will reverse.

Notwithstanding, in the fourth quarter of 2009, the housing market experienced some stabilization, albeit at significantly lower levels than before the current downturn, as homebuyers took advantage of declining home prices, low interest rates and temporary government incentive programs. In 2010 and the first half of 2011, job growth and home prices were relatively stable in most of our markets. Additionally, although in the first 36 weeks of 2011 our consolidated home sales orders were 1% lower than 2010, 2011 consolidated home sales orders per active selling community were 7% higher and 2011 consolidated home sales orders per active selling community have exceeded 2010 results in 19 of the first 36 weeks.

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Operations Restructuring

Beginning in 2007, in response to weak housing market conditions, we restructured our operations to reduce costs and to improve operating efficiencies through consolidation of selected offices, the disposal of related property and equipment and workforce reduction.

For the three and six months ended June 30, 2011, we incurred $0.1 million and $0.2 million, respectively, of restructuring costs, primarily employee severance. For 2010, 2009 and 2008, we incurred $0.7 million, $1.7 million and $13.9 million, respectively, of restructuring costs, primarily employee severance and office vacancy. We believe this restructuring is substantially complete; however, until market conditions stabilize, we may incur additional restructuring costs.

Seasonality

The homebuilding industry historically experienced seasonal fluctuations. We typically take more new home sales orders in spring and summer, although the amount of new home sales orders is also highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since we typically take three to eight months to construct a new home, we deliver more homes in the second half of the year as we convert spring and summer home sales orders to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows are historically highest from April to October while the majority of cash receipts from home closings occur between July and December. Therefore, operating results for the three and six months ended June 30, 2011 are not indicative of results expected for the year ended December 31, 2011.

The weakness in homebuilding market conditions in the last four years has disrupted the historical seasonal pattern. During the six months ended June 30, 2010, the federal homebuyer tax credit stimulated demand by providing an incentive for homebuyers to purchase homes. Accordingly, we experienced unusually higher home closings and house revenue during that time.

Inflation

Our homebuilding segment can be adversely impacted by inflation, primarily from higher land, financing, labor, material and construction costs. In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers. While we attempt to pass on cost increases to customers through increased prices, when weak housing market conditions exist, we are often unable to offset cost increases with higher selling prices.

Joint Venture Transactions

In April 2011, Shea Colorado LLC, a Consolidated Joint Venture, entered into transactions with the joint venture partner of two Unconsolidated Joint Ventures in Colorado, in which SHLP owns a 50% ownership interest in each, SB Meridian Villages, LLC (SBMV) and TCD Bradbury, LLC (TCDB). First, SHLP assigned its membership interest in SBMV to the joint venture partner for $4.5 million, resulting in a $0.5 million gain. Second, SHLP contributed $11.5 million cash to TCDB and received $15.4 million of land and a $0.6 million secured promissory note payable, and the joint venture partner received $12.2 million and $6.5 million of land and cash, respectively. TCDB then paid off a bank note payable that was secured by the land distributed to the TCDB partners.

In August 2009, Vistancia LLC, a Consolidated Joint Venture, contributed substantially all its land to four single member LLCs and sold 90% of its interest in these LLCs to an unrelated third party for $67.5 million, resulting in a $195.7 million net loss, of which $228.8 million, including $38.3 million of interest expense, was included in cost of sales, offset by $33.1 million of other income from debt extinguishment (the “Vistancia Transaction”). Of the $195.7 million net loss, $32.1 million was attributable to non-controlling interests.

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In May 2008, SHLP restructured three joint ventures with the California Public Employees Retirement System (“CalPERS”). CalPERS purchased SHLP’s entire interest in two joint ventures, Shea Capital I, LLC and Shea Mountain House, LLC, and SHLP purchased CalPERS’ entire interest in the third joint venture, Shea Capital II, LLC (the “CalPERS Exchange”). These transactions caused SHLP to recognize a $167.6 million loss.

In December 2008, SHLP sold its 1% interest in a homebuilding joint venture in North Carolina for $0.1 million, which resulted in a $0.2 million loss.

RESULTS OF OPERATIONS

The tabular homebuilding operating data presented throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes data for SHLP and its wholly-owned subsidiaries and the Consolidated Joint Ventures. Data for our Unconsolidated Joint Ventures is presented separately where indicated. Our ownership interest in the Unconsolidated Joint Ventures varies, but is generally less than or equal to 50%.

Overview

Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

For the three months ended June 30, 2011, net income (loss) attributable to SHLP was $(101.1) million compared to $(7.2) million for the three months ended June 30, 2010. This increase was primarily attributable to an $88.4 million loss on debt extinguishment in connection with the payoff of previously outstanding indebtedness in May 2011, $22.3 million of lower gross margin (including a $9.7 million inventory impairment in 2011) and $7.7 million of lower income from joint ventures, partially offset by $5.3 million of lower SG&A expense in 2011 and a $20.1 million write-off of professional fees in June 2010 in connection with the modification and extension of our then outstanding indebtedness.

For the six months ended June 30, 2011, net income (loss) attributable to SHLP was $(109.4) million compared to $(10.7) million in 2010. This increase was primarily attributable to an $88.4 million loss on debt extinguishment in connection with the payoff of previously outstanding indebtedness in May 2011, $24.9 million of lower gross margin (including a $10.3 million inventory impairment in 2011) and $7.6 million of lower income from joint ventures, partially offset by $5.5 million of lower SG&A expense in 2011 and a $20.9 million write-off of professional fees in June 2010 in connection with the modification and extension of our then outstanding indebtedness.

	Three Months Ended June 30,									Six Months Ended June 30,
	2011			2010			% Change			2011			2010			% Change
	(Dollars in thousands)
Revenues	$	114,934		$	220,503			(48	)%	$	188,993		$	298,252			(37	)%
Cost of sales		(104,856	)		(188,139	)		(44	)		(168,302	)		(252,631	)		(33	)
Gross margin		10,078			32,364			(69	)		20,691			45,621			(55	)
Selling expenses		(11,170	)		(15,540	)		(28	)		(19,388	)		(23,302	)		(17	)
General and administrative expenses		(8,265	)		(9,213	)		(10	)		(16,488	)		(18,092	)		(9	)
Equity in income (loss) from joint ventures		(102	)		7,643			(101	)		(495	)		7,069			(107	)
Loss on debt extinguishment		(88,384	)		—			—			(88,384	)		—			—
Interest and other income (expense), net		(3,589	)		(16,064	)		(78	)		(5,909	)		(14,312	)		(59	)
Income (loss) before income taxes		(101,432	)		(810	)		(12,422	)		(109,973	)		(3,016	)		(3,546	)
Income tax benefit (expense)		676			(446	)		252			1,017			(1,497	)		168
Net income (loss)		(100,756	)		(1,256	)		(7,922	)		(108,956	)		(4,513	)		(2,314	)
Less: Net (income) loss attributable to non-controlling interests		(349	)		(5,953	)		94			(438	)		(6,165	)		93
Net income (loss) attributable to SHLP	$	(101,105	)	$	(7,209	)		(1,302	)%	$	(109,394	)	$	(10,678	)		(924	)%

53

2010 vs. 2009 and 2009 vs. 2008

In 2010, net income (loss) attributable to SHLP was $(60.1) million compared to $(392.3) million in 2009. This decrease was primarily attributable to $405.2 million higher gross margin (including a $73.9 million inventory impairment in 2010, a $250.3 million inventory impairment in 2009 and a $228.8 million loss from the Vistancia Transaction in 2009) and $43.7 million of higher income from joint ventures (including a $30.5 million impairment in 2009), partially offset by $41.7 million of lower income tax benefit, $33.1 million income of debt extinguishment from the Vistancia Transaction in 2009 and a $25.7 million loan modification fee write-off in 2010.

In 2009, net income (loss) attributable to SHLP was $(392.3) million compared to $(594.7) million in 2008. This decrease was primarily attributable to a $167.6 million loss from the CalPERS Exchange in 2008, $33.1 million income of debt extinguishment from the Vistancia Transaction in 2009, $85.0 million of lower SG&A expense, $19.2 million of lower net loss on marketable securities and $13.9 million of restructuring costs in 2008, partially offset by $135.4 of million lower gross margin (including a $219.8 million inventory impairment in 2009, a $228.8 million loss from the Vistancia Transaction in 2009 and a $403.3 million inventory impairment in 2008).

	Year Ended December 31,
	2010			2009			2008			% Change 2009-2010			% Change 2008-2009
	(Dollars in thousands)
Revenues	$	639,566		$	611,463		$	1,078,330			5	%		(43	)%
Cost of sales		(609,097	)		(986,206	)		(1,317,642	)		(38	)		(25	)
Gross margin		30,469			(374,743	)		(239,312	)		108			(57	)
Selling expenses		(46,665	)		(48,949	)		(98,537	)		(5	)		(50	)
General and administrative expenses		(32,440	)		(29,459	)		(64,832	)		10			(55	)
Equity in income (loss) from joint ventures		8,613			(35,089	)		(43,621	)		125			20
Loss from disposition of joint ventures		—			—			(167,805	)		—			—
Interest and other income (expense), net		(18,759	)		19,962			(30,421	)		(194	)		166
Income (loss) before income taxes		(58,782	)		(468,278	)		(644,528	)		87			27
Income tax benefit (expense)		3,567			45,218			35,011			(92	)		29
Net income (loss)		(55,215	)		(423,060	)		(609,517	)		87			31
Less: Net (income) loss attributable to non-controlling interests		(4,874	)		30,717			14,802			(116	)		108
Net income (loss) attributable to SHLP	$	(60,089	)	$	(392,343	)	$	(594,715	)		85	%		34	%

Revenues

Revenues are derived primarily from homes closed and land sales. House and land revenues are recorded at closing. Management fees from homebuilding ventures and projects are in other homebuilding revenues. Revenues generated from financial services, corporate and PIC are in other revenues.

54

Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		%   Change			2011		2010		%   Change
	(Dollars in thousands)
Revenues:
House revenues	$	111,149	$	216,699		(49	)%	$	182,317	$	291,324		(37	)%
Land revenues		2,157		2,230		(3	)		4,030		4,155		(3	)
Other homebuilding revenues		1,360		895		52			2,121		1,943		9
Total homebuilding revenues		114,666		219,824		(48	)		188,468		297,422		(37	)
Other revenues		268		679		(61	)		525		830		(37	)
Total revenues	$	114,934	$	220,503		(48	)%	$	188,993	$	298,252		(37	)%

For the three months ended June 30, 2011, total revenues were $114.9 million, compared to $220.5 million for the three months ended June 30, 2010. This decrease was primarily attributable to a 47% decrease in homes closed and a 4% decrease in the average selling price of homes closed.

For the six months ended June 30, 2011, total revenues were $189.0 million compared to $298.3 million for the six months ended June 30, 2010. This decrease was primarily attributable to a 35% decrease in homes closed and a 3% decrease in the average selling price of homes closed.

For the three and six months ended June 30, 2011 and 2010, homebuilding revenues by segment were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		%   Change			2011		2010		%   Change
	(Dollars in thousands)
California South:
House revenues	$	39,938	$	94,154		(58	)%	$	65,419	$	114,599		(43	)%
Land revenues		15		—		—			65		104		(38	)
Other homebuilding revenues		12		11		9			15		20		(25	)
Total homebuilding revenues	$	39,965	$	94,165		(58	)%	$	65,499	$	114,723		(43	)%
California North:
House revenues	$	26,227	$	52,579		(50	)%	$	42,047	$	70,244		(40	)%
Land revenues		210		—		—			210		—		—
Other homebuilding revenues		121		86		41			156		248		(37	)
Total homebuilding revenues	$	26,558	$	52,665		(50	)%	$	42,413	$	70,492		(40	)%
Mountain West/Other:
House revenues	$	44,984	$	69,966		(36	)%	$	74,851	$	106,481		(30	)%
Land revenues		1,932		2,230		(13	)		3,755		4,051		(7	)
Other homebuilding revenues		1,227		798		54			1,950		1,675		16
Total homebuilding revenues	$	48,143	$	72,994		(34	)%	$	80,556	$	112,207		(28	)%

For the three months ended June 30, 2011, total homebuilding revenues were $114.7 million compared to $219.8 million for the three months ended June 30, 2010. This decrease was primarily attributable to a 47% decrease in homes closed and a 4% decrease in average selling price of homes closed. In the Mountain West/Other segment, homes closed decreased 45%, partially offset by a 16% increase in the average selling price of homes closed. In the other segments, homes closed and average selling price of homes closed decreased. The net decrease in homes closed was attributable to downturns in the homebuilding industry, fewer active selling

55

communities and expiration of the federal homebuyer tax credit which stimulated higher sales orders and homes closed in the three months ended June 30, 2010. The net decrease in average selling price of homes closed is primarily attributable to product mix weighted toward lower-priced homes and use of targeted price reductions and incentives to sell homes.

For the six months ended June 30, 2011, total homebuilding revenues were $188.5 million compared to $297.4 million for the six months ended June 30, 2010. This decrease was primarily attributable to a 35% decrease in homes closed and a 3% decrease in the average selling price of homes closed. In the Mountain West/Other segment, homes closed decreased 35%, partially offset by an 8% increase in the average selling price of homes closed. In the other segments, homes closed and the average selling price of homes closed decreased. The net decrease in homes closed was attributable to downturns in the homebuilding industry, fewer active selling communities and expiration of the federal homebuyer tax which stimulated higher sales orders and homes closed in the six months ended June 30, 2010. The net decrease in average selling price of homes closed is primarily attributable to product mix weighted toward lower-priced homes and use of targeted price reductions and incentives to sell homes.

For the three and six months ended June 30, 2011 and 2010, total homes closed by segment were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		% Change			2011		2010		%  Change
Homes closed:
California South		89		172		(48	)%		139		211		(34	)%
California North		53		103		(49	)		87		140		(38	)
Mountain West/Other		131		237		(45	)		229		352		(35	)
Total consolidated		273		512		(47	)		455		703		(35	)
Unconsolidated Joint Ventures		29		54		(46	)		49		100		(51	)
Total homes closed		302		566		(47	)%		504		803		(37	)%

For the three and six months ended June 30, 2011 and 2010, average selling price (“ASP”) of homes closed by segment were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		%   Change			2011		2010		%   Change
ASP of homes closed:
California South	$	448,742	$	547,407		(18	)%	$	470,640	$	543,118		(13	)%
California North		494,849		510,476		(3	)		483,299		501,750		(4	)
Mountain West/Other		343,389		295,215		16			326,860		302,503		8
Total consolidated		407,139		423,240		(4	)		400,697		414,401		(3	)
Unconsolidated Joint Ventures		283,379		308,019		(8	)		305,776		306,490		—
Total ASP of homes closed	$	395,255	$	412,247		(4	)%	$	391,468	$	400,963		(2	)%

56

2010 vs. 2009 and 2009 vs. 2008

	Year Ended December 31,
	2010		2009		2008			% Change 2009-2010			%      Change     2008-2009
	(Dollars in thousands)
Revenues:
House revenues	$	620,683	$	587,504	$	1,055,066			6	%		(44	)%
Land revenues		13,116		20,873		26,629			(37	)		(22	)
Other homebuilding revenues		4,640		2,134		3,139			117			(32	)
Total homebuilding revenues		638,439		610,511		1,084,834			5			(44	)
Other revenues		1,127		952		(6,504	)		18			115
Total revenues	$	639,566	$	611,463	$	1,078,330			5	%		(43	)%

In 2010, total revenues were $639.6 million, compared to $611.5 million in 2009. This increase was primarily attributable to a 3% increase in homes closed and a 3% increase in the ASP of homes closed, partially offset by a decrease in land revenues.

In 2009, total revenues were $611.5 million, compared to $1.08 billion in 2008. This decrease was primarily attributable to a 41% decrease in homes closed, a 6% decrease in the ASP of homes closed and a decrease in land and other homebuilding revenues.

For the years ended December 31, 2010, 2009 and 2008, homebuilding revenues by segment were as follows:

	Year Ended December 31,
	2010		2009		2008		% Change      2009-2010			%    Change     2008-2009
	(Dollars in thousands)
California South:
House revenues	$	270,592	$	246,093	$	433,413		10	%		(43	)%
Land revenues		111		8,455		4,395		(99	)		92
Other homebuilding revenues		46		56		1		(18	)		5,500
Total homebuilding revenues	$	270,749	$	254,604	$	437,809		6	%		(42	)%
California North:
House revenues	$	118,873	$	100,681	$	165,269		18	%		(39	)%
Land revenues		2,275		100		3,601		2,175			(97	)
Other homebuilding revenues		803		253		2,043		217			(88	)
Total homebuilding revenues	$	121,951	$	101,034	$	170,913		21	%		(41	)%
Mountain West/Other:
House revenues	$	231,218	$	240,729	$	456,380		(4	)%		(47	)%
Land revenues		10,729		12,319		18,634		(13	)		(34	)
Other homebuilding revenues		3,792		1,825		1,098		108			66
Total homebuilding revenues	$	245,739	$	254,873	$	476,112		(4	)%		(46	)%

In 2010, total homebuilding revenues were $638.4 million compared to $610.5 million in 2009. This increase was primarily attributable to a 3% increase in homes closed and a 3% increase in ASP of homes closed. In the California South and California North segments, homes closed increased 8% and 9%, respectively, and ASP of homes closed increased 2% and 11%, respectively. In the Mountain West/Other segment, homes closed and ASP of homes closed decreased 2%. The net increase in homes closed was primarily attributable to the

57

federal homebuyer tax credit which stimulated higher sales orders and homes closed in 2010. The net increase in ASP of homes closed was primarily attributable to product mix weighted toward higher-priced homes, partially offset by use of targeted price reductions and incentives to sell homes.

In 2009, total homebuilding revenues were $610.5 million compared to $1.08 billion in 2008. This decrease was primarily attributable to a 41% decrease in homes closed and a 6% decrease in ASP of homes closed. In the California South and Mountain West/Other segments, homes closed decreased 41% and 41%, respectively, and ASP of homes closed decreased 4% and 11%, respectively. In the California North segment, homes closed decreased 43% and ASP of homes closed increased 1%. The net decrease in homes closed was primarily attributable to downturns in the homebuilding industry and fewer active selling communities. The net decrease in ASP of homes closed was primarily attributable to product mix weighted toward lower-priced homes and use of targeted price reductions and incentives to sell homes.

For the years ended December 31, 2010, 2009 and 2008, total homes closed by segment were as follows:

	Year Ended December 31,
	2010		2009		2008		% Change 2009-2010			% Change 2008-2009
Homes closed:
California South		523		485		820		8	%		(41	)%
California North		238		219		386		9			(43	)
Mountain West/Other		728		742		1,257		(2	)		(41	)
Total consolidated		1,489		1,446		2,463		3			(41	)
Unconsolidated Joint Ventures		166		276		351		(40	)		(21	)
Total homes closed		1,655		1,722		2,814		(4	)%		(39	)%

For the years ended December 31, 2010, 2009 and 2008, ASP of homes closed by segment were as follows:

	Year Ended December 31,
	2010		2009		2008		% Change 2009-2010			% Change 2008-2009
ASP of homes closed:
California South	$	517,387	$	507,408	$	528,555		2	%		(4	)%
California North		493,249		445,494		441,899		11			1
Mountain West/Other		317,605		324,432		363,071		(2	)		(11	)
Total consolidated		416,007		404,339		430,463		3			(6	)
Unconsolidated Joint Ventures		308,575		317,331		359,917		(3	)		(12	)
Total ASP of homes closed	$	405,251	$	390,449	$	421,626		4	%		(7	)%

Gross Margin

Gross margin is revenues less cost of sales and is comprised of gross margins from our homebuilding and corporate segments. Total homebuilding gross margin is comprised of house, land and other homebuilding gross margins. Inventory impairments are included in other homebuilding gross margin.

58

Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

Gross margin for the three and six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended June 30,												Six Months Ended June 30,
	2011			Gross Margin %			2010			Gross Margin %			2011			Gross Margin %			2010			Gross Margin %
	(Dollars in thousands)
Gross margin:
House gross margin	$	19,430			17.5	%	$	32,455			15.0	%	$	32,298			17.7	%	$	43,048			14.8	%
Land gross margin		559			25.9			868			38.9			880			21.8			2,501			60.2
Other homebuilding gross margin		(10,179	)		(748.5	)		(1,375	)		(153.6	)		(13,012	)		(613.5	)		(758	)		(39.0	)
Total homebuilding gross margin		9,810			8.6			31,948			14.5			20,166			10.7			44,791			15.1
Other gross margin		268			100.0			416			61.3			525			100.0			830			100.0
Total gross margin	$	10,078			8.8	%	$	32,364			14.7	%	$	20,691			10.9	%	$	45,621			15.3	%

For the three months ended June 30, 2011, total gross margin was $10.1 million, compared to $32.4 million, for the three months ended June 30, 2010. For the six months ended June 30, 2011, total gross margin was $20.7 million, compared to $45.6 million, for the six months ended June 30, 2010. These decreases were primarily attributable to decreased homes closed, lower margins on land sales, increased impairments, and higher home warranty and related legal costs, partially offset by higher margins as a percentage of revenues on homes closed.

Composition of total homebuilding gross margin by segment for the three and six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended June 30,												Six Months Ended June 30,
	2011			Gross  Margin %			2010			Gross  Margin %			2011			Gross  Margin %			2010			Gross  Margin %
	(Dollars in thousands)
California South:
House gross margin	$	7,010			17.6	%	$	13,460			14.3	%	$	11,518			17.6	%	$	16,346			14.3	%
Land gross margin		15			100.0			—			—			65			100.0			104			100.0
Other homebuilding gross margin		(10,242	)		—			(362	)		(3,291	)		(12,518	)		—			(378	)		(1,890	)
Total homebuilding gross margin	$	(3,217	)		(8.0	)%	$	13,098			13.9	%	$	(935	)		(1.4	)%	$	16,072			14.0	%
California North:
House gross margin	$	4,947			18.9	%	$	8,267			15.7	%	$	8,703			20.7	%	$	10,327			14.7	%
Land gross margin		205			97.6			—			—			205			97.6			—			—
Other homebuilding gross margin		(375	)		(309.9	)		271			315.1			(746	)		(478.2	)		(158	)		(63.7	)
Total homebuilding gross margin	$	4,777			18.0	%	$	8,538			16.2	%	$	8,162			19.2	%	$	10,169			14.4	%
Mountain West/Other:
House gross margin	$	7,473			16.6	%	$	10,728			15.3	%	$	12,077			16.1	%	$	16,375			15.4	%
Land gross margin		339			17.5			868			38.9			610			16.2			2,397			59.2
Other homebuilding gross margin		438			35.7			(1,284	)		(160.9	)		252			12.9			(222	)		(13.3	)
Total homebuilding gross margin	$	8,250			17.1	%	$	10,312			14.1	%	$	12,939			16.1	%	$	18,550			16.5	%

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Impairments significantly impact gross margin. Impairments by segment and type for the three and six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		%  Change			2011		2010		%  Change
	(Dollars in thousands)
Impairments by segment:
California South	$	9,684	$	1,231		687	%	$	9,684	$	1,231		687	%
California North		—		—		—			—		—		—
Mountain West/Other		—		1,619		(100	)		618		1,619		(62	)
Total impairments	$	9,684	$	2,850		240	%	$	10,302	$	2,850		261	%
Impairments by type:
Inventory	$	9,684	$	1,778		445	%	$	10,302	$	1,778		479	%
Joint venture		—		1,072		(100	)		—		1,072		(100	)
Total impairments	$	9,684	$	2,850		240	%	$	10,302	$	2,850		261	%

2010 vs. 2009 and 2009 vs. 2008

Gross margin for the years ended December 31, 2010, 2009 and 2008 were as follows:

	Year Ended December 31,
	2010			Gross  Margin %			2009			Gross    Margin %			2008			Gross   Margin %
	(Dollars in thousands)
Gross margin:
House gross margin	$	96,586			15.6	%	$	78,005			13.3	%	$	146,357			13.9	%
Land gross margin		5,572			42.5			(219,206	)		(1,050	)		9,025			33.9
Other homebuilding gross margin		(72,816	)		(1,569	)		(232,416	)		(10,891	)		(398,700	)		(12,702	)
Total homebuilding gross margin		29,342			4.6			(373,617	)		(61.2	)		(243,318	)		(22.4	)
Other gross margin		1,127			100.0			(1,126	)		(118.3	)		4,006			(61.6	)
Total gross margin	$	30,469			4.8	%	$	(374,743	)		(61.3	)%	$	(239,312	)		(22.2	)%

In 2010, total gross margin was $30.5 million, compared to $(374.7) million in 2009. This increase was primarily attributable to a 5% increase in total homebuilding revenues, a $147.2 million decrease in inventory impairments and a $228.8 million loss from the Vistancia Transaction in 2009, partially offset by a 3% increase in house cost of sales. In 2010, inventory impairments were $72.6 million compared to $219.8 million in 2009.

In 2009, total gross margin was $(374.7) million, compared to $(239.3) million in 2008. This decrease was primarily attributable to a 44% decrease in total homebuilding revenue and a $228.8 million loss from the Vistancia Transaction, partially offset by a 44% decrease in house cost of sales and a $183.4 million decrease in inventory impairments. In 2009, inventory impairments were $219.8 million compared to $403.3 million in 2008.

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Composition of total homebuilding gross margin by segment for the years ended December 31, 2010, 2009 and 2008 were as follows:

	Year Ended December 31,
	2010			Gross  Margin %			2009			Gross    Margin %			2008			Gross    Margin %
	(Dollars in thousands)
California South:
House gross margin	$	43,291			16.0	%	$	32,091			13.0	%	$	57,273			13.2	%
Land gross margin		111			100.0			5,696			67.4	%		4,335			98.6
Other homebuilding gross margin		(51,936	)		—			(128,686	)		—			(94,662	)		—
Total homebuilding gross margin	$	(8,534	)		(3.2	)%	$	(90,899	)		(35.7	)%	$	(33,054	)		(7.5	)%
California North:
House gross margin	$	17,054			14.3	%	$	10,932			10.9	%	$	11,812			7.1	%
Land gross margin		1,292			56.8			122			122.0			682			18.9
Other homebuilding gross margin		(38	)		(4.7	)		(49,897	)		(19,722	)		(229,970	)		(11,257	)
Total homebuilding gross margin	$	18,308			15.0	%	$	(38,843	)		(38.4	)%	$	(217,476	)		(127.2	)%
Mountain West/Other:
House gross margin	$	36,241			15.7	%	$	34,982			14.5	%	$	77,269			16.9	%
Land gross margin		4,168			38.8			(225,023	)		(1,827	)		4,009			21.5
Other homebuilding gross margin		(20,841	)		(549.6	)		(53,834	)		(2,950	)		(74,066	)		(6,746	)
Total homebuilding gross margin	$	19,568			8.0	%	$	(243,875	)		(95.7	)%	$	7,212			1.5	%

Impairments by segment and type for the years ended December 31, 2010, 2009 and 2008 were as follows:

	Year Ended December 31,
	2010		2009		2008		% Change 2009-2010			% Change 2008-2009
	(Dollars in thousands)
Impairments by segment:
California South	$	51,099	$	123,900	$	130,598		(59	)%		(5	)%
California North		81		71,281		232,103		(100	)		(69	)
Mountain West/Other		22,711		55,125		75,691		(59	)		(27	)
Total impairments	$	73,891	$	250,306	$	438,392		(70	)%		(43	)%
Impairments by type:
Inventory	$	72,629	$	219,846	$	403,279		(67	)%		(45	)%
Joint venture		1,262		30,460		35,113		(96	)		(13	)
Total impairments	$	73,891	$	250,306	$	438,392		(70	)%		(43	)%

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Selling, General and Administrative Expense

Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

Selling, general and administrative expense for the three and six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended June 30,									Six Months Ended June 30,
	2011			2010			%  Change			2011			2010			%  Change
	(Dollars in thousands)
Selling expense:
Selling expense	$	11,170		$	15,540			(28	)%	$	19,388		$	23,302			(17	)%
Total homebuilding revenues		114,666			219,824			(48	)		188,468			297,422			(37	)
% of total homebuilding revenues		9.7	%		7.1	%		37	%		10.3	%		7.8	%		(32	)%
General and administrative expense:
General and administrative expense	$	8,265		$	9,213			(10	)%	$	16,488		$	18,092			(9	)%
Total homebuilding revenues		114,666			219,824			(48	)		188,468			297,422			(37	)
% of total homebuilding revenues		7.2	%		4.2	%		71	%		8.7	%		6.1	%		(43	)%
Total selling, general and administrative expense:
Total selling, general and administrative expense	$	19,435		$	24,753			(21	)%	$	35,876		$	41,394			(13	)%
Total homebuilding revenues		114,666			219,824			(48	)		188,468			297,422			(37	)
% of total homebuilding revenues		16.9	%		11.3	%		50	%		19.0	%		13.9	%		(37	)%

Selling Expense

For the three months ended June 30, 2011, selling expense was $11.2 million compared to $15.5 million for the three months ended June 30, 2010. For the six months ended June 30, 2011, selling expense was $19.4 million compared to $23.3 million for the six months ended June 30, 2010. These decreases were primarily attributable to fewer homes closed and the corresponding reductions in the variable components of selling expense, primarily sales commissions and model home amortization costs.

General and Administrative Expense

For the three months ended June 30, 2011, general and administrative expense was $8.3 million compared to $9.2 million for the three months ended June 30, 2010. For the six months ended June 30, 2011, general and administrative expense was $16.5 million compared to $18.1 million for the six months ended June 30, 2010. These decreases were primarily attributable to continued workforce and general and administrative expense reductions to better align our operations with weak housing market conditions.

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2010 vs. 2009 and 2009 vs. 2008

Selling, general and administrative expense for the years ended December 31, 2010, 2009 and 2008 were as follows:

	Year Ended December 31,
	2010			2009			2008			% Change 2009-2010			% Change 2008-2009
	(Dollars in thousands)
Selling expense:
Selling expense	$	46,665		$	48,949		$	98,537			(5	)%		(50	)%
Total homebuilding revenues		638,439			610,511			1,084,834			5			(44	)
% of total homebuilding revenues		7.3	%		8.0	%		9.1	%		(9	)%		(12	)%
General and administrative expense:
General and administrative expense	$	32,440		$	29,459		$	64,832			10	%		(55	)%
Total homebuilding revenues		638,439			610,511			1,084,834			5			(44	)
% of total homebuilding revenues		5.1	%		4.8	%		6.0	%		6	%		(20	)%
Total selling, general and administrative expense:
Total selling, general and administrative expense	$	79,105		$	78,408		$	163,369			1	%		(52	)%
Total homebuilding revenues		638,439			610,511			1,084,834			5			(44	)
% of total homebuilding revenues		12.4	%		12.8	%		15.1	%		(3	)%		(15	)%

Selling Expense

In 2010, selling expense was $46.7 million compared to $48.9 million in 2009. This decrease was primarily attributable to the continued workforce and selling and marketing expense reductions to better align our operations with the weak housing market conditions.

In 2009, selling expense was $48.9 million compared to $98.5 million in 2008. This decrease was primarily attributable to fewer homes closed and continued workforce and selling and marketing expense reductions to better align our operations with the weak housing market conditions.

General and Administrative Expense

In 2010, G&A expense was $32.4 million, compared $29.5 million in 2009. This increase was primarily attributable to an increase in compensation costs, partially offset by continued workforce and G&A expense reductions to better align our operations with the weak housing market conditions.

In 2009, G&A expense was $29.5 million, compared to $64.8 million in 2008. This decrease was primarily attributable to continued workforce and G&A expense reductions to better align our operations with the weak housing market conditions.

Equity in Income (Loss) from Joint Ventures

Equity in income (loss) from joint ventures represents our share of income (loss) from Unconsolidated Joint Ventures (as defined herein) that are accounted for under the equity method. We have Unconsolidated Joint Ventures, which are generally involved in real property development.

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Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

For the three months ended June 30, 2011, equity in income (loss) from joint ventures was $(0.1) million compared to $7.6 million for the three months ended June 30, 2010. For the six months ended June 30, 2011, equity in income (loss) from joint ventures was $(0.5) million compared to $7.1 million for the six months ended June 30, 2010. For the three and six months ended June 30, 2011, there were no significant earnings or losses from Unconsolidated Joint Ventures; however, for the three and six months ended June 2010, $6.7 million of income related to the reallocation of income among partners in a joint venture.

2010 vs. 2009 and 2009 vs. 2008

In 2010, equity in income (loss) from joint ventures was $8.6 million compared to $(35.1) million in 2009. This increase was primarily attributable to a $2.3 million reversal of a prior impairment related to one joint venture and $6.7 million of income related to the reallocation of income among partners in a joint venture. In 2010, these results included a $1.3 million charge for our share of Unconsolidated Joint Venture impairments compared to $30.5 million in 2009.

In 2009, equity in income (loss) from joint ventures was $(35.1) million, compared to $(43.6) million in 2008. This decrease was primarily attributable to a $30.5 million charge for our share of Unconsolidated Joint Venture impairments in 2009 and a $35.1 million charge for our share of Unconsolidated Joint Venture impairments in 2008.

Loss on Debt Extinguishment

Concurrent with the payoff of the Secured Facilities (as defined herein) on May 10, 2011, we recognized an $88.4 million loss on debt extinguishment for the $65.0 million write-off of the Secured Facilities discount, which increased the Secured Facilities principal to its face value, $779.6 million, and the $23.4 million of prepaid professional and loan fees incurred in connection with the Secured Facilities were written off.

Loss from Disposition of Joint Ventures

In 2008, loss from disposition of joint ventures was $167.8 million, which was comprised of a $167.6 million loss from the restructuring of three joint ventures with CalPERS and a $0.2 million loss on a $0.1 million sale of our 1% interest in a homebuilding Unconsolidated Joint Venture in North Carolina.

Interest and Other Income (Expense), Net

Interest and other income (expense), net is comprised of interest income, interest expense, loan modification fee write-offs, gains (losses) on investments and other income (expense). Interest income is primarily from related party notes receivables. Interest expense is interest incurred and not capitalized. In 2011 and 2010, most interest incurred was capitalized to housing projects and land under development, and some expensed. In 2009 and 2008, all interest incurred was capitalized to housing projects and land under development.

Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

For the three months ended June 30, 2011, interest and other income (expense), net was $(3.6) million compared to $(16.1) million for the three months ended June 30, 2010. This decrease was primarily attributable to the $20.1 million write-off in June 2010 of professional fees in connection with the modification and extension of our Secured Facilities, partially offset by a $2.8 million interest expense increase and a $6.7 million gain amortization decrease from the PIC Transaction. The interest expense increase was primarily attributable to higher amortization of loan modification fees and fewer assets qualifying for interest capitalization. The PIC Transaction is a series of transactions by PIC in December 2009, whereby PIC novated its workers’ compensation, general liability and certain construction defect risks to JFSCI and reinsured the remaining construction defect risks with third-party insurance carriers. The $34.8 million gain was deferred and is amortized as income or expense when the related claims are paid or actuarial estimates are adjusted.

64

For the six months ended June 30, 2011, interest and other income (expense), net was $(5.9) million compared to $(14.3) million for the six months ended June 30, 2010. This decrease was primarily attributable to the $20.9 million write-off in June 2010 of professional fees in connection with the modification and extension of our Secured Facilities, partially offset by a $4.8 million interest expense increase, lower gains on marketable securities of $4.0 million, and $6.6 million gain amortization decrease from the PIC Transaction.

For the three and six months ended June 30, 2011 and 2010, interest and other income (expense), net were as follows:

	Three Months Ended June 30,									Six Months Ended June 30,
	2011			2010			%    Change			2011			2010			%    Change
	(Dollars in thousands)
Interest and other income (expense), net:
Interest income	$	754		$	1,188			(37	)%	$	1,478		$	2,997			(51	)%
Interest (expense)		(4,375	)		(1,544	)		(183	)		(8,326	)		(3,522	)		(136	)
Loan modification fee write-off		(14	)		(20,090	)		100			645			(20,914	)		103
Gain (loss) on investments		270			503			(46	)		409			4,395			(91	)
Other income (expense)		(224	)		3,879			(106	)		(115	)		2,732			(104	)
Total interest and other income (expense), net	$	(3,589	)	$	(16,064	)		78	%	$	(5,909	)	$	(14,312	)		59	%

2010 vs. 2009 and 2009 vs. 2008

In 2010, interest and other income (expense), net was $(18.8) million compared to $20.0 million in 2009. This decrease was primarily attributable to a $25.7 million write-off of professional fees in connection with the modification and extension of our Secured Facilities, $33.1 million of income from the Vistancia Transaction debt extinguishment in 2009, $6.6 million of lower interest income from maintaining lower cash balances in interest bearing accounts and an $8.6 million increase in interest expense from higher amortization of loan modification fees and fewer assets qualifying for interest capitalization, partially offset by an $18.4 million write-off of accounts receivable and other costs in 2009 and $15.1 million of income from the deferred gain amortization related to the PIC Transaction in 2010.

In 2009, interest and other income (expense), net was $20.0 million compared to $(30.4) million in 2008. This increase was primarily attributable to a $19.2 million lower net loss on marketable securities, a $7.0 million increase in interest income from maintaining higher cash balances in interest bearing accounts, $33.1 million of income from the Vistancia Transaction debt extinguishment in 2009 and $12.3 million less restructuring costs in 2009, partially offset by an $18.4 million write-off of accounts receivable and other costs in 2009.

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For the years ended December 31, 2010, 2009 and 2008, interest and other income (expense), net were as follows:

	Year Ended December 31,
	2010			2009			2008			% Change  2010-2009			% Change 2009-2008
	(Dollars in thousands)
Interest and other income (expense), net:
Interest income	$	4,699		$	11,289		$	4,281			(58	)%		164	%
Interest (expense)		(8,558	)		—			—			—			—
Loan modification fee write-off		(25,747	)		—			—			—			—
Gain (loss) on investments		4,664			2,839			(16,380	)		64			117
Vistancia Transaction debt extinguishment		—			33,104			—			(100	)		—
Other income (expense)		6,183			(27,270	)		(18,322	)		123			(49)
Total interest and other income (expense), net	$	(18,759	)	$	19,962		$	(30,421	)		(194	)%		166%

Income Tax Benefit (Expense)

At June 30, 2011 and December 31, 2010, net deferred tax assets were $49.2 million and $48.8 million, respectively, which primarily related to available loss carryforwards, inventory and marketable securities impairments, housing and land inventory basis differences and income recognition timing differences from our investments in joint ventures. At June 30, 2011 and December 31, 2010, deferred tax asset valuation fully reserved the net deferred tax asset due to the inherent uncertainty of future income. To the extent eligible taxable income exists, which allows tax benefits of these deferred tax assets to be utilized, the effective tax rate may be reduced, subject to certain limitations under Internal Revenue Code Section 382, by reducing the valuation allowance and offsetting a portion of taxable income. However, it is unlikely all of these net deferred tax assets will be realized.

Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

For the three months ended June 30, 2011, income tax benefit (expense) was $0.7 million compared to income tax benefit (expense) of $(0.4) million for the three months ended June 30, 2010. For the six months ended June 30, 2011, income tax benefit (expense) was $1.0 million compared to income tax benefit (expense) of $(1.5) million for the six months ended June 30, 2010. The change for the three and six months ended June 30, 2011 compared to the same periods in 2010 was primarily attributable to decreased taxable income from operations, offset by the increase in the deferred tax asset valuation allowance.

2010 vs. 2009 and 2009 vs. 2008

In 2010, income tax benefit (expense) was $3.6 million, compared to $45.2 million in 2009. This decrease was primarily attributable to decreased losses of SHI and its subsidiaries compared to prior year and the reduction of certain deferred tax assets previously reserved.

In 2009, income tax benefit (expense) was $45.2 million, compared to $35.0 million in 2008. This increase was primarily attributable to the loss from the Vistancia Transaction.

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Net (Income) Loss Attributable to Non-Controlling Interests

We conduct certain operations through joint ventures with unrelated and related parties in which we have a non-controlling interest.

Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

For the three months ended June 30, 2011, net (income) loss attributable to non-controlling interests was $(0.3) million compared to $(6.0) million for the three months ended June 30, 2010. For the six months ended June 30, 2011, net (income) loss attributable to non-controlling interests was $(0.4) million compared to $(6.2) million for the six months ended June 30, 2010. In June 2010, a $6.5 million charge related to the non-realization of a non-controlling interest’s deficit capital balance was recorded. There were no significant activities for the three and six months ended June 30, 2011.

2010 vs. 2009 and 2009 vs. 2008

In 2010, net (income) loss attributable to non-controlling interests was $(4.9) million, compared to $30.7 million in 2009. In 2010, these results included a $(6.5) million charge related to non-realization of a non-controlling interest’s deficit capital balance, partially offset by $1.9 million of impairment charges attributable to non-controlling interests.

In 2009, net (income) loss attributable to non-controlling interests was $30.7 million compared to $14.8 million in 2008. In 2009, these results included a $32.1 million charge from the Vistancia Transaction. In 2008, these results included a $17.9 million impairment for a homebuilding joint venture, partially offset by $(3.1) million in income from operations.

SELECTED HOMEBUILDING OPERATIONAL DATA

Homes Sales Orders and Active Selling Communities

Home sales orders are contracts executed with homebuyers to purchase homes and are stated net of cancellations. Except where market conditions or other factors justify increasing available unsold home inventory, construction of a home typically begins when a sales contract for that home is executed. Therefore, recognition of a home sales order usually represents the beginning of the home’s construction cycle. Accordingly, homebuilding construction expenditures and, ultimately, homebuilding revenues and cash flow, are dependent on the timing and magnitude of home sales orders.

Active selling community is a designation of a sales office that advertises, markets and sells homes for a new home community. Sales offices in communities near the end of their sales cycle are not designated as an active selling community. Active selling community is a designation similar to a store or sales outlet and is used to measure home sales order results on a per active selling community basis. Presentation of home sales orders per active selling community is a means of assessing sales growth or reductions across communities with a common analytical measurement. The average number of active selling communities for a particular period represents the aggregate number of active selling communities in operation at the end of each month in such period divided by the number of months in such period.

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Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

For the three and six months ended June 30, 2011 and 2010 home sales orders, net of cancellations, were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		% Change			2011		2010		% Change
Home sales orders, net:
California South		136		137		(1	)%		256		267		(4	)%
California North		62		59		5			104		134		(22	)
Mountain West/Other		212		226		(6	)		396		399		(1	)
Total consolidated		410		422		(3	)		756		800		(6	)
Unconsolidated Joint Ventures		24		29		(17	)		63		88		(28	)
Total home sales orders, net		434		451		(4	)%		819		888		(8	)%

For the three and six months ended June 30, 2011 and 2010 active selling communities were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		% Change			2011		2010		% Change
Average number of active selling communities:
California South		23		23		—	%		22		23		(4	)%
California North		15		13		15			13		14		(7	)
Mountain West/Other		41		47		(13	)		42		46		(9	)
Total consolidated		79		83		(5	)		77		83		(7	)
Unconsolidated Joint Ventures		14		8		75			13		8		63
Total average number of active selling communities		93		91		2	%		90		91		(1	)%

For the three and six months ended June 30, 2011, total consolidated home sale orders, net of cancellations, were 410 and 756, respectively, compared to 422 and 800, respectively, for the three and six months ended June 30, 2010. These decreases were primarily attributable to downturns in the homebuilding industry, lower consolidated active selling communities and the federal homebuyer tax credit which stimulated higher sales orders and homes closed in 2010.

For the three and six months ended June 30, 2011, the average number of consolidated active selling communities was 79 and 77, respectively, compared to 83 and 83, respectively, for the three and six months ended June 30, 2010. For the three and six months ended June 30, 2011, consolidated home sales orders per consolidated active selling community were 5.2 and 9.8, respectively, compared to 5.1 and 9.6, respectively, for the three and six months ended June 30, 2010.

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2010 vs. 2009 and 2009 vs. 2008

For the years ended December 31, 2010, 2009 and 2008 home sales orders, net of cancellations, were as follows:

	Year Ended December 31,
	2010		2009		2008		% Change 2009-2010			% Change 2008-2009
Home sales orders, net:
California South		430		616		773		(30	)%		(20	)%
California North		211		272		363		(22	)		(25	)
Mountain West/Other		675		820		978		(18	)		(16	)
Total consolidated		1,316		1,708		2,114		(23	)		(19	)
Unconsolidated Joint Ventures		143		284		311		(50	)		(9	)
Total home sales orders, net		1,459		1,992		2,425		(27	)%		(18	)%

For the years ended December 31, 2010, 2009 and 2008, active selling communities were as follows:

	Year Ended December 31,
	2010		2009		2008		% Change 2009-2010			% Change 2008-2009
Average number of active selling communities:
California South		23		30		43		(23	)%		(30	)%
California North		13		17		23		(24	)		(26	)
Mountain West/Other		46		47		48		(2	)		(2	)
Total consolidated		82		94		114		(13	)		(18	)
Unconsolidated Joint Ventures		9		10		20		(10	)		(50	)
Total average number of active selling communities		91		104		134		(13	)%		(22	)%

In 2010, consolidated home sales orders were 1,316, compared to 1,708 in 2009, and in 2010, our average number of consolidated active selling communities was 82, compared to 94 in 2009. In 2010, our consolidated home sales orders per consolidated active selling community were 16.0 compared to 18.2 in 2009.

In 2009, consolidated home sales orders were 1,708, compared to 2,114 in 2008, and in 2009, our average number of consolidated active selling communities was 94, compared to 114 in 2008. In 2009, consolidated home sales orders per consolidated active selling community were 18.2, compared to 18.5 in 2008.

Sales Order Backlog and Cancellation Rates

Sales order backlog represents homes sold and under contract to be built, but not closed. Backlog sales value is the revenue anticipated to be realized at closing. A home is sold when a sales contract is signed by the seller and buyer and upon receipt of a prerequisite deposit. A home is closed when all conditions of escrow are met, including delivery of the home, title passage and payment of the sales price and closing costs. A sold home is classified “in backlog” during the time between its sale and close. During that time, construction costs are generally incurred to complete the home except where market conditions or other factors justify increasing available unsold home inventory. Backlog is therefore an important performance measurement in analysis of cash outflows and inflows. However, because sales order contracts can be cancelled by the buyer in certain circumstances, not all homes in backlog will result in closings.

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Three and Six Months Ended June 30, 2011 vs. Three and Six Months Ended June 30, 2010

At June 30, 2011 and 2010 sales order backlog was as follows:

	Homes				Sales Value				Average Selling Price
	June 30,				June 30,				June 30,
	2011		2010		2011		2010		2011		2010
					(In thousands)				(In thousands)
Backlog:
California South		250		269	$	138,458	$	138,773	$	554	$	516
California North		116		97		57,992		47,260		500		487
Mountain West/Other		379		315		122,021		104,144		322		331
Total consolidated		745		681		318,471		290,177		427		426
Unconsolidated Joint Ventures		36		33		12,258		11,144		341		338
Total backlog		781		714	$	330,729	$	301,321	$	423	$	422

Homes are sold pursuant to sales contracts, which are generally accompanied by sales deposits. Purchasers are permitted to cancel sales contracts if they fail to qualify for financing or under other circumstances. Cancellation rates for the three and six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Cancellation rates:
California South		23	%		27	%		22	%		26	%
California North		17			17			19			15
Mountain West/Other		14			8			16			11
Total consolidated		18	%		16	%		18	%		17	%
Unconsolidated Joint Ventures		29			33			22			22
Total cancellation rates		18	%		18	%		19	%		18	%

2010 vs. 2009 and 2009 vs. 2008

December 31, 2010, 2009 and 2008 sales order backlog was as follows:

	Homes						Sales Value						Average Selling Price
	December 31,						December 31,						June 30,
	2010		2009		2008		2010		2009		2008		2010		2009		2008
							(In thousands)						(In thousands)
Backlog:
California South		118		211		80	$	61,174	$	109,502	$	45,759	$	518	$	519	$	572
California North		76		103		54		35,958		49,441		23,064		473		480		427
Mountain West/Other		212		265		187		70,187		82,515		72,094		331		311		386
Total consolidated		406		579		321		167,319		241,458		140,917		412		417		439
Unconsolidated Joint Ventures		22		45		37		7,310		13,409		11,798		332		298		319
Total backlog		428		624		358	$	174,629	$	254,867	$	152,715	$	408	$	408	$	427

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For the years ended December 31, 2010, 2009 and 2008 cancellation rates were as follows:

	Year Ended December 31,
	2010			2009			2008
Cancellation rates:
California South		28	%		24	%		33	%
California North		15			16			25
Mountain West/Other		14			18			31
Total consolidated		19			20			31
Unconsolidated Joint Ventures		21			18			36
Total cancellation rates		19	%		20	%		31	%

Land and Homes in Inventory

Inventory is comprised of housing projects under development, land under development, land held for development, deposits and pre-acquisition costs. As land is acquired and developed, and homes are constructed, the underlying costs are capitalized to inventory. As homes and land transactions close, these costs are relieved from inventory and charged to cost of sales.

As land is acquired and developed, each parcel is assigned a lot count. For parcels of land, an estimated number of lots are added to inventory once entitlement occurs. Occasionally, when the intended use of a parcel changes, lot counts are adjusted. As homes and land are sold, lot counts are reduced. Lots are categorized as (i) those owned, (ii) those controlled (which includes a contractual right to purchase) or (iii) those owned or controlled through Unconsolidated Joint Ventures. The status of each lot is identified by land held for development, land under development, lots available for construction, homes under construction, completed homes and models. Homes under construction and completed homes are also classified as sold or unsold.

At June 30, 2011, December 31, 2010 and December 31, 2009 total lots owned or controlled were as follows:

	June 30, 2011		December 31, 2010		% Change from December 31, 2010			December 31, 2009		% Change from December  31, 2009
Lots owned or controlled by segment:
California South		2,196		2,281		(4	)%		2,322		(5	)%
California North		3,673		3,443		7			3,746		(2	)
Mountain West/Other		11,792		10,836		9			11,014		7
Total consolidated		17,661		16,560		7			17,082		3
Unconsolidated Joint Ventures		6,107		7,867		(22	)		7,191		(15	)
Total lots owned or controlled		23,768		24,427		(3	)%		24,273		(2	)%
Lots owned or controlled by ownership type:
Lots owned		10,480		9,260		13	%		10,358		1	%
Lots optioned or subject to contract		7,181		7,300		(2	)		6,724		7
Joint venture lots		6,107		7,867		(22	)		7,191		(15	)
Total lots owned or controlled		23,768		24,427		(3	)%		24,273		(2	)%

At June 30, 2011, total consolidated lots owned or controlled increased 7% from December 31, 2010 and 3% from December 31, 2009. From December 31, 2010 and December 31, 2009 the increase in lots in the California South and California North segments was attributable to contributions of two projects from JFSCI in May 2011 as a partial pay down of the loan receivable from JFSCI. From December 31, 2010 and December 31, 2009, the increase in lots in the Mountain West/Other segment was due to the distribution of land in April 2011 from an Unconsolidated Joint Venture.

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At June 30, 2011, December 31, 2010 and December 31, 2009 total homes under construction and completed homes were as follows:

	June 30, 2011		December 31, 2010		% Change from June  30, 2011			December 31, 2009		% Change from December  31, 2009
Homes under construction:
Sold		478		194		146	%		348		37	%
Unsold		161		89		81			124		30
Total consolidated		639		283		126			472		35
Unconsolidated Joint Ventures		34		40		(15	)		392		(91	)
Total homes under construction		673		323		108	%		864		(22	)%
Completed homes: (a)
Sold (b)		70		41		71	%		29		141	%
Unsold		65		77		(16	)		58		12
Total consolidated		135		118		14			87		55
Unconsolidated Joint Ventures		37		22		68			6		517
Total completed homes		172		140		23	%		93		85	%

^(a)  Excludes model homes.

^(b)  Sold but not closed.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2011, cash and cash equivalents were $176.1 million, restricted cash was $14.0 million and total debt was $752.5 million, compared to cash and cash equivalents of $166.9 million, restricted cash of $11.7 million and total debt of $730.0 million at December 31, 2010. Restricted cash includes cash used as collateral for potential obligations paid by the Company’s bank, customer deposits temporarily restricted in accordance with regulatory requirements, and cash used in lieu of bonds. Operating and other short-term cash liquidity needs are funded from homebuilding operations primarily through home closings and land sales, net of the underlying expenditures to fund these operations. Based on our financial condition, we believe our operational and capital resources are sufficient to provide for our foreseeable capital requirements the next twelve months.

The following tables present cash provided by (used in) operating, investing and financing activities:

	Six Months Ended June 30,
	2011			2010
	(In thousands)
Cash provided by (used in):
Operating activities	$	(44,508	)	$	(73,880	)
Investing activities		93,839			26,885
Financing activities		(40,089	)		25,562
Net increase (decrease) in cash	$	9,242		$	(21,433	)

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	Year Ended December 31,
	2010			2009			2008
	(In thousands)
Cash provided by (used in):
Operating activities	$	(75,048	)	$	93,294		$	155,959
Investing activities		46,056			16,604			(265,307	)
Financing activities		(7,210	)		(112,443	)		173,080
Net increase (decrease) in cash	$	(36,202	)	$	(2,545	)	$	63,732

Cash from Operating Activities

For the six months ended June 30, 2011, cash provided by (used in) operating activities was $(44.5) million compared to $(73.9) million for the six months ended June 30, 2010. For the six months ended June 30, 2011, cash provided by (used in) operating activities was primarily attributable to a $48.2 million increase in inventory, the result of new home construction starts and land acquisitions in the California South and Mountain West/Other segments. For the six months ended June 30, 2010, cash provided by (used in) operating activities was primarily attributable to an $86.0 million insurance premium payment to JFSCI and third-party insurance carriers pursuant to a series of transaction in December 2009, whereby, through PIC, workers’ compensation, general liability and certain completed operations risks were novated or reinsured.

In 2010, cash provided by (used in) operating activities was $(75.0) million compared to $93.3 million in 2009. The decrease was primarily attributable to $(145.6) million of higher land acquisition and construction costs; an $(86.2) million payment of premiums to third-party insurance companies to reinsure general liability and completed operations loss exposure; $(15.3) million of loan fees and deposits in lieu of letters of credit; $(15.6) million of prepaid completed operations insurance premiums; $(10.0) million of lower income tax refunds; $(28.1) million of lower proceeds from accounts receivables, receivables from related parties and deposits; and the absence of $(67.5) million of proceeds from the Vistancia Transaction in 2009, partially offset by $27.9 million of higher homebuilding revenues, $93.3 million of lower payment of liabilities to related parties; $64.8 million of lower payment of accounts payable and accrued liabilities; and a $20.9 million decrease in restricted cash requirements.

In 2009, cash provided by (used in) operating activities was $93.3 million compared to $156.0 million in 2008. The decrease was primarily attributable to $(474.3) million of lower homebuilding revenues; $(87.9) million of higher payment of liabilities to related parties; $(30.0) million of lower proceeds from accounts receivables, primarily escrow and notes receivables; $(26.3) million of lower proceeds from receivables from related parties; a $(28.0) million increase in restricted cash requirements; $(20.1) of loan modification fees and prepaid expenses; and $(30.0) million of higher payment of accounts payable and accrued liabilities, partially offset by $469.2 million of lower land acquisition and construction costs; $68.9 million of lower selling, general and administrative cash expense; $29.0 million of lower income tax payments, and $67.5 million of proceeds from the Vistancia Transaction.

Cash from Investing Activities

For the six months ended June 30, 2011, cash provided by (used in) investing activities was $93.8 million compared to $26.9 million for the six months ended June 30, 2010. For the six months ended June 30, 2011, cash provided by (used in) investing activities was primarily attributable to $101.7 million of collections of promissory notes receivables from related parties, primarily JFSCI, whereby on May 20, 2011, concurrent with issuance of the Secured Notes, JFSCI partially paid down these promissory notes. Proceeds from collections on promissory notes receivables were offset by $8.8 million of cash contributions to Unconsolidated Joint Ventures, which were used by the Unconsolidated Joint Venture to pay off debt. For the six months ended June 30, 2010, cash provided by (used in) investing activities was primarily attributable to $51.5 million of proceeds from the sale of marketable securities, which were used to partially fund payment of the insurance premiums described in Cash from Operating Activities above.

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In 2010, cash provided by (used in) investing activities was $46.1 million compared to $16.6 million in 2009. The increase was primarily attributable to $57.4 million of higher proceeds from purchases and sales of marketable securities, partially offset by $(10.6) million in purchases of property and equipment; $(4.5) million of net investments in joint ventures; and $(12.6) million of lower proceeds from sales of property and equipment.

In 2009, cash provided by (used in) investing activities was $16.6 million compared to $(265.3) million in 2008. The increase was primarily attributable to net contributions to Unconsolidated Joint Ventures in 2008. In 2009, cash provided by investing activities included $12.6 million of proceeds from sales of golf courses and $17.4 million of net borrowings from related parties, primarily comprised of cash management receivables from JFSCI and a write down of certain loans made to Shea Management LLC and Shea Properties Management Company. In 2009, cash provided by investing activities also included $(10.1) million of net contributions to Unconsolidated Joint Ventures. In 2008, cash used in investing activities included $(310.7) million of contributions to Unconsolidated Joint Ventures, primarily to $(152.4) million to Shea Capital I, $(20.5) million to Shea Capital II, $(77.9) million to Shea Mountain House, and $(31.3) million to Tonner Hills SSP LLC and $(58.4) million of loans to related parties, offset by $44.9 million of distributions from Unconsolidated Joint Ventures, primarily $34.1 million from Riverpark Legacy LLC, $45.1 million of proceeds from the sale of our investment in Shea Capital II and $7.7 million of proceeds from sales of golf courses.

Cash from Financing Activities

For the six months ended June 30, 2011, cash provided by (used in) financing activities was $(40.1) million compared to $25.6 million for the six months ended June 30, 2010. For the six months ended June 30, 2011, cash used was primarily attributable to a $20.0 million principal prepayment of the Secured Facilities in January 2011 and the $(779.6) million payoff of the Secured Facilities in May 2010, which was primarily funded by $750.0 million of Secured Notes. For the six months ended June 30, 2010, cash provided was primarily attributable to $12.6 million of borrowings for letters of credit presented and $12.5 million of owners’ contributions.

In 2010, cash provided by (used in) financing activities was $(7.2) million compared to $(112.4) in 2009. The increase was primarily attributable to, in 2010, a $(25.0) million principal payment on the Secured Facilities and $5.4 million of borrowings on the revolving line of credit and, in 2009, the $(112.8) million payoff of the promissory note in the Vistancia Transaction. In addition, in 2010, the owners made a $12.5 million contribution.

In 2009, cash provided by (used in) financing activities was $(112.4) million compared to $173.1 million in 2008. The decrease was primarily attributable to, in 2009, the $(112.8) million payoff of the promissory note in the Vistancia Transaction and, in 2008, $220.0 million of borrowings on the revolving line of credit, partially offset by $(26.7) million of principal payments on the private placement debt and term loans and a $(16.5) million principal payment on a bank financed promissory note.

Notes Payable

At June 30, 2011, December 31, 2010 and December 31, 2009, notes payable were as follows:

	June 30, 2011		December 31, 2010		December 31, 2009
	(In thousands)
Notes payable:
Senior secured notes	$	750,000	$	—	$	—
Senior secured bank credit facility		—		215,650		—
Senior secured term loans		—		458,295		—
Senior secured subordinated notes payable		—		54,106		—
Other secured promissory notes		2,520		1,954		17
Unsecured revolving bank line of credit		—		—		220,000
Unsecured private placement debt		—		—		440,000
Unsecured term loans		—		—		85,000
Total notes payable	$	752,520	$	730,005	$	745,017

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On November 16, 2010, the Company and JFSCI, as borrowers, executed loan modifications and extensions to their unsecured revolving bank line of credit, private placement debt and term loans, resulting in the effective exchange of such indebtedness for new senior secured notes payable and senior secured subordinated notes payable (the “Secured Facilities”). The Secured Facilities were secured by the Company’s assets. In connection with this modification, J.F. Shea Construction Management, Inc., a related party, was released as a guarantor and an additional $80.0 million principal amount of indebtedness was issued.

In accordance with ASC 470, the Secured Facilities were accounted for as a debt modification, which required $80.0 million of additional principal be recorded as interest expense over the term of the notes and the Secured Facilities be recorded net of related discount or premium. The carrying value of the underlying notes payable was unchanged as a result of the modification. As a result, the amortization of the discount or premium increased the effective interest rate of our Secured Facilities, and therefore interest incurred, for the three and six months ended June 30, 2011.

On May 10, 2011, 8.625% senior secured notes were issued in the aggregate principal amount of $750.0 million (the “Secured Notes”) and the outstanding amounts under the Secured Facilities were paid. Principal and interest paid under the Secured Facilities was $779.6 million and $2.5 million, respectively. In connection with payment of the Secured Facilities, all payable-in-kind interest, $5.0 million of principal, and certain fees were waived. In addition, of $19.1 million of then outstanding letters of credit, $4.0 million was returned and $15.1 million was paid by the Company, with $14.5 million reimbursed by JFSCI for its share of the letters of credit paid by the Company.

Concurrent with the payoff of the Secured Facilities, an $88.4 million loss on debt extinguishment was recognized for the $65.0 million write-off of the Secured Facilities discount, which increased the Secured Facilities principal to its face value, $779.6 million, and the $23.4 million write-off of prepaid professional and loan fees incurred in connection with the Secured Facilities.

The Secured Notes were issued pursuant to Rule 144A and Regulation S, with registration rights. The Secured Notes bear interest at 8.625% paid semi-annually on May 15 and November 15, do not require principal payments and mature May 15, 2019.

On May 10, 2011, concurrent with issuance of the Secured Notes, through a $75.0 million cash payment and $41.5 million contribution of assets, the receivable from JFSCI was paid down by JFSCI and converted to a $38.9 million term note receivable from JFSCI, bearing 4% interest, payable in equal quarterly installments and maturing May 15, 2019.

CONTRACTUAL OBLIGATIONS, COMMERCIAL COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS

Contractual Obligations

SHLP’s primary contractual obligations are payments under notes payable and operating leases. Purchase obligations are primarily specific performance requirements under non-refundable land purchase and option contracts that may require SHLP to purchase land when a land seller meets certain obligations. At June 30, 2011, material changes to contractual obligations since December 31, 2010 included payoff of the Secured Facilities and issuance of $750.0 million of Secured Notes in May 2011.

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Future estimated payments under existing contractual obligations at June 30, 2011, including estimated future cash payments are as follows:

	Payments due by period
	Total		Less than 1 Year		1 –3 Years		4 –5 Years		After 5 Years
	(In thousands)
Contractual obligations:
Long-term debt principal payments	$	752,520	$	2,121	$	399	$	—	$	750,000
Long-term debt interest payments		518,472		65,624		129,411		129,375		194,062
Operating leases		11,759		3,306		4,166		2,321		1,966
Purchase obligations(1)		182,017		50,730		65,733		44,655		20,899
Total contractual obligations	$	1,464,768	$	121,781	$	199,709	$	176,351	$	966,927

(1) Comprised of $142.3 million non-refundable land purchase and option contracts, and $39.7 million water system connection rights purchase obligations.

SHLP expects to fund its contractual obligations in the ordinary course of business with existing cash resources, cash flows generated from operations and issuance of new debt as market conditions permit.

Land Purchase and Option Contracts

In the ordinary course of business, we enter into land purchase and option contracts to procure land for construction of homes. These contracts typically require a cash deposit and the purchase is often contingent on satisfaction of certain requirements by land sellers, including securing property and development entitlements. We utilize option contracts as a method of acquiring large tracts of land in smaller parcels to better manage financial and market risk of holding land and to reduce use of funds. Option contracts generally require a non-refundable deposit for the right to acquire lots over a specified period of time at a predetermined price. However, the purchase price may not be determinable and payable until the land or lots are sold by us. In such instances, an estimated purchase price is not included in the total remaining purchase price. At our discretion, we generally have rights to terminate our obligations under purchase and option contracts by forfeiting our cash deposit or by repaying amounts drawn under our letter of credit with no further financial responsibility to the land seller. However, purchase contracts can contain specific performance clauses that require us to purchase a specified number of lots at predetermined prices upon satisfaction of certain requirements by the seller and Company.

Use of option contracts is dependent on the willingness of land sellers, availability of capital, housing market conditions and geographic preferences. Options may be more difficult to obtain from land sellers in stronger housing markets and are more prevalent in certain geographic regions.

At June 30, 2011, we had $8.0 million in option contract deposits on land with a total remaining purchase price, excluding land subject to option contracts that do not specify a purchase price, of $142.3 million compared to $7.9 million and $132.5 million, respectively, at December 31, 2010. At June 30, 2011, $95.7 million of the $142.3 million remaining purchase price on such option contracts was subject to specific performance clauses, consistent with December 31, 2010.

At December 31, 2010, we had $7.9 million in option contract deposits on land with a total remaining purchase price of $132.5 million compared to $7.6 million and $151.3 million, respectively, at December 31, 2009. At December 31, 2010, $95.7 million of the $132.5 million remaining purchase price on such option contacts was subject to specific performance clauses compared to $111.0 million of the $151.3 million total remaining purchase price on option contacts at December 31, 2009.

At December 31, 2009, we had $7.6 million in option contract deposits on land with a total remaining purchase price of $151.3 million compared to $8.8 and $153.3 million, respectively, at December 31, 2008. At

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December 31, 2009, $111.0 million of the $151.3 million remaining purchase price on such option contracts was subject to specific performance clauses compared to $111.3 million of the $153.3 million total remaining purchase price on option contacts at December 31, 2008.

Water System Connection Rights

In certain consolidated homebuilding projects, we have contractual obligations to purchase and receive water system connection rights which, at June 30, 2011, were $39.7 million. These water system connection rights are held and then transferred to homebuyers upon closing of their home or transferred upon the sale of land to the respective buyer. These water system connection rights can also be sold or leased but generally only within the local jurisdiction.

Land Development and Homebuilding Joint Ventures

We enter into land development and homebuilding joint ventures for the following purposes:

• leveraging our capital base;

• managing financial and market risks of holding land;

• establishing strategic alliances;

• accessing lot positions; and

• expanding market share.

These joint ventures typically obtain secured acquisition, development and construction financing, each designed to reduce use of funds. In response to weak homebuilding market conditions, the number of joint ventures in which we participate and their underlying debt have significantly decreased.

At June 30, 2011, Unconsolidated Joint Ventures’ total notes payable were $118.6 million and included $69.2 million of bank and seller financing notes payable secured by real property and $49.4 million of notes payable with joint ventures’ partners, of which $15.4 million was secured by real property. At December 31, 2010, Unconsolidated Joint Ventures’ total notes payable were $126.3 million and included $77.4 million of bank and seller financing notes payable secured by real property and $48.9 million of notes payable to joint ventures’ partners, of which $15.4 million was secured by real property. At December 31, 2009, Unconsolidated Joint Ventures’ total notes payable were $144.2 million and included $100.2 million of bank and seller financing notes payable secured by real property and $44.0 million of notes payable to joint ventures’ partners, of which $15.4 million was secured by real property. In addition, at June 30, 2011, December 31, 2010 and December 31, 2009, we had an indirect 12.3% effective ownership in a joint venture having bank notes payable secured by real property of $7.2 million, in which we have not provided guarantees.

At June 30, 2011, December 31, 2010 and December 31, 2009, of the $69.2 million, $77.4 million and $100.2 million in Unconsolidated Joint Ventures’ outstanding bank and seller financing secured notes payable, respectively, we provided guarantees on a joint and several basis for secured notes payables that had an outstanding balance of $16.3 million, $19.5 million and $84.6 million at June 30, 2011, December 31, 2010 and December 31, 2009, respectively. These guarantees include, but are not limited to, project completion and loan-to-value maintenance guarantees. In addition, we have an indemnification agreement from our joint venture partner for 90% of a secured note payable’s outstanding balance of $16.3 million, $19.5 million and $24.4 million, respectively. No liabilities were recorded for these guarantees as the fair value of secured real estate assets exceeded the outstanding notes payable. We have not provided guarantees on bank and seller financing secured notes payable of $52.9 million, $57.9 million and $15.6 million, respectively, or on notes payables to joint ventures’ partners of $49.4 million, $48.9 million and $44.0 million, respectively.

Despite recent reductions in the size of our joint venture portfolio, we may be required to use our funds for obligations of these joint ventures, such as:

• loans (including to replace expiring loans, to satisfy loan re-margin and land development and construction completion obligations or to satisfy environmental indemnity obligations);

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• development and construction costs;

• indemnity obligations to surety providers;

• land purchase obligations; and

• dissolutions (including satisfaction of joint venture indebtedness through repayment or the assumption of such indebtedness, payments to our partners in connection with the dissolution, and the remaining costs to complete).

Guarantees, Surety Obligations and Other Contingencies

At December 31, 2009, in addition to guarantees on our joint ventures’ outstanding borrowings, SHLP guaranteed, on a joint and several basis, certain secured development loans of related parties in which SHLP had no ownership interest. The guarantees were partial or contingent guarantees that included, but were not limited to, project completion guarantees and loan-to-value maintenance guarantees. At December 31, 2009, these loans had a $62.5 million aggregate outstanding principal balance. A liability was not recorded for these guarantees as the fair value of the secured real estate assets exceeded the outstanding notes payable. At June 30, 2010, the majority of these loans were modified and SHLP was released as a guarantor. At June 30, 2011 and December 31, 2010, the remaining unconditional loan-to-value maintenance guarantee issued, on a joint and several basis, was for a secured development loan for Shea/Baker Ranch Associates, LLC, a related party in which we have no ownership interest. At June 30, 2011 and December 31, 2010, the loan had a $25.4 million outstanding principal balance. A liability was not recorded for this guarantee as the fair value of the secured real estate assets exceeded the outstanding notes payable.

Joint and several non-recourse (“bad-boy”) guarantees were issued for secured permanent financing loans of related parties in which we have no ownership interest. The bad boy guarantee may become a liability for us upon a voluntary bankruptcy filing by the related party borrower or the occurrence of other “bad” acts, including fraud or a material misrepresentation by the related party borrower. At December 31, 2009, these loans had a $183.3 million outstanding principal balance. In June 2010, SHLP was released as a guarantor from two of these loans. At June 30, 2011 and December 31, 2010, the remaining three loans had a $46.7 million and $47.3 million outstanding principal balance, respectively. These loans have maturity dates between December 2011 and September 2012. A liability was not recorded for these guarantees as the probability of payment on these guarantees is remote.

We are required to provide surety bonds that guarantee completion of certain infrastructure that serves our homebuilding projects. At June 30, 2011, we had a $70.2 million exposure in connection with $177.9 million of surety bonds issued for our projects. At December 31, 2010, we had a $77.5 million exposure in connection with $180.7 million of surety bonds issued for our projects. At December 31, 2009, we had a $110.4 million exposure in connection with $264.4 million of surety bonds issued for our projects.

We also provided indemnification for bonds issued by Unconsolidated Joint Ventures and other related party projects in which we have no ownership interest. At June 30, 2011, we had a $30.0 million exposure in connection with $72.8 million of surety bonds issued for Unconsolidated Joint Venture projects, and a $3.7 million exposure in connection with $7.8 million of surety bonds issued for related party projects. At December 31, 2010, we had a $44.6 million exposure in connection with $80.2 million of surety bonds issued for Unconsolidated Joint Venture projects, and a $9.4 million exposure in connection with $14.1 million of surety bonds issued for related party projects. At December 31, 2009, we had a $53.2 million exposure in connection with $104.7 million of surety bonds issued for Unconsolidated Joint Venture projects, and a $14.0 million exposure in connection with $23.6 million of surety bonds issued for related party projects.

Certain of our consolidated and joint ventures’ homebuilding projects utilize and may continue to utilize community facility district, metro-district and other local government bond financing programs to fund construction or acquisition of infrastructure improvements. Interest and principal on these bonds are typically paid from taxes and assessments levied on homeowners following the sale of new homes within the project.

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From time to time we enter into credit support arrangements where we are required to make interest and principal payments on these bonds if the taxes and assessments levied on homeowners are insufficient to cover such obligations. Furthermore, reimbursement of these payments to us is dependent on the district or local government’s ability to generate sufficient tax and assessment revenues from the sale of new homes.

CRITICAL ACCOUNTING POLICIES

The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those that impact our most critical accounting policies. We base our estimates and judgments on historical experience and various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that accounting policies related to the following accounts or activities are those most critical to the portrayal of our financial condition and results of operations and require the most significant judgments and estimates.

Housing Projects and Land Under Development

Housing projects and land under development are stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventories are written down to fair value. Quarterly, we review our real estate assets at each community for indications of impairment. If events or changes in circumstances indicate the net book value may not be recoverable, real estate assets are tested for recoverability by comparing the asset’s net book value to its estimated future undiscounted net cash flows to be realized from its disposition. These evaluations for impairments require us to make estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine whether expected future undiscounted cash flows will be sufficient to recover the carrying value of the assets. If assets are considered impaired, impairment is determined by the amount the asset’s net book value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets or other valuation techniques. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when assessment is made. These factors are specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage. We generally use discount rates up to 25%, subject to perceived risks associated with the community’s cash flow streams relative to its inventory.

Completed Operations Claim Costs

We record expenses and liabilities related to the estimated costs of completed operations claims when received in the ordinary course of business. In addition, we record expenses and liabilities for estimated costs of potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported and is actuarially estimated using individual case-basis valuations and statistical analysis. Concurrently, we estimate and record insurance receivables under applicable policies when recovery is probable. Expenses, liabilities and receivables related to these claims are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, claim settlement patterns and insurance industry practices.

Revenues

Revenues from housing and other real estate sales are recognized in accordance with Accounting Standards Codification (“ASC”) 360 when the respective units are closed. Housing and other real estate sales are closed when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured. Sales incentives are a reduction of revenues when the respective unit is closed.

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Income Taxes

SHLP is treated as a partnership for income tax purposes. As a limited partnership, SHLP is subject to certain minimal state taxes and fees; however, taxes on income or losses realized by SHLP are generally the obligation of the Partners and their owners.

SHI and PIC are C corporations. Federal and state income taxes are provided for these entities in accordance with the provisions of ASC 740. The provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are evaluated to determine whether a valuation allowance should be established based on its determination of whether it is more likely than not some or all of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends primarily on generation of future taxable income during the periods in which those temporary differences become deductible. Judgment is required in determining future tax consequences of events that have been recognized in the consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the consolidated financial position or results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, (“ASU 2011-04”). ASU 2011-04 amends ASC 820, Fair Value Measurements, (“ASC 820”), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the ASC 820 disclosure requirements, particularly for Level 3 fair value measurements. ASU 2011-04 will be effective for the Company’s fiscal year beginning January 1, 2012. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, (“ASU 2011-05”). ASU 2011-05 requires the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in equity. ASU 2011-05 will be effective for the Company’s fiscal year beginning January 1, 2012. The Company believes the adoption of ASU 2011-05 concerns disclosure and presentation only and will not have a material impact on its consolidated financial position or results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk primarily from interest rate fluctuations. We have historically incurred both fixed-rate and variable-rate debt. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument, but not our earnings or cash flow. Conversely, for variable-rate debt, changes in interest rates generally do not affect the fair market value of the debt but do affect our earnings and cash flow. We do not have an obligation to prepay fixed-rate debt prior to maturity and, as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we refinance.

On May 10, 2011, existing Secured Facilities were paid off from $750.0 million of Secured Notes that bear interest at a fixed rate of 8.625%. No principal payments are due until maturity on May 15, 2019. We currently have no other material indebtedness outstanding.

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BUSINESS

Overview

We are one of the largest private homebuilders in the United States. We design, build and market single-family detached and attached homes across various geographic markets in California, Arizona, Colorado, Washington, Nevada and Florida. We serve a broad customer base including entry, move-up, luxury and active adult buyers. We have been recognized by industry professionals and our homebuyers for quality, customer service and craftsmanship, as evidenced by receipt of some of the homebuilding industry’s most prominent awards, including being named as “Builder of the Year” in 2007 by Professional Builder magazine and one of “America’s Best Builders” in 2005 by the National Association of Homebuilders and Builder magazine. In February 2011, Shea Homes was honored as one of 40 brands in the country to be named a J.D. Power “Customer Service Champion” and is the only homebuilder to receive this honor.

Our operating results are aggregated into three geographic segments:

• California South, comprised of the results of our Los Angeles, Ventura, Orange County, Inland Empire and San Diego communities;

• California North, comprised of the results of our northern and central California communities; and

• Mountain West/Other, comprised of the results of our Arizona, Colorado, Washington, Nevada and Florida communities.

Our communities are grouped into these segments based on similar economic and other characteristics including product types, production processes, suppliers, subcontractors, jurisdictional and political environments, land availability and values, and underlying demand and supply.

Since its founding in 1881 in Portland, Oregon, the Shea family of companies has grown but remained privately held by the Shea family. The Shea family began building homes in 1968 through JFSCI, and in 1989, homebuilding under the Shea Homes brand was moved to the newly-formed SHLP, an entity under the broader umbrella of JFSCI. In all, the Shea Homes brand has enjoyed a 40-plus year legacy of consistent family management and support.

We operate under three brands that reflect our value proposition: homes designed to meet the needs of our customers, with standard energy-efficient features, built in an environmentally-responsible manner.

• Shea Homes, our flagship brand, targets first-time and move-up buyers. Each segment builds and markets homes under the Shea Homes brand;

• Trilogy, master-planned communities are designed and built to meet the needs and active lifestyles of “baby boomers.” These communities combine quality homes with diverse resort-like amenities and are located in each segment; and

• SPACES, our newest brand, targets the 25-40 year-old buyers in each segment with contemporary, practical homes that have flexible floor plans and stylish, energy-efficient features at an affordable price. We have opened SPACES communities in all of our geographic segments.

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History

In 1881, John F. Shea established a small plumbing business in Portland, Oregon. From those modest beginnings, the fourth generation of the Shea family is now leading Shea Homes.

Since its formation over 40 years ago, Shea Homes has expanded significantly through acquisitions, developments, and joint ventures to become one of the most well-regarded homebuilders in the markets in which it competes:

1968: Residential homebuilding operations began in southern California;

1970: Residential homebuilding operations began in northern California;

1985: Residential homebuilding operations began in San Diego;

1989: Acquired Knoell Homes and residential homebuilding operations began in Arizona;

1996: Residential homebuilding operations began in Denver and a portfolio of assets in southern and northern California was acquired from Chevron Land;

1997: Purchased Mission Viejo Company and its land holdings in southern California and Colorado from Philip Morris;

1998: Purchased UDC Homes, Inc. and launched the Trilogy brand;

2001: Residential homebuilding operations began in Washington state;

2006: Acquired homebuilding land, commercial land and income properties that comprised the Denver Tech Center;

2007: Residential homebuilding operations began in Florida;

2009: Launched the SPACES brand; and

2010: Residential homebuilding operations began in Nevada.

Nearly 100% of SHLP is beneficially owned by the Shea family through direct ownership and through the family’s ownership of various Shea entities. The Shea family ownership interests are shared by 20 families, consisting of the families of each of John F. Shea, Mary Shea and Peter O. Shea and the families of their children. See “Security Ownership of Certain Beneficial Owners and Management.”

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Markets and Products

For the six months ended June 30, 2011, SHLP operated an average of 77 consolidated active selling communities in California, Arizona, Colorado, Washington, Nevada and Florida. When determining markets to enter, we evaluate various factors, including local economic and real estate conditions, historical and projected population and job growth trends, number of housing starts, building lot availability and price, housing inventory, climate, customer profile, regional raw material costs, competitive environment and home sales rates.

Within each community, we utilize a product mix depending on market conditions and opportunities. In determining product mix in each community, we consider demographic trends, demand for a particular type of product, margins, timing and economic strength of the market. While remaining responsive to market opportunities, we have focused, and intend to continue to focus, our core homebuilding business primarily on first-time and move-up buyers offering single-family detached and attached homes.

We offer extensive design options that, in conjunction with our sophisticated building systems, allow us to produce homes with features that customers desire while maintaining efficient construction cycle times. We strive to maximize vendor standardization across our product lines by using national accounts for appliances (Whirlpool) and plumbing fixtures (Delta). In addition, our in-house and outside architectural teams seek to create innovative designs that can be efficiently produced across our multiple product lines.

Brands

We build homes under three brands: Shea Homes, Trilogy and SPACES.

Shea Homes, with its “Caring Since 1881” tag line, referencing the Shea family legacy in the construction business, is our namesake brand. Shea Homes branded homes are stylishly designed and include energy-efficient features intended to meet the needs of customers across multiple market segments. We believe our unique floor plans and elevations, combined with attractive features and amenities, differentiate Shea Homes branded homes from our competitors’ homes. Under this brand, we have built new homes and developed master-planned communities for thousands of families. We built active adult homes under both our Shea Homes and Trilogy brands.

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Trilogy master-planned communities are designed and built to meet the needs and active lifestyles of the “baby boomer” generation. Trilogy communities are resort-oriented, offering a new choice in living to those looking for a lifestyle that revolves around wellness, continued learning and a sense of community. Trilogy’s architectural product design and amenities reflect changing needs of its residents, including business services, high-end clubs and a diverse range of recreational choices.

SPACES, our newest brand, offers homes designed to appeal to 25-40 year-old buyers, which we believe will be a strong market segment as the housing market recovers. SPACES homes are designed to meet priorities set by their target customers: contemporary homes with flexible floor plans, stylish features and efficient and resource-saving fixtures and equipment at an affordable price. SPACES homes include energy-saving materials and construction that reduce the energy required to heat and cool home interiors. SPACES homes’ construction documents and plans are drawn by our in-house architectural team, allowing us to maintain design and specification consistency and leverage suppliers across segments to lower construction costs.

Land Acquisition and Development

We have a disciplined and structured land acquisition process. Each acquisition must be approved by our land committee, which is composed of members of senior management and directors. The committee reviews potential new projects and option deposit funds are placed at risk only if the committee votes in favor of purchasing the land. As part of this process, the committee reviews due diligence information provided by our land acquisition teams, typically including market, environmental and site planning studies of undeveloped properties and an overall risk and financial analysis. We believe our current land supply will support operations in our Colorado market over a three-to four-year period. All of our remaining markets (with the exception of our small Washington and Florida markets) are expected to acquire inventory to meet expected demand.

We typically purchase land only after substantially all of the necessary governmental development approvals or entitlements have been obtained so that development or construction may begin as and when market conditions dictate. The term “entitlements” refers to the right, for the duration of the term of the entitlements, to develop a specific number of residential lots without the need for further public hearings or discretionary local government approvals. Entitlements generally give the developer the right to obtain building permits upon compliance with conditions that are ordinarily within the developer’s control. Although entitlements are usually obtained before we purchase land, we are still required to secure a variety of other governmental approvals and obtain permits prior to and during development and construction. The process of obtaining such approvals and permits can be costly and can substantially delay the development cycle.

We acquire land through purchases and option contracts. Deposits made in connection with entering into option contracts are generally refundable until the necessary entitlements and zoning, including plan approval and in some cases engineering plan approval, is obtained, at which point they become non-refundable. Purchases are generally financed through our cash flow from operations. Option contracts allow us to control lots and land without incurring the risks of land ownership or financial commitments, other than, in some circumstances, a non-refundable deposit. We also enter into option contracts with third parties, including our affiliates, to purchase finished lots before home construction begins. These option contracts may require a certain number of purchases per quarter. We have the right to decline to exercise future purchases and to cancel our future rights to lots, forfeiting only the deposits held by the sellers at that time, with exception of our project known as Trilogy Central Coast. At June 30, 2011, our total remaining obligation to purchase land at Trilogy Central Coast is $95.7 million to be paid in the next 5 years.

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At June 30, 2011, December 31, 2010 and December 31, 2009 total lots owned or controlled were as follows:

	June 30, 2011		December 31, 2010		% Change from December 31, 2010			December 31, 2009		% Change from December 31, 2009
Lots owned or controlled by segment:
California South		2,196		2,281		(4	)%		2,322		(5	)%
California North		3,673		3,443		7			3,746		(2	)
Mountain West/Other		11,792		10,836		9			11,014		7
Total consolidated		17,661		16,560		7			17,082		3
Unconsolidated Joint Ventures		6,107		7,867		(22	)		7,191		(15	)
Total lots owned or controlled		23,768		24,427		(3	)%		24,273		(2	)%
Lots owned or controlled by ownership type:
Lots owned		10,480		9,260		13	%		10,358		1	%
Lots optioned or subject to contract		7,181		7,300		(2	)		6,724		7
Joint venture lots		6,107		7,867		(22	)		7,191		(15	)
Total lots owned or controlled		23,768		24,427		(3	)%		24,273		(2	)%

Once we acquire undeveloped land, we generally begin development through contractual agreements with consultants and our TradePartners^®. These activities include site planning and engineering and constructing roads, sewer, water, utility and drainage systems and, in certain instances, recreational amenities. For additional information regarding our land position, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Selected Homebuilding Operational Data – Land and Homes in Inventory.”

Joint Ventures

Unconsolidated Joint Ventures

SHLP operates unconsolidated homebuilding and land development joint ventures (“Unconsolidated Joint Ventures”) with independent and affiliated parties in which SHLP does not have a controlling interest. These joint ventures allow SHLP to acquire attractive land positions, expand market opportunities, manage its risk profile and leverage its capital base. Most Unconsolidated Joint Ventures are with financial partners, where SHLP has a 5-15% ownership interest and receives promoted returns, which returns increase its share of profits beyond its ownership interest. In addition, SHLP collects fees as reimbursement of its costs to manage the venture and its properties.

In recent years, SHLP significantly reduced its exposure in certain Unconsolidated Joint Ventures. In April 2011, SHLP, through its Consolidated Joint Venture (as defined below), Shea Colorado LLC, entered into transactions with the joint venture partner of two Unconsolidated Joint Ventures in Colorado, in which SHLP owns a 50% ownership interest in each, SB Meridian Villages, LLC (SBMV) and TCD Bradbury, LLC (TCDB). First, SHLP assigned its membership interest in SBMV to the joint venture partner for $4.5 million, resulting in a $0.5 million gain. Second, SHLP contributed $11.5 million cash to TCDB and received $15.4 million of land and a $0.6 million secured promissory note payable, and the joint venture partner received $12.2 million and $6.5 million of land and cash, respectively. TCDB then paid off a bank note payable that was secured by the land distributed to the TCDB partners. In May 2008, SHLP restructured three joint ventures in which it owned with CalPERS where CalPERS purchased SHLP’s entire interest in two joint ventures, Shea Capital I, LLC and Shea Mountain House, LLC, and SHLP purchased CalPERS’ entire interest in the third joint venture, Shea Capital II, LLC, resulting in a $167.6 million loss.

In addition, for the years ended December 31, 2010, 2009 and 2008, SHLP wrote down its investment in Unconsolidated Joint Ventures by $1.3 million, $30.5 million and $35.1 million, respectively, a result of

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inventory impairments incurred by these joint ventures. For the six months ended June 30, 2011, there were no impairments in SHLP’s investments in Unconsolidated Joint Ventures. For the six months ended June 30, 2010, SHLP wrote down its investment in Unconsolidated Joint Ventures by $1.1 million, a result of inventory impairments incurred by these joint ventures.

SHLP’s Unconsolidated Joint Ventures obtain secured acquisition, development and construction financing primarily from third party lenders. At June 30, 2011, debt to these lenders was $69.2 million, of which SHLP issued loan-to-value maintenance, project completion and environmental hazard liability guarantees on $16.3 million. In addition, SHLP and SHI issued $72.1 million of loan-to-value maintenance and/or non-recourse exception guarantees (pursuant to which SHLP and SHI may be liable if the respective borrower engages in certain prohibited acts) for joint ventures owned by other Shea Family Owned Companies in which SHLP and SHI have no ownership interest. If these guarantees are triggered, SHLP and SHI could become liable for payment of this debt.

At June 30, 2011, the book value of SHLP’s investment in Unconsolidated Joint Ventures was $29.3 million, which includes $1.0 million of liabilities in excess of its investment in certain joint ventures.

Consolidated Joint Ventures

SHLP consolidates joint ventures when it has a controlling ownership interest or, absent a controlling interest, can substantially influence the joint venture’s business (“Consolidated Joint Ventures”). At June 30, 2011, SHLP conducted business primarily in two Consolidated Joint Ventures, Vistancia LLC (83.3% ownership) and Shea Colorado, LLC (58% ownership).

In August 2009, SHLP, through its Consolidated Joint Ventures, Vistancia LLC, entered into the Vistancia Transaction, where Vistancia LLC contributed land under development to single member LLCs and sold 90% of its interest in these LLCs to an unrelated third party for $67.5 million, resulting in a $195.7 million loss. As a result of the Vistancia Transaction, assets of Vistancia, LLC are comprised of a 10% investment in these single member LLCs and the homebuilding activities of its wholly-owned subsidiaries, Vistancia Construction, LLC and Vistancia Marketing, LLC.

Shea Colorado, LLC is a joint venture with Shea Properties II, a Shea affiliate, whose assets consist primarily of real estate, 50% ownership interests in Unconsolidated Joint Ventures and notes receivables from these Unconsolidated Joint Ventures.

SHLP has also recorded impairments on the real estate assets in Consolidated Joint Ventures. For the years ended December 31, 2010 and 2008, these impairments were $4.6 million and $61.8 million, respectively, of which $1.9 million and $17.9 million, respectively, were attributable to non-controlling interests. For the year ended December 31, 2009, there were no impairments on the real estate assets in Consolidated Joint Ventures. In addition, for the year ended December 31, 2010, SHLP recorded a $6.5 million charge for the non-realization of a non-controlling interest’s deficit capital balance. For the six months ended June 30, 2011 and 2010, there were no impairments on the real estate assets in Consolidated Joint Ventures.

Marketing and Sales

We believe we have established a valuable brand, which has a reputation for high quality construction, innovative design and strong customer service. We believe our reputation helps generate interest in each new project we undertake. We have positioned ourselves as the “homebuilder who cares” and believe our approach drives customer satisfaction, increases referrals and improves brand recognition.

We utilize a variety of marketing platforms, including website, internet and mobile applications, customer information centers, advertisements, newspapers, magazines and brochures, direct mail, billboards and fully

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decorated model units. We focus on being at the forefront of technological advances in products and how we communicate information to the marketplace. We have success with Facebook, Twitter and blogs, and in November 2009, we became the first national builder to launch an application for Apple’s iPhone and iTouch devices. We also maintain a state-of-the-art website that allows potential customers to insert their existing furniture into our floor plans, and benefit from an exclusive industry non-competition agreement with our website design firm.

Model homes play an important role in our marketing efforts. Consequently, we focus on creating an attractive atmosphere at each model home. We use local third-party design specialists for interior decorations, which vary within models based upon characteristics of targeted homebuyers. At June 30, 2011, we owned 231 model homes throughout our communities. In addition, we have home design service centers which offer a wide range of customization options to satisfy individual customer tastes.

To sell homes, we employ commissioned sales agents who are licensed real estate agents where required by law. We also utilize independent brokers, and pay for their services a market-based commission based on the price of the home.

Customer purchase deposit requirements vary amongst markets based on customs and practices and are influenced by the financing program utilized by the consumer. Total base purchase price deposits range from $500 to more than $70,000 and can represent less than 1% to more than 24% of the house purchase price (excluding options). Additional purchase deposits are required for options and upgrades and can be as high as 65% of the option price. Generally, higher deposit percentages are required for large option orders. For example, a customer may be required to make a 20% deposit for standard options but would then be required to deposit as much as 100% of the purchase price for unusual or significant levels of options. Most sales contracts stipulate (in accordance with applicable laws) when customers cancel their contracts following the satisfaction of all contingencies, we have the right to retain their earnest money and option deposits; however, we may elect to refund certain deposits based on special circumstances. Our sales contracts also include a financing contingency which permits customers to cancel and receive a refund of their deposits if they cannot obtain mortgage financing at prevailing or specified interest rates within a specified period. Our contracts may include other contingencies, such as the sale of an existing home. Our cancellation rate as a percentage of home sales orders averaged approximately 21% from 1997-2006 before the downturn in the homebuilding industry. Though this rate increased to a high of 31% in 2008, it returned to 20% in 2009. In 2010, our cancellation rate was 19%. For the six months ended June 30, 2011, our cancellation rate was 18%.

To reduce the risk of unsold inventory, we have formalized our approval process of home construction starts. Generally, customers must have approved financing, no contingencies tied to sale of an existing home, and an appropriate deposit before a construction of a home begins. Depending on market conditions in each community, we may begin construction on a limited number of homes when no signed sales contract exists to have inventory available for buyers who immediately need a home. In addition, we use various sales incentives, such as the payment of certain homebuyer costs to entice new home sales. Use of incentives and speculative construction is dependent on local economic and competitive market conditions.

Backlog

Sales order backlog represents homes under sales contracts but not yet closed at the end of the period. We recognize revenue on homes under sales contracts when the sale has closed, funds have been received by escrow and title passes to the new homeowners. At June 30, 2011, we had a backlog of 745 units with a sales value of $318.5 million.

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Seasonality

The homebuilding industry historically experienced seasonal fluctuations. We typically take more new home sales orders in spring and summer, although the amount of new home sales orders is also highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since we typically take three to eight months to construct a new home, we deliver more homes in the second half of the year as we convert spring and summer home sales orders to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows are historically highest from April to October while the majority of cash receipts from home closings occur between July and December. Therefore, operating results for the three and six months ended June 30, 2011 are not indicative of results expected for the year ended December 31, 2011.

The weakness in homebuilding market conditions in the last four years has disrupted the historical seasonal pattern. During the six months ended June 30, 2010, the federal homebuyer tax credit stimulated demand by providing an incentive for homebuyers to purchase homes. Accordingly, we experienced unusually higher home closings and house revenue during that time.

Consumer Financial Services

• We provide certain financial services to our homebuyers through:

• Shea Insurance Services, Inc., an entity 100% owned by SHI that provides insurance brokerage services; and

• Shea Financial Services, Inc., an entity 100% owned by SHI that provides management services to Shea Mortgage, Inc. (a related company).

Construction

As the general contractor for our communities, we employ subcontractors that meet our requirements for becoming what we refer to as our TradePartners^®. These requirements include quality and workplace safety standards and participation in training programs. We typically hire TradePartners^® on a community-by-community basis to complete construction at a fixed price. Occasionally, we enter into longer-term contracts or national account agreements (exclusive or non-exclusive) with suppliers or manufacturers if we can obtain more favorable terms or receive rebates based upon product usage. Our construction managers and field superintendents coordinate and schedule the activities of TradePartners^® and suppliers and subject their work to quality and cost controls.

We do not maintain significant inventories of construction materials, except for work-in-process materials for homes under construction. When possible, we negotiate price and volume discounts with manufacturers and suppliers to take advantage of production volume and regional purchasing capabilities, including with such parties as Delta, for plumbing fixtures, and Whirlpool, for appliances. Prices for these goods and services may fluctuate due to various factors, including supply and demand shortages that may be beyond the control of our vendors.

Quality Control and Warranty Programs

We view positive customer relations and adherence to stringent quality control standards as fundamental to our continued success. We believe our quality assurance programs help improve production efficiency, reduce warranty costs and increase customer satisfaction and referrals. Our commitment to product quality includes a comprehensive checkpoint evaluation at key points in the construction process, continuous improvement based on a direct feedback loop with our TradePartners^®, and our participation in TradePartners^® councils to discuss industry practices, solve problems and distribute information in an effort to build better homes.

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We offer our customers a one-or two-year limited warranty for our homes and typically provide ongoing customer service support for up to twelve years. The specific terms and conditions of these warranties vary depending on the market in which a home is sold. Additionally, post-closing, we proactively provide one-, five-and eleven-month customer care home visits. On-site customer care personnel coordinate with TradePartners^® to service the homes.

We record a reserve of approximately 1.0% to 2.0% of the sales price of a home to cover warranty and customer service expenses, although this allowance is subject to adjustment in special circumstances. Our historical experience is that warranty and customer service expenses generally fall within the amount established for such allowance. We believe that our reserves are adequate to cover the ultimate resolution of our potential liabilities associated with known and anticipated warranty and customer service related claims and litigation.

Insurance Coverage

We obtain workers compensation insurance, commercial general liability insurance, and certain insurance for completed operations losses and damages with respect to our homebuilding operations from unrelated third-party insurance providers. Policies covering these items are written by unrelated third parties at various coverage levels but include a self-insured retention or deductible ranging in amounts from $0.5 million to $25.0 million. We also have retention liability insurance from affiliated entities to insure these retentions or deductibility. See “Certain Relationships and Related Party Transactions—Supplemental Insurance Coverage and PIC Transaction.”

We require TradePartners^® be insured for workers compensation, commercial general liability and completed operations losses and damages, and most of our TradePartners^® carry this insurance through our “rolling wrap-up” insurance program, whereby our risk and risks of participating subcontractors working on our projects are insured through a set of master policies.

Competition and Market Factors

The development and sale of residential properties is highly competitive and fragmented. We compete for sales on the basis of a number of interrelated factors, including location, reputation, amenities, design, quality and price, with a number of large and small homebuilders, including some homebuilders with nationwide operations. We also compete for sales with individual resales of existing homes and against available rental housing. We believe that we compare favorably to other builders in the markets in which we operate, as evidenced by our market share.

The demand for new housing is affected by consumer confidence levels and prevailing economic conditions, including employment, interest rate levels and state and federal home ownership legislative policies. A variety of other factors affect the housing industry and demand for new homes, including the availability of labor and materials and increases in the costs thereof, changes in costs associated with home ownership such as increases in property taxes and energy costs, changes in consumer preferences, demographic trends and the availability of and changes in mortgage financing programs.

Government Regulation and Environmental Matters

The homebuilding industry is subject to extensive and complex regulations. We and the subcontractors we use must comply with various federal, state and local laws and regulations, including zoning, density and development requirements, building, environmental, advertising and real estate sales rules and regulations. These requirements affect the development process, as well as building materials to be used and the building designs of our properties. Moreover, we are dependent on state and local authorities to obtain building permits and other approvals in order to complete our development projects. The length of time necessary to obtain such permits and other approvals affects the carrying costs of unimproved property acquired for the purpose of development and construction, and the continued effectiveness of permits already granted is subject to factors such as changes in

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policies, rules and regulations, and their interpretation and application. Several governmental authorities have imposed impact fees as a means of defraying the cost of providing certain governmental services to developing areas. To date, the governmental approval processes discussed above have not had a material adverse effect on our development activities, and other homebuilders in a given market generally face the same fees and restrictions. There can be no assurance, however, that these requirements will not have a material adverse effect on us in the future.

In addition, some state and local governments in markets in which we operate have approved, and others may approve, slow-growth or no-growth initiatives that could negatively impact the availability of land and building opportunities within those areas. Substantially all of our land is entitled and, therefore, the moratoriums generally would only adversely affect us if they arose from health, safety and welfare issues such as insufficient water or sewage facilities. Nevertheless, approval of these initiatives could adversely affect our ability to build and sell homes in the affected markets or could require the satisfaction of additional administrative and regulatory requirements, which could result in slowing the progress or increasing the costs of our homebuilding operations in these markets. Any such delays or costs could have a negative effect on our future revenues and earnings.

Our homebuilding operations are also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning land use and the protection of health, safety and the environment. The particular impact and requirements of environmental laws for each site vary greatly according to location, environmental condition and the present and former uses of the site and adjoining properties. Complying with such laws may result in delays, cause us to incur substantial compliance and other costs or prohibit or severely restrict development in certain environmentally sensitive regions or areas. To date, such compliance has not had a material adverse effect on our operations, although it may have such an effect in the future.

We typically conduct certain limited environmental due diligence reviews prior to the acquisition of undeveloped properties. With respect to finished lots that we acquire from other developers, we generally do not conduct environmental due diligence separate from that already performed by the selling developer prior to acquisition. Prior to development, we undertake extensive site planning activities as appropriate for each community, which may include the design and implementation of stormwater management plans, wetlands delineation and mitigation plans, perennial stream flow determinations, erosion and sediment control plans and archeological, cultural and endangered species surveys. We may be required to obtain permits or other approvals for our operations, particularly in environmentally sensitive areas, such as wetlands. Infrastructure projects impacting public health and the environment, such as the construction of drainfields or connection to public sewer lines, and the drilling of wells or connection to municipal water supplies, may be subject to inspection and approval by local authorities. We also could incur cleanup costs and obligations with respect to environmental conditions at our properties, including, under some environmental laws, conditions resulting from the operations of prior site owners or operators, or at properties where we have disposed of wastes. Although no assurances can be given, we are not aware of obligations or liabilities arising out of environmental conditions in any of our existing developments that are likely to materially and adversely affect us.

Employees

At June 30, 2011, we employed 538 people, of whom 271 were executive management, office and administrative personnel, 111 were sales representatives and 156 were involved in construction. None of our employees are covered by collective bargaining agreements. Employees of certain of the TradePartners^® are represented by labor unions or are subject to collective bargaining arrangements. We believe that our relations with our employees and TradePartners^® are satisfactory.

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PROPERTIES

We lease 189,251 square feet of office space in various locations from related and unrelated parties. All rents were at market rates at the time of lease execution. We have satellite offices in Aliso Viejo, California; Corona, California; Livermore, California; San Diego, California; Scottsdale, Arizona; and Denver, Colorado. The total square footage leased from related parties is 121,034 and comprises the offices in Aliso Viejo, Livermore, San Diego and Denver. Our corporate office is in Walnut, California, approximately 35 miles east of Los Angeles, California. JFSCI leases this office from a related party and SHLP bears 59% of its total cost. For information about land owned or controlled by us for use in our homebuilding activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Selected Homebuilding Operational Data—Land and Homes in Inventory.”

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LEGAL PROCEEDINGS

From time to time we are involved in various legal proceedings incidental to our business. We believe that none of these matters, some of which are covered by insurance, will have a material impact upon our financial condition.

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MANAGEMENT

Executive Officers

The names, ages and positions of the executive officers of SHLP as of the date of this prospectus are set forth below:

Name	Age	Position(s)
Bert Selva	49	President and Chief Executive Officer
Bruce Varker	58	Chief Financial Officer
Layne Marceau	48	President—Northern California
Buddy Satterfield	58	President—Arizona
Rick Andreen	46	President—Trilogy brand

Directors

The names and ages of the directors of J.F. Shea Construction Management Inc., which is the ultimate general partner of SHLP, as of the date of this prospectus are set forth below:

Name	Age	Position(s)
John F. Shea	85	Director
Peter O. Shea	76	Director
Peter Shea, Jr.	44	Director
John C. Morrissey	53	Director
James G. Shontere	64	Director

Bert Selva. Mr. Selva has served as our President and Chief Executive Officer since 2002. Prior to that time, he served as our President for the Colorado homebuilding operations, which he was instrumental in founding. Before joining us in 1996, Mr. Selva served as a senior executive with KB Home from 1994 to 1996. He previously served as the Chief Financial Officer of Signature Homes. Mr. Selva holds an M.B.A. from UCLA and a B.S. from the University of Southern California. Mr. Selva serves on the Executive Committee of the Lusk Center for Real Estate at the University of Southern California and is Chairman of the National Advisory Board of HomeAid America.

Bruce Varker. Mr. Varker has served as our Chief Financial Officer since joining us in 1994. Before joining us, he served as the Chief Financial Officer of Bramalea California, Inc. from 1984 to 1994, and as the Chief of Financial Services at William Lyon Company from 1981 to 1984. Mr. Varker holds a B.S. from the University of Maryland.

Layne Marceau. Mr. Marceau has served as our President of our northern California homebuilding operations since 2000. Prior to that time, he was our Chief Financial Officer of our southern California homebuilding operations. Before joining us in 1995, Mr. Marceau was a real estate consultant and auditor at the accounting firm of Deloitte & Touche. Mr. Marceau holds an M.B.A. from the University of California, Irvine and a B.S. from the University of California, San Diego. Mr. Marceau has served on the boards of HomeAid of northern California since 1995 and the Livermore Performing Arts Center since 2007.

Buddy Satterfield. Mr. Satterfield has served as our President of our Arizona homebuilding operations since 1996. Prior to that, he served as the Vice President of Sales and Marketing. Before joining us in 1991, Mr. Satterfield served as the Vice President of Sales and Marketing for Estes Homes. Mr. Satterfield holds a B.S. from The University of Phoenix. Mr. Satterfield serves on the board of the Home Builders Association of Central Arizona.

Rick Andreen. Mr. Andreen has served as the President of our Trilogy brand since joining us in 1999. Prior to that time, Mr. Andreen served as President of the active adult group of Pulte Homes from 1995 to 1999, and as

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Operations Manager for Centex Homes from 1989 to 1995. Mr. Andreen holds a B.S. from the University of Oklahoma. Mr. Andreen serves on the board of Circle the City, a Phoenix, Arizona based non-profit.

John F. Shea. Mr. Shea has been a member of the Board of Directors of the general partner of SHLP since SHLP’s formation in 1989. He is currently the Chairman of the Board for JFSCI after formerly serving as its President and CEO until 2005. Mr. Shea holds a B.C.E. from the University of Southern California.

Peter O. Shea. Mr. Shea has been a member of the Board of Directors of the general partner of SHLP since SHLP’s formation in 1989. He is currently an Executive Vice President of JFSCI and the President of J.F. Shea Construction, Inc. Mr. Shea holds a B.B.A. from the University of California, Berkeley and a B.C.E. from the University of Southern California.

Peter Shea, Jr. Mr. Shea has been a member of the Board of Directors of the general partner of SHLP since 2005. He also serves as President and Chief Executive Officer of JFSCI. Before assuming this position, he served as Chief Operating Officer of JFSCI for three years, prior to which he was Vice President of J.F. Shea Construction, Inc. Mr. Shea holds a B.S. in Civil Engineering from the University of California, Berkeley. He serves on the boards of Fidelity National Title and the Beavers, a nationwide construction engineering association.

John C. Morrissey. Mr. Morrissey has been a member of the Board of Directors of the general partner of SHLP since 2005. He is currently an Executive Vice President of JFSCI and Managing Director of Shea Ventures. Prior to joining Shea in 2003, Mr. Morrissey was a partner at the law firm Bingham McCutchen LLP. He received his B.A. in Economics from Yale College. He received a degree in Philosophy, Politics & Economics from Oxford University. He earned his J.D. degree from the University of Chicago Law School.

James G. Shontere. Mr. Shontere has been a member of the Board of Directors of the general partner of SHLP since SHLP’s formation in 1989. He has served as the Chief Financial Officer of JFSCI since 1987, where he also serves as the Corporate Secretary and is a member of the Board of Directors. Before joining JFSCI, Mr. Shontere served as the Chief Financial Officer of a privately held manufacturer/distributor, prior to which he served as director of accounting for Taco Bell, a division of PepsiCo. Mr. Shontere holds both a B.A. and an M.B.A. from the University of Southern California. He serves on the board of CalTax, a business advisory board to the California state government.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis describes the material elements of compensation for our executive officers. When we refer to “executive” in this section, we mean our five executives listed in the Summary Compensation Table: Bert Selva, President and CEO of SHLP, Bruce Varker, Chief Financial Officer, Buddy Satterfield, President—Arizona, Rick Andreen, President—Trilogy brand, and Layne Marceau, President—Northern California.

Compensation Objectives

The objective of our compensation program for our named executive officers is to provide an appropriate level of compensation to attract, retain, and motivate highly skilled and experienced executives. The program is designed to provide a combination of fixed and variable pay components that will result in compensation levels that recognize both individual performance and the overall performance of SHLP.

Elements of Executive Compensation

Our executive compensation program consists of several components, including base salaries, cash bonuses, limited perquisites, a deferred compensation plan, and retirement benefits.

In addition, an affiliate of SHLP develops and manages income properties, and in the past the named executives have been recipients of grants of minority interests in certain properties which were developed by this affiliate. There were no such grants in 2010.

Determination of Executive Compensation

The directors of SHLP determine the amount and type of executive compensation to be paid to the named executives of SHLP in any given compensation year at their discretion. The President of SHLP makes recommendations and is part of the approval process with respect to the amount and type of compensation to be paid to the other four named executives. The directors of SHLP have not created a formal compensation committee and have not historically engaged compensation consultants to assist them with the determination of compensation for the named executives.

Base Salaries

Base salaries are intended to provide a level of stability to SHLP’s named executives’ annual compensation package, as they are fixed at the beginning of each compensation year. Base salaries are reviewed on an annual basis. In such review, the directors of SHLP may consider factors including levels of experience, responsibilities and personal and company performance. There were no base salary adjustments made in 2010.

Cash Bonuses

Cash bonuses for our named executive officers are discretionary and reviewed on an annual basis. For each individual named executive, annual cash bonus amounts are determined by the directors of SHLP based on the overall performance of SHLP and, where applicable, the performance of homebuilding projects under such executive’s management. Factors that may be considered in determining annual cash bonuses for SHLP’s named executives include the pre-tax profits of SHLP, and, where applicable, the specific pre-tax profits of homebuilding projects under the executive’s management. Where applicable, the directors of SHLP may also consider the performance of homebuilding projects under an executive’s management against such metrics as homebuyer customer service scores and achievement of production objectives. However, in 2010, in response to a difficult operating environment that affected results for all homebuilders, factors that have historically been considered in setting annual cash bonuses were given less weight by the directors of SHLP, and discretionary cash bonuses were paid to each of the named executives of SHLP.

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Non-Qualified Deferred Compensation Plan

JFSCI, on our behalf, maintains a non-qualified Deferred Compensation Plan. The plan covers employees whose total annual compensation is at least $110,000 and who are selected by the committee that administers the plan. This plan is designed to allow participants to accumulate additional savings on a pre-tax basis.

Retirement Savings Plan

JFSCI, on our behalf, maintains a 401(k) Retirement Savings Plan that includes a profit sharing component covering all eligible employees, including our named executive officers. The plan includes employer participation in accordance with provisions of Section 401(k) of the Internal Revenue Code. The plan allows participants to make pre-tax contributions. On a discretionary basis, we may match employee contributions up to 5% of the employee’s salary. The profit sharing portion of the plan is discretionary and non-contributory, allowing us to make additional contributions of up to another 5% of the employee’s salary. All amounts contributed to the plan are deposited into a trust fund administered by independent trustees. For the year ended December 31, 2010, there were no matching 401(k) contributions or profit sharing contributions.

Employment Agreements; Severance

The Company has not entered into employment agreements with any of the named executive officers, and none of the named executive officers are entitled to severance or change in control payments in connection with a termination of employment or a change in control.

Limited Perquisites

Our named executive officers, in addition to their base pay, generally receive an automobile allowance and the use of a company-provided gas card. These amounts are included below in the Summary Compensation Table in the “All Other Compensation” column.

Tax Considerations

In determining which elements of compensation are to be paid, and how they are weighted, we also take into account whether a particular form of compensation will be deductible under Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Section 162(m) generally limits the deductibility of compensation paid to our named executive officers (other than the Chief Financial Officer) to $1 million during any fiscal year unless such compensation is “performance-based” under Section 162(m). As a privately-held company, we have not historically been subject to the limitations under Section 162(m). Our compensation program is intended to maximize the deductibility of the compensation paid to our named executive officers to the extent that we determine it is in our best interests.

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Summary Compensation Table

The following table sets forth a summary of the compensation paid or accrued during the year ended December 31, 2010 to our Chief Executive Officer, Chief Financial Officer and the next three most highly compensated executive officers:

	Salary		Bonus		All Other Compensation(1)		Total Compensation
Bert Selva President and Chief Executive Officer	$	425,000	$	400,000	$	12,498	$	837,498
Bruce Varker Chief Financial Officer		232,000		175,000		13,243		420,243
Buddy Satterfield President—Arizona		242,000		200,000		10,521		452,521
Rick Andreen President—Trilogy brand		242,000		200,000		10,060		452,060
Layne Marceau President—Northern California		231,000		200,000		11,726		442,726

⁽¹⁾ All Other Compensation consists of costs incurred by SHLP in providing each named executive with an automobile allowance and the use of a company-provided gas card.

Non-Qualified Deferred Compensation Table

The following table sets forth a summary of our non-qualified Deferred Compensation Plan paid or accrued during the year ended December 31, 2010 to our Chief Executive Officer, Chief Financial Officer and the next three most highly compensated executive officers:

	Executive Contributions			Registrant Contributions			Aggregate Earnings			Aggregate  Withdrawals/  Distributions				Aggregate Balance
Bert Selva President and Chief Executive Officer		$	—		$	—		$	—		$	(294,650	)		$	—
Bruce Varker Chief Financial Officer			—			—			—			—				—
Buddy Satterfield President—Arizona			—			—			4,472			—				62,708
Rick Andreen President—Trilogy brand			—			—			—			—				—
Layne Marceau President—Northern California			—			—			—			(137,819	)			—

JFSCI, on our behalf, maintains a non-qualified Deferred Compensation Plan. The plan allows participants to defer up to 80% of base salary, 80% of commissions and 100% of bonus in a deferral account. Deferred amounts may be invested in a variety of investment funds. On behalf of each participant, on a discretionary basis, we may contribute to a separate account comprised of investment funds that correspond to such participant’s deferral account. The plan is designed to comply with Section 409A of the Internal Revenue Code. Deferred amounts may be distributed to each participant upon a separation from service, death, disability, on a scheduled withdrawal date, or with committee approval, in the event of an unforeseen emergency. For the year ended December 31, 2010 and the six months ended June 30, 2011, we made no contributions under the plan.

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Director Compensation

Members of SHLP’s Board of Directors are members of the Shea family and/or employees of JFSCI. These directors receive no additional compensation for their service on the Board, however, as employees of JFSCI, their costs, including compensation, are included in the allocation of shared services costs to us for corporate services provided by JFSCI.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Ownership interests in SHLP are held in three classes: Class B, Class C and Class D. Profit allocations to the capital accounts of holders of these interests are only made following restoration of losses from prior periods.

Class C interests have rights that are similar to common equity ownership. Holders of Class C interests are allocated 99% of SHLP’s profits, after allocation of profits to holders of Class B and Class D interests in accordance with the preferred allocations described below. SHLP’s outstanding Class C interests are the only interests that carry voting rights.

Holders of Class B interests are allocated a preferred interest in any SHLP profits, which is based on a floating interest rate applied to their capital account, but no other share of profits. Holders of Class D interests are allocated a preferred interest in any SHLP profits, which is based on a fixed 7% interest rate applied to their capital account. Holders of Class D interests also receive a non-preferred allocation equal to 1% of any remaining SHLP profits after the Class B and Class D preferred allocations described above.

The following table sets forth the percentage of SHLP’s Class C limited partnership interests that are held by each person who is or is deemed to be a beneficial owner of such limited partnership interests. No executive officer of SHLP or Shea Homes Funding Corp. beneficially owns any of SHLP’s outstanding limited partnership interests.

SHLP owns 100% of the outstanding common stock of Shea Homes Funding Corp. The mailing address of each owner listed below is c/o Shea Homes Limited Partnership, 655 Brea Canyon Road, Walnut, CA 91789.

SHLP is effectively controlled by members of the Shea family, including John Shea, Mary Shea (wife of Edmund Shea—deceased) and Peter Shea.

Name of Beneficial Owner	Percentage  Beneficial Ownership(1)
Direct Owners
J.F. Shea L.P.(2)		20.83%
Orlando Road LLC(3)(6)		33.52
Virginia Road LLC(4)(7)		20.30
Bay Front Drive LLC(5)(8)		12.94
Tahoe Partnership(9)		3.42
The John F. Shea Family Trust		3.13
Shea Investments(9)		3.08
Balboa Partners(9)		2.78
Indirect Owners
John and Dorothy Shea(3)		57.48%
Mary Shea(4)		41.13
Peter and Carolyn Shea(5)		33.77
The descendants of John and Dorothy Shea(6)		33.52
The descendants of Mary Shea(7)		20.30
The descendants of Peter and Carolyn Shea(8)		12.94
JFS Management LP(10)		20.83

(1) Beneficial ownership is determined in accordance with Section 13 of the Exchange Act and the rules promulgated thereunder. Accordingly, if an individual or entity is a member of a “group” which has agreed to act together for the purpose of acquiring, holding, voting or disposing of membership interests, such individual or entity is deemed to be the beneficial owner of the membership interests held by all members of the group. Further, if an individual or entity has or shares the power to vote or dispose of membership interests held by another entity, beneficial ownership of the interests held by such entity may be attributed to such other individuals or entities.

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(2) J.F. Shea LP directly owns 20.83% of Shea Homes Limited Partnership’s outstanding limited partnership interests and is in turn 96.00% owned by JFSCI and 4.00% owned by JFS Management LP. JFSCI is in turn 46.07% owned by the John F. Shea Family Trust, 25.54% owned by the E&M Shea Revocable Trust, 16.49% owned by the Peter and Carolyn Shea Revocable Trust, 3.93% owned by certain trusts for the benefit of the children of John F. Shea, 4.46% owned by certain trusts for the benefit of the children of Edmund Shea and 3.51% owned by certain trusts for the benefit of the children of Peter Shea.

(3) John and Dorothy Shea, as beneficiaries of the John F. Shea Family Trust, directly own 3.13% of Shea Homes Limited Partnership’s outstanding limited partnership interests and are deemed to beneficially own 20.83% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s indirect ownership interest in J.F. Shea LP and 33.52% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s direct ownership interest in Orlando Road LLC.

(4) Mary Shea, as beneficiary of the E&M Shea Revocable Trust, is deemed to beneficially own 20.83% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s indirect ownership interest in J.F. Shea LP and 20.30% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s direct ownership interest in Virginia Road LLC.

(5) Peter and Carolyn Shea, as beneficiaries of the Peter & Carolyn Shea Revocable Trust, are deemed to beneficially own 20.83% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s indirect ownership interest in J.F. Shea LP and 12.94% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s direct ownership interest in Bay Front Drive LLC.

(6) The descendents of John and Dorothy Shea, including children and grandchildren, as beneficiaries of the 1996 Dorothy Shea Trust, can be considered a “group” as such term is used in Section 13(d)(3) of the Exchange Act and are deemed to beneficially own 33.52% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s direct ownership interest in Orlando Road LLC.

(7) The descendents of Mary Shea, including children and grandchildren, as beneficiaries of the 1996 Mary Shea Trust, can be considered a “group” as such term is used in Section 13(d)(3) of the Exchange Act and are deemed to beneficially own 20.30% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s direct ownership interest in Virginia Road LLC.

(8) The descendents of Peter and Carolyn Shea, including children and grandchildren, as beneficiaries of the 1996 Carolyn Shea Trust, can be considered a “group” as such term is used in Section 13(d)(3) of the Exchange Act and are deemed to beneficially own 12.94% of Shea Homes Limited Partnership’s outstanding limited partnership interests through the trust’s direct ownership interest in Bay Front Drive LLC.

(9) Tahoe Partnership, Shea Investments, and Balboa Partners are investment entities owned by the Shea family.

(10) JFS Management LP is deemed to beneficially own 20.83% of Shea Homes Limited Partnership’s outstanding limited partnership interests through its ownership interests in J.F. Shea LP. JFS Management LP is in turn 50.00% owned by Shea Management LLC and 50.00% owned by J.F. Shea Construction Management Inc. Shea Management LLC is owned 11.00% by Peter Shea Jr., 6.00% by John Morrissey, 3.75% by Jim Shea, and 79.25% by certain employees of Shea Management LLC and certain of the executive officers of SHLP. J.F. Shea Construction Management Inc. is 33.33% owned by the 1996 Dorothy Shea Trust, 33.33% owned by the 1996 Mary Shea Trust and 33.33% owned by the 1996 Carolyn Shea Trust.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The Shea Family of Companies

SHLP and SHI are part of the Shea Family Owned Companies. The Shea family consists primarily of John Shea, Sr., Mary Shea (wife of his cousin, Edmund Shea, Jr.—deceased) and his cousin, Peter Shea, and their 17 children. While John and Peter Shea actively participate in strategic management decisions for the Shea family companies, day-to-day management decisions with respect to the Shea family companies are made by Peter Shea, Jr. and John Morrissey, who serve as directors of J.F. Shea Construction Management Inc., which is the ultimate general partner of SHLP.

The Shea Family Owned Companies are operated in three major groups: homebuilding, heavy construction and commercial property development and management. Much of the Shea Family Owned Companies’ business has traditionally been operated and managed through JFSCI, with each of the homebuilding, heavy construction, and commercial property businesses providing management, administrative, financial and credit support to one another. Over the past several years, the Shea family and our management have made a series of changes to the business and operating structure of the Shea Family Owned Companies so that, currently:

• the Shea family homebuilding business is owned and operated primarily through SHLP, SHI and their subsidiaries;

• the Shea family heavy construction business is owned and operated primarily through JFSCI; and

• the Shea family commercial development and management operation is owned and operated primarily through Shea Properties, LLC and Shea Properties II, LLC.

Use of the Shea Homes Brand

Most of the Shea family homebuilding business under the Shea Homes brand is owned and operated by SHLP, SHI and their subsidiaries. However, some homebuilding businesses and projects under the Shea Homes brand are, and will continue to be, owned and operated by legal entities that are owned and controlled by the Shea family separately from SHLP and SHI. These legal entities are not Guarantors and their assets are not pledged as collateral for the notes. The homebuilding projects owned and operated by these legal entities include:

• Shea/Baker Ranch Associates—Unentitled land owned in southern Orange County, California by a joint venture between the Shea family and the Baker family, which was the original landowner. Presently, the Shea/Baker joint venture is entitling land for residential development.

• Shea Homes North Carolina—Builds homes in North Carolina and South Carolina under the Shea Homes brand and shares a website with SHLP and SHI. Shea Homes North Carolina also contracts with JFSCI for certain management and administrative services. Shea Homes North Carolina is based in Charlotte, North Carolina and is owned and operated by children and nephews of John Shea and Mary Shea.

• Shea Mortgage, Inc.—A related entity that arranges mortgage origination options for customers, helping to ensure customers secure financing for their home purchases. Although closely related to the homebuilding operation, Shea Mortgage is owned directly by members of the Shea family and is not a Guarantor of the notes. Shea Financial Services, an entity 100% owned by SHI, provides management services to Shea Mortgage.

Cash Management and Treasury Services

Until August 2011, SHLP participated in a centralized cash management and treasury function operated by JFSCI, whereby net cash flows from operations were transferred daily with JFSCI and resulted in related party transactions and fund transfers to settle and account for amounts owed. In August 2011, SHLP ceased its participation in this centralized cash management and treasury function and performed this function independently. The resultant receivables and payables are stated in the consolidated financial statements as receivables from related parties, net or payables to related parties.

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Other Shared Services

SHLP and SHI share several administrative operations with members of the Shea Family Owned Companies, including management, legal, tax, information technology, facilities, accounting, treasury and human resources. This sharing and resultant allocation of costs is based on reasonable and customary practices, is governed by written agreement and requires intercompany transactions and fund transfers to settle and account for amounts owed between entities. The resultant receivables and payables are stated in the consolidated financial statements as receivables from related parties, net or payables to related parties.

Related Party Receivables and Payables

Included in receivables from related parties, net are interest bearing note receivables from JFSCI, Unconsolidated Joint Ventures and other Shea Family Owned Companies in which SHLP has no ownership interest, as follows:

At December 31,	JFSCI (net)		Unconsolidated Joint Ventures		Other Shea Affiliates		Total, net		Highest Monthly Ending Balance
	(In thousands)
2010	$	177,011	$	24,817	$	204	$	202,032	$	224,957
2009		192,335		24,117		4,831		221,283		317,840
2008		197,558		24,298		16,873		238,729		258,649
At June 30,
2011		31,466		25,252		2,049		58,767		192,194
2010		195,629		24,402		4,926		224,957		224,957

Previously, the net note receivable from JFSCI was unsecured and due on demand, and on May 10, 2011, through a series of transactions, was converted to an unsecured term note, bearing 4% interest, payable in equal quarterly installments and due May 15, 2019. On June 17, 2011, JFSCI elected to make a $7.7 million prepayment, including accrued interest, and apply the payment to future installments such that JFSCI would not be required to make a payment until November 15, 2012.

At December 31, 2010, the net note receivable from JFSCI accrued interest at Prime minus 2.05% (1.2%), and at December 31, 2009 and 2008, at a rate ranging from Prime minus 2.05% (1.2%) to 3.25%. At June 30, 2011, the net note receivable from JFSCI accrued interest at 4%, and at June 30, 2010, at Prime minus 2.05% (1.2%).

At June 30, 2011, SHLP and its subsidiaries had note receivables, including accrued interest, from these Unconsolidated Joint Ventures:

Borrower	Amount Outstanding at June  30, 2011
	(In thousands)
TCD Bradbury, LLC	$	14,850
Meridian MB, LLC		9,969
AGS Jubilee		433
Total	$	25,252

The note receivables bear interest ranging from 4.17% to 8% and mature from 2013 through 2020. The note receivable from Meridian MB, LLC is secured by real property, and the note receivable from AGS Jubilee earns additional interest to achieve a 17.5% internal rate of return, subject to available cash flows of the joint venture, and can be repaid prior to 2020.

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At June 30, 2011, SHLP and its subsidiaries also had note receivables from the following Shea Family Owned Companies which SHLP has no ownership interest:

Borrower	Amount Outstanding at June 30, 2011
	(In thousands)
Shea Management LLC	$	2,113
Shea Properties Management Company		10,572
Shea Baker Ranch LLC		2,027
Subtotal		14,712
Valuation reserve(1)		(12,663	)
Total	$	2,049

(1) In 2009, SHLP recorded reserves in the full amount of the note receivables from Shea Management LLC and Shea Properties Management Company due to uncertainty of collection. In June 2011, Shea Properties Management Company paid the accrued interest for 2010 and 2011. Therefore, current interest from Shea Properties Management Company is not reserved.

These notes are unsecured, bear interest ranging from Prime less 2.05% to Prime plus 1% (1.2% to 4.25% at June 30, 2011), and mature through 2021.

SHLP and certain other Shea Family Owned Companies also engage in specific transactions with third parties on behalf of each other. These transactions primarily relate to employee payroll and payment of subcontractor and supplier invoices. The resultant receivables and payables are non-interest bearing and due on demand. Prior to 2009, the accounts payables and receivables resulting from such transactions were allowed to offset but the ultimate settlement of net amounts was not regularly performed because of the small amounts involved. Beginning in 2009, payroll is funded when paid and the receivables and payables resulting from subcontractor and supplier invoice payments are settled monthly.

At December 31, 2010, 2009 and 2008, SHLP’s non-interest-bearing receivables from related parties were approximately $2.4 million, $0.9 million and $12.0 million, respectively. During the years ended December 31, 2010, 2009 and 2008, SHLP’s highest month-end balance of non-interest-bearing receivables from related parties was $5.8 million, $53.6 million and $92.3 million, respectively.

At June 30, 2011 and 2010, SHLP’s non-interest bearing receivables from related parties were approximately $0.8 million and $1.5 million, respectively. During the six months ended June 30, 2011 and 2010, SHLP’s highest month-end balance of non-interest-bearing receivables from related parties was $1.5 million and $5.8 million, respectively.

At December 31, 2010, 2009 and 2008, SHLP’s non-interest-bearing payables to related parties, which primarily result from payments made on SHLP’s behalf by such parties, were $9.2 million, $7.5 million and $99.2 million, respectively.

At June 30, 2011 and 2010, SHLP’s non-interest-bearing payables to related parties, which primarily result from payments made on SHLP’s behalf by such parties, were $6.7 million and $12.9 million, respectively.

General Contractor Services

SHLP, SHI and J.F. Shea Construction Management, Inc., the ultimate general partner of SHLP, hold contractor’s licenses in various jurisdictions and use their licenses to build homes on behalf of their wholly-owned subsidiaries. These companies do not charge a fee for performing such contracting services.

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In 2010, SHLP acquired a new project in north Las Vegas, Nevada. Because neither SHLP nor SHI currently holds contractor’s licenses in Nevada, JFSCI, which holds a contractor’s license in Nevada, is the general contractor on this project. JFSCI does not receive fees for this service. Costs of the project are paid by SHLP.

In Florida, J.F. Shea Construction Management, Inc. holds the contractor’s license and acts as general contractor for SHLP homes built in that state. J.F. Shea Construction Management, Inc. does not receive fees for this service. All project costs in Florida are paid by SHLP, SHI or their subsidiaries.

Shea Homes at Montage, LLC, the Shea family-owned entity that develops residential property in Livermore, California, does not hold a contractor’s license and SHLP, the general contractor, receives fees equal to 4.5% of house revenue. For the years ended December 31, 2010, 2009 and 2008, SHLP received $1.1 million, $1.8 million and $0.2 million of fees, respectively, and for the four months ended April 30, 2011 and six months ended June 30, 2010, received $0.3 million and $0.6 million of fees, respectively. Project costs are paid by Shea Homes at Montage, LLC. In May 2011, Shea Homes at Montage, LLC was contributed to SHI and is included in the consolidated financial statements.

Guarantees and Other Credit Support

At June 30, 2011, SHLP had $16.3 million of potential liabilities pursuant to guarantees of joint venture debt in which SHLP and/or its subsidiaries hold an ownership interest, and $72.1 million of potential liabilities pursuant to guarantees with respect to financings of other Shea Family Owned Companies’ projects in which SHLP has no ownership interest, including $46.7 million of guarantees for “bad boy” acts of affiliated borrowers, such as voluntary bankruptcy, fraud or material misrepresentation, and $25.4 million of guarantees on debt of Shea/Baker Ranch Associates, LLC. See “Description of Other Indebtedness.”

At June 30, 2011, SHLP had $70.2 million of exposure on $177.9 million of surety bonds issued for its projects.

SHLP also provided indemnification for bonds issued by Unconsolidated Joint Ventures and other Shea Family Owned Companies. At June 30, 2011, SHLP had $30.0 million of exposure on $72.8 million of surety bonds issued by Unconsolidated Joint Ventures and $3.7 million of exposure on $7.8 million of surety bonds issued by other Shea Family Owned Companies.

In addition, SHLP may issue letters of credit under its letter of credit facility on behalf of its Unconsolidated Joint Ventures.

Management of Joint Ventures

SHLP is the managing member for several Unconsolidated Joint Ventures, including River Park Legacy, LLC and Marina Community Partners, LLC, in which one of SHLP’s joint venture partners is Shea Properties, LLC, a related company.

For its services, SHLP receives a management fee from the joint ventures as reimbursement for direct and overhead costs incurred by SHLP on behalf of the joint ventures. For the years ended December 31, 2010, 2009 and 2008, $4.5 million, $4.5 million and $7.7 million, respectively, of management fees were offset against general and administrative expenses as cost reimbursements, and $1.6 million, $0.5 million and $2.4 million of management fees, respectively, were included in other homebuilding revenues for the amount exceeding cost reimbursements. For the six months ended June 30, 2011 and 2010, $1.7 million and $2.3 million of management fees, respectively, were offset against general and administrative expenses as cost reimbursements, and $0.6 million and $0.7 million, respectively, of management fees were included in other homebuilding revenues for the amount exceeding cost reimbursements.

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Pursuant to management and development contracts with CalPERS, Shea Capital I, LLC and Shea Mountain House, LLC, homebuilding and land development entities, respectively, owned by CalPERS in which SHLP previously had an ownership interest, pay SHLP a management fee as reimbursement for the direct and overhead costs incurred by SHLP on their behalf. For the years ended December 31, 2010, 2009 and 2008, $3.7 million, $4.3 million and $8.5 million of management fees, respectively, were offset against general and administrative expenses as cost reimbursements, and $0.9 million, $1.0 million and $0.6 million of management fees, respectively, were included in other homebuilding revenues for the amount exceeding cost reimbursements. For the six months ended June 30, 2011 and 2010, $2.0 and $2.1 million of management fees, respectively, were offset against general and administrative expenses as cost reimbursements, and $0.0 million and $0.5 million of management fees, respectively, were included in other homebuilding revenues for the amount exceeding cost reimbursements.

Tax Distribution Agreement

SHLP, the partners of SHLP, and the direct and indirect holders of all beneficial interests in SHLP, entered into an agreement (the “Tax Distribution Agreement”) which requires SHLP to distribute cash payments to its partners for taxes incurred by such partners (or their direct or indirect holders) for their ownership interest in SHLP. Under the Tax Distribution Agreement, SHLP is required to make distributions to its partners quarterly or annually if the aggregate income tax liability of the SHLP partners (or their direct or indirect holders) with respect to allocations of income to such persons for periods commencing on or after January 1, 2011, at any time exceeds amounts previously distributed to such persons after January 1, 2011 (excluding for this purpose certain distributions otherwise permitted pursuant to the Indenture). The aggregate income tax liability of the SHLP partners (or their direct or indirect holders) is determined on a notional basis by multiplying the income allocated to such partners (or their direct or indirect holders) for tax purposes by the highest aggregate marginal combined federal, state and local income tax rates applicable to such income. Under the Tax Distribution Agreement, SHLP is also required to make distributions to its partners to pay the adjusted income tax liability of the SHLP partners (or their direct or indirect holders) as a result of an adjustment to items of income, gain, loss, or deduction of SHLP upon the resolution of any tax proceeding of SHLP or any entity treated as a “pass-through” entity under U.S. federal income tax principles in which SHLP has an ownership interest, including the CCM proceeding. Such adjusted income tax liability of the SHLP partners (or their direct or indirect holders) is determined by multiplying the increase in income (or reduction of loss) allocated to such partners (or their direct or indirect holders) for tax purposes basis by the highest aggregate marginal combined federal, state and local income tax rates applicable to such income or loss.

Vistancia Transaction

In August 2009, Vistancia LLC, a Consolidated Joint Venture, contributed substantially all of its land to four single member LLCs and sold 90% of its interest in these LLCs to an unrelated third party for $67.5 million. The cash consideration from the Vistancia Transaction and contributions from the partners of Vistancia LLC were used to pay down the principal loan balance that was secured by the underlying land, which outstanding balance with accrued interest was $107.9 million. The resultant unpaid principal of $33.1 million was canceled by the bank creditor. As a result, SHLP incurred a $195.7 million net loss, of which $228.8 million, including $38.3 million of interest expense, was included in cost of sales, offset by $33.1 million of other income from debt cancellation. Of the $195.7 million loss, $32.0 million was attributable to non-controlling interests.

Supplemental Insurance Coverage and PIC Transaction

SHLP requires TradePartners^® be insured for workers compensation, commercial general liability and completed operations losses and damages, and most of SHLP’s TradePartners^® carry this insurance through its “rolling wrap-up” insurance program, where our risks and risks of participating TradePartners^® working on our projects are insured through a set of master policies. Through retention liability policies, SHLP obtains

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supplemental insurance for these “rolling wrap-up” programs from affiliated entities. Prior to July 2007, PIC provided this insurance. Since August 2007, this insurance has been provided by Orlando Insurance Company, Virginia Insurance Company and Bay Front Insurance Company, each wholly-owned by the Shea family.

From December 2009 to February 2010, PIC made $86.2 million in insurance premium payments to certain third-party insurance carriers (including, in part through JFSCI) whereby PIC either novated or reinsured its workers’ compensation, commercial general liability and certain completed operations risks, in each case, with third-party insurance carriers (the “PIC Transaction”). This premium payment was partially funded from the sale of PIC’s marketable securities. PIC will remain in business until the reinsured claims and matching reinsurance receivables are processed, which we estimate will occur in the next 7-10 years. As a result of the PIC Transaction, PIC’s financial exposure is limited to (i) the portion of PIC’s original policy limits not reinsured and (ii) to the extent of the reinsurance policies, the creditworthiness of its reinsurers, which are highly rated by AM Best and/or have sufficient loss reserves funded in trusts.

Real Property Transactions

In the ordinary course of business, SHLP may enter into lot purchase agreements with Shea Family Owned Companies to facilitate development of land for its use. At June 30, 2011, SHLP was not party to such agreements.

In September 2011, the Company sold fixed assets, comprised of three buildings and related improvements and land, to a related party. The consideration received was $14.4 million cash and a $6.5 million note receivable at 4.20% interest, payable in equal monthly installments and maturing August 2016. The $1.5 million of consideration received in excess of net book value will be recorded as an equity contribution.

In March 2009, SHLP sold a housing project and related land in northern California to a related party, RVCP, LLC, for approximately $0.1 million. For the year ended December 31, 2008, SHLP recorded a $72.8 million inventory impairment charge for this property. SHLP manages this property for a fee.

On December 20, 2007, SHLP sold land and an adjoining apartment building in Irvine, California, to a subsidiary of Shea Properties Management Company, Inc., a related company, for $52.2 million and incurred a $3.3 million loss. In 2009, as a condition of sale, the fair value of the building and land at completion was revalued, resulting in a purchase price true-up of $4.8 million, which is included in SHLP’s revenues for the year ended December 31, 2009.

SHLP and its subsidiaries and joint ventures lease office space under non-cancelable operating leases from the following entities in which the Shea family holds an ownership interest: Shea Center Livermore, LLC, Treena Street Partners, Highlands Ranch Shea Center II, LLC, Reunion Village, LLC and Highlands Ranch Commerce Center, LLC. The leases are for terms of five to ten years and generally provide renewal options for terms up to an additional five years.

At June 30, 2011, future minimum rental payments under related party operating leases were as follows:

Payments Due By Year	At June 30, 2011
	(In thousands)
2011	$	1,269
2012		2,365
2013		1,600
2014		1,442
2015 and thereafter		1,289
Total	$	7,965

For the years ended December 31, 2010, 2009 and 2008, related party rent expense was $0.9 million, $0.9 million and $2.6 million, respectively. For the six months ended June 30, 2011 and 2010, related party rent expense was $0.4 million and $0.4 million, respectively.

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DESCRIPTION OF OTHER INDEBTEDNESS

Letter of Credit Facility

In conjunction with the issuance of the outstanding notes on May 20, 2011, the Company entered into a letter of credit facility with Credit Suisse AG (acting through one or more of its branches or affiliates) acting as the sole administrative agent thereunder, for purposes of (i) backstopping or replacing letters of credit outstanding under the Company’s existing letter of credit facility and (ii) supporting obligations of the Company and its subsidiaries and their respective joint ventures. The letter of credit facility provides for the issuance of an aggregate principal amount of $75.0 million in letters of credit for the account of the Company (or for the joint account of the Company and any subsidiary or joint venture thereof) at the interest rate described below.

The Security Documents and the Intercreditor Agreement provide that the Company’s obligations under the letter of credit facility are secured on a pari passu with the notes, but will have the benefit of repayment priority upon enforcement against the collateral, as described under “Description of the Notes—Liens with Respect to the Collateral—Intercreditor Agreement.” The Guarantors of the notes also guarantee the Company’s obligations under the letter of credit facility. The letter of credit facility contains customary events of default, and covenants substantially similar to those set forth in the Indenture. The letter of credit facility also subjects the Company to certain additional affirmative covenants relating to, among other things, delivery of notices regarding certain events, performance of obligations and compliance with laws.

The letter of credit facility provides that, upon the disbursement of any amount in respect of a letter of credit issued thereunder, unless the Company reimburses the disbursement in full on the date such disbursement is made, the unpaid amount thereof will bear interest at a rate per annum equal to an Alternative Base Rate plus a specified margin (the “LC Interest Rate”); except all overdue amounts under the letter of credit facility will bear interest at the LC Interest Rate plus an additional margin.

The letter of credit facility will mature, and the commitments thereunder will terminate, on the date that is three years after the date on which the conditions precedent to the effectiveness of the letter of credit facility are satisfied (the “Maturity Date”). However, the letter of credit facility and the commitments thereunder may be extended and will terminate on the date that is one year after the Maturity Date, subject to the payment by the Company of a specified extension fee on the then-outstanding commitments under the letter of credit facility.

Guarantees of Affiliate Debt

SHLP issued loan-to-value maintenance, project completion and environment hazard liability guarantees to third-party lenders in connection with $16.3 million of outstanding debt of AGS Homebuilder I, LP, an Unconsolidated Joint Venture in which SHLP has an effective 9.1% ownership interest through a 69% investment in SFHB 1, LLC and a 71% investment in Shea Riverpark Developers, LLC, which in turns holds a 31% investment in SFHB 1, LLC; SFHB 1, LLC holds a 10% investment in AGS Homebuilder I, LP. The investment percentage as computed is (69% * 10%) + (71% * 31% * 10%) = 9.1%. SHLP’s joint venture partners, certain investment funds managed by Angelo Gordon, are contractually obligated to reimburse SHLP for 90% of any amounts required to be paid under these guarantees. SHLP’s total potential liability in relation to such debt could, however, exceed 10% of any amounts required to be paid under these guarantees if such investment funds are unable to satisfy their contractual obligations to SHLP.

SHLP issued loan-to-value maintenance and environmental hazard liability guarantees, on a joint and several basis, to third-party lenders in connection with $25.4 million of outstanding debt of Shea/Baker Ranch Associates, LLC, in which SHLP has no ownership interest and is 50% owned by other Shea Family Owned Companies. If any of the circumstances triggering these guarantees were to occur, SHLP could become liable for the obligations of Shea/Baker Ranch Associates, LLC under this debt facility. The loan matures June 30, 2013.

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SHLP and SHI issued the following guarantees in permanent financings for stabilized projects of other Shea Family Owned Companies in which SHLP and SHI have no ownership interest. Each of these guarantees is limited to “bad-boy” guarantees that trigger liability to SHLP and/or SHI if there is a voluntary bankruptcy filing by the affiliated borrower or other “bad” acts occur, including acts constituting fraud or a material misrepresentation of the affiliated borrower. These loans have maturity dates between December 2011 and September 2012.

Borrower	June 30, 2011
	(In thousands)
Shea Center Baldwin Park(1)		2,700
Wildcat Shopping Center, LLC(2)		12,300
Club Laguna, LLC(2)		31,700
Total	$	46,700

(1) SHLP, SHI and JFSCI have issued joint and several “bad-boy” guarantees

(2) SHLP and JFSCI have issued joint and several “bad-boy” guarantees

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DESCRIPTION OF THE NOTES

You can find the definitions of certain terms used in this description under the subheading “—Certain Definitions.” In this description, the term “Issuers” refers only to SHLP and Shea Homes Funding Corp., and not to any of their subsidiaries.

The exchange notes will be issued under an indenture (the “Indenture”) dated as of May 10, 2011 by and among the Issuers, the Guarantors and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The terms of the exchange notes are identical in all material respects to the terms of the outstanding notes, except the exchange notes will not contain transfer restrictions and holders of exchange notes will no longer have any registration rights and we will not be obligated to pay Additional Interest as described in the registration rights agreement. We refer to exchange notes and outstanding notes (to the extent not exchanged for exchange notes) in this section as the “Notes.”

The terms of the exchange notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “TIA”). The following description is a summary of the material provisions of the Indenture. It does not restate the Indenture in its entirety. We urge you to read the Indenture because it, and not this description, defines your rights as holders of the Notes. Copies of the Indenture are available as set forth under “Where You Can Find More Information.” Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the Indenture.

The registered holder of any Note will be treated as the owner of it for all purposes. Only registered holders will have rights under the Indenture.

Brief Description of the Notes

The exchange notes will be, and the outstanding notes are:

• senior obligations of the Issuers;

• guaranteed on a senior basis by each Guarantor;

• secured by an equal and ratable security interest with all existing and future Pari-Passu Lien Obligations of the Company (including the LC Facility Obligations), in the Collateral that is subject only to those Liens permitted by the Indenture and the Security Documents, but in the event of enforcement of the Lien securing the Notes, any liabilities in respect of our $75.0 million letter of credit facility will be repaid prior to the repayment of the Notes and any Additional Pari-Passu Lien Obligations secured on a pari-passu basis with the Notes;

• senior in right of payment to any future Subordinated Indebtedness of the Issuers;

• effectively subordinated to any existing and future Indebtedness of either of the Issuers or any Guarantor that is secured by assets that do not constitute Collateral, to the extent of the value of such assets; and

• effectively subordinated to any existing and future Indebtedness of Subsidiaries of the Company that are not Guarantors.

Principal, Maturity and Interest

The Issuers will issue the exchange notes initially with a maximum aggregate principal amount of $750.0 million. The Issuers will issue the exchange notes in minimum denominations of $2,000 and any integral multiple of $1,000 in excess thereof. The exchange notes will mature on May 15, 2019. Subject to compliance with the covenant described under “Certain Covenants—Limitations on Indebtedness,” the Issuers will be

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permitted to issue additional Notes from time to time (the “Additional Notes”) without the consent of the holders of the Notes. The Notes and the Additional Notes, if any, will be treated as a single class for all purposes of the Indenture, including waivers, amendments, redemptions and offers to purchase. Unless the context otherwise requires, for all purposes of the Indenture and this “Description of the Notes,” references to the Notes include the outstanding notes, the exchange notes, and any Additional Notes actually issued.

Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on May 15 and November 15, commencing on November 15, 2011. The Issuers will make each interest payment to the Holders of record of the Notes on the immediately preceding May 1 and November 1.

Interest on the Notes accrues from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Holders whose outstanding notes are exchanged for exchange notes will not receive a payment in respect of interest accrued but unpaid on such outstanding notes from the most recent interest payment date up to but excluding the settlement date. Instead, interest on the exchange notes received in exchange for such outstanding notes will (i) accrue from the last date on which interest was paid on such outstanding notes and (ii) accrue at the same rate as and be payable on the same dates as interest was payable on such outstanding notes. However, if any interest payment occurs prior to the settlement date on any outstanding notes already tendered for exchange in the exchange offer, the holder of such outstanding notes will be entitled to receive such interest payment.

Ranking

The Notes are general recourse secured obligations of the Issuers. The Notes rank senior in right of payment to all existing and future Indebtedness of either the Company or the Corporate Issuer that is, by its terms, expressly subordinated in right of payment to the Notes and rank pari-passu in right of payment with all existing and future Indebtedness of either the Company or the Corporate Issuer that is not so subordinated, effectively senior to all unsecured Indebtedness to the extent of the value of the Collateral securing the Notes and effectively junior to any obligations of either the Company or the Corporate Issuer that are secured by a Lien senior in priority to the Lien securing the Notes or that are secured by assets that are not part of the Collateral securing the Notes, to the extent of the value of such assets. The Guarantees are general recourse secured obligations of the Guarantors. The Guarantees rank senior in right of payment to all existing and future Indebtedness of the Guarantors that is, by its terms, expressly subordinated in right of payment to the Guarantees and rank pari-passu in right of payment with all existing and future Indebtedness of the Guarantors that is not so subordinated, effectively senior to all unsecured Indebtedness of the Guarantors to the extent of the value of the Collateral securing the Guarantees and effectively junior to any obligations of any Guarantor that are secured by a Lien senior in priority to the Lien securing the Guarantees or that are secured by assets that are not part of the Collateral securing the Guarantees, to the extent of the value of such assets. In addition, the Indenture permits the Issuers and the Guarantors to grant certain “Permitted Liens,” some of which, as a matter of law or contract, may have priority claims over the Collateral. In addition, in the event of enforcement of the Lien securing the Notes, any liabilities in respect of the letter of credit facility will be repaid prior to the repayment of the Notes and any Additional Pari-Passu Lien Obligations secured on a pari-passu basis with the Notes.

At June 30, 2011, we had $752.5 million of secured Indebtedness outstanding (primarily comprised of $750.0 million in Notes) and no senior secured Indebtedness outstanding. The Intercreditor Agreement provides that, upon an enforcement event or insolvency proceeding, proceeds from such Collateral will be applied first to satisfy such letter of credit obligations and then to satisfy our obligations with respect to the Notes and any Additional Pari-Passu Lien Obligations secured on a pari-passu basis with the Notes.

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Security

General

The Notes and the Guarantees are secured by Liens (the “Pari-Passu Liens”) granted by the Issuers, the initial Guarantors and any future Guarantor on substantially all of the assets of the Issuers and the Guarantors (whether now owned or hereafter arising or acquired) other than Excluded Property (defined below), which Pari-Passu Liens are subject to Permitted Liens and other encumbrances described in the Indenture and the Security Documents (collectively, the “Collateral”). The Pari-Passu Liens are shared with the lenders under the letter of credit facility, which also have the benefit of a priority allocation of enforcement proceeds. No Person other than the Holders of Notes may have a security interest in any of the Collateral except holders of Permitted Liens. Some of the types of Permitted Liens have priority with respect to the Collateral by operation of law, and some of the types of Permitted Liens pertaining to certain real estate will be granted priority by agreement with us in the ordinary course of our real estate development business.

The Collateral does not include (collectively, the “Excluded Property”) (a) except to secure the LC Facility Obligations, any pledges of stock of a Guarantor to the extent that Rule 3-16 of Regulation S-X under the Securities Act requires or would require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, that would require) the filing with the Commission of separate financial statements of such Guarantor that are not otherwise required to be filed, but only to the extent necessary to not be subject to such requirement, (b) personal property where the cost of obtaining a security interest or perfection thereof exceeds its benefits (as reasonably determined by the Company’s Governing Body in a resolution delivered to the Collateral Agent), (c) real property subject to a Lien securing Indebtedness Incurred for the purpose of financing the acquisition thereof (to the extent the creation of additional security interests in such property is prohibited by contract), (d) assets, with respect to which any applicable law or contract (including certain profit and price participation arrangements) prohibits the creation or perfection of security interests therein, or that otherwise results in a default, waiver or termination of rights or privileges arising under such law or contract, (e) all trademarks, trade names and other intellectual property bearing the name “Shea” or a variant thereof (provided that the Holders of Notes shall have a non-exclusive license to use such intellectual property in connection with the exercise of remedies upon an Event of Default), (f) cash collateral supporting (1) deductible, retention and other obligations to insurance carriers, (2) reimbursement claims in respect of letters of credit and surety providers, (3) contingent claims arising in respect of community facility district, metro-district, mello-roos, subdivision improvement bonds and similar obligations arising in the ordinary course of business of a homebuilder and (4) cash management services, (g) equity interests in joint ventures with respect to which the agreements governing such joint ventures prohibit the creation or perfection of security interests in such equity interests, (h) any leasehold interests in real property, (i) any real property in a community under development with a dollar amount of investment as of the most recent quarter end (as determined in accordance with GAAP) of less than $2.0 million or with less than 10 lots remaining unsold (to the extent the Company does not create a Pari-Passu Lien in such property), (j) deposit accounts and securities accounts with an aggregate balance for all such excluded accounts not to exceed $2.0 million in aggregate amount, or established solely for purposes of funding payroll, trust and other compensation benefits to employees and (k) all vehicles covered by a certificate of title.

If (i) property (other than Excluded Property) is acquired by either the Company, the Corporate Issuer or a Guarantor that is not automatically subject to a perfected security interest under the Security Documents, (ii) certain property initially classified as Excluded Property no longer qualifies as Excluded Property or (iii) a Restricted Subsidiary becomes a Guarantor, then the applicable Issuer or Guarantor will, as soon as practical after such property is acquired or is no longer classified as Excluded Property, or in the case of clause (iii), as soon as practical after such Restricted Subsidiary becomes a Guarantor, grant Liens in such property (or, in the case of a Restricted Subsidiary that becomes a Guarantor, all of its assets except Excluded Property) in favor of the Collateral Agent, cause the Liens to be duly perfected and deliver such certificates and opinions in respect thereof as required by the Indenture, the Intercreditor Agreement or the Security Documents.

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In addition, the Indenture permits the Issuers and the Guarantors to grant additional Liens under specified circumstances, including certain additional Liens on the Collateral that may rank equally with the Liens securing the Notes or, in certain circumstances, senior to such Liens. See “—Ranking” and the definition of “Permitted Liens.”

The Collateral is pledged to Wells Fargo Bank, N.A. as collateral agent (together with any successor, the “Collateral Agent”), for the benefit of the Trustee, the Holders of the Notes, the lenders under the letter of credit facility and any future holders of Pari-Passu Lien Obligations.

At June 30, 2011, the aggregate book value of the real property that constitutes part of the Collateral was approximately $808.6 million, which does not include the impact of inventory investments, home deliveries or impairments thereafter and which may differ from the appraised value. In addition, cash that constitutes a part of the Collateral was approximately $160.5 million as of June 30, 2011. Subsequent to such date, cash uses include general business operations and real estate and other investments. The incremental value of the stock of Guarantors that would constitute a part of the Collateral securing the Notes is not meaningful because the underlying assets of such Guarantors have been separately pledged as Collateral. The fair market value of the Collateral is subject to fluctuations based on factors that include, among others, the condition of the homebuilding industry, our ability to implement our business strategy, the ability to sell the Collateral in an orderly sale, general economic conditions, the availability of buyers and similar factors. The amount to be received upon a sale of the Collateral would be dependent on numerous factors, including but not limited to the actual fair market value of the Collateral at such time and the timing and the manner of the sale. By its nature, portions of the Collateral may be illiquid and may have no readily ascertainable market value. Likewise, there can be no assurance that the Collateral will be saleable, or, if saleable, that there will not be substantial delays in its liquidation. To the extent that Liens (including Permitted Liens), rights or easements granted to third parties encumber assets located on property owned by either of the Issuers or any of the Guarantors, including the Collateral, such third parties may exercise rights and remedies with respect to the property subject to such Liens that could adversely affect the value of the Collateral and the ability of the Collateral Agent, the Trustee or the Holders of the Notes to realize or foreclose on Collateral. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, we cannot assure you that the proceeds from any sale or liquidation of the Collateral would be sufficient to pay our obligations under the Notes. If the proceeds of any of the Collateral were not sufficient to repay all amounts due on the Notes, the Holders of the Notes (to the extent not repaid from the proceeds of the sale of the Collateral) would have only an unsecured claim against the remaining assets of the Issuers and the Guarantors.

Liens with Respect to the Collateral

Priority

The terms of the Security Documents and the Intercreditor Agreement establish the relative priority among (1) the lenders under the letter of credit facility, (2) the Trustee and the holders of the Notes with respect to the security interest in the Collateral that is created by the Security Documents and secures the Notes Obligations and (3) the creditors extending credit to either of the Issuers or any Guarantor under any Additional Pari-Passu Lien Obligations that are permitted to be incurred under the Indenture and as to which either Issuer or such Guarantor, as applicable, may incur a Permitted Lien. The Security Documents and the Intercreditor Agreement provide that all obligations under the Notes, the LC Facility Obligations and any Additional Pari-Passu Lien Obligations are secured equally and ratably by a Pari-Passu Lien on the Collateral, but any liabilities in respect of the letter of credit facility will be repaid prior to the repayment of the Notes and any Additional Pari-Passu Lien Obligations secured on a pari-passu basis with the Notes, as described under “—Intercreditor Agreement.” The Security Documents and the Intercreditor Agreement also authorize and instruct the Collateral Agent to subordinate the Pari-Passu Lien under certain circumstances, as described under “—Intercreditor Agreement.”

Security Documents

On the Issue Date, the Issuers, the Guarantors, the Trustee, the administrative agent under the letter of credit facility and the Collateral Agent entered into the Security Documents establishing the terms of the security

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interests and Liens that secure the Notes, other than those Security Documents that were to be delivered within 90 days of the Issue Date. These security interests secure the payment and performance when due of all of the Obligations of the Issuers under the Notes, the Indenture, the letter of credit facility and the Security Documents. The Security Documents and the Collateral are administered by the Collateral Agent for the benefit of all holders of Pari-Passu Lien Obligations (including the LC Facility Obligations, the Notes Obligations and any Additional Pari-Passu Lien Obligations).

Subject to the terms of the Security Documents, the Issuers and the Guarantors will have the right to remain in possession and retain exclusive control of the Collateral securing the Notes (except as set forth in the Security Documents), to freely operate the Collateral and to collect, invest and dispose of any income from the Collateral.

The lenders under the letter of credit facility and the Trustee have, and by accepting a Note each holder thereof will be deemed to have:

• irrevocably appointed the Collateral Agent to act as its agent under the Security Documents and the Intercreditor Agreement; and

• irrevocably authorized the Collateral Agent to (1) perform the duties and exercise the rights, powers and discretions that are specifically given to it under the Security Documents, the Intercreditor Agreement or other documents to which it is a party, together with any other incidental rights, powers and discretions and (2) execute each document expressed to be executed by the Collateral Agent on its behalf.

Intercreditor Agreement

Generally

On May 10, 2011, the Trustee and the Collateral Agent entered into an Intercreditor Agreement (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”) with the Administrative Agent under the letter of credit facility.

The Intercreditor Agreement provides for the priorities and other relative rights among the Pari-Passu Lien Secured Parties, including, among other things, that:

(1) notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens on the Collateral securing the Notes and the other Pari-Passu Lien Obligations, the Liens securing all Pari-Passu Lien Obligations shall be of equal priority; provided, however, that any liabilities in respect of the letter of credit facility will be repaid prior to the repayment of the Notes and any Additional Pari-Passu Lien Obligations secured on a pari-passu basis with the Notes; and

(2) the Obligations in respect of the Notes and the other Pari-Passu Lien Obligations may be increased, extended, renewed, replaced, restated, supplemented, restructured, refunded, refinanced or otherwise amended from time to time (including, without the consent of the Holders, to add other parties holding Pari-Passu Lien Obligations permitted to be Incurred under the Indenture, the letter of credit facility and the Intercreditor Agreement), in each case, to the extent permitted by the Pari-Passu Lien Documents.

Enforcement of the Security

The lenders under the letter of credit facility are represented under the Intercreditor Agreement by the Administrative Agent and the Holders are represented under the Intercreditor Agreement by the Trustee. In the future, to the extent that the Company or any Restricted Subsidiary incurs Additional Pari-Passu Lien Obligations, the Company will designate such Additional Pari-Passu Lien Obligations as such under the Intercreditor Agreement by providing notice to such effect, together with an Officers’ Certificate certifying that such Additional Pari-Passu Lien Obligations (and the Liens associated therewith) have been incurred in

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compliance with the Indenture (and the other Pari-Passu Lien Documents), to the Collateral Agent. Upon such designation, the designated agent of the holders of such Additional Pari-Passu Lien Obligations shall deliver a joinder to the Intercreditor Agreement, thereby acknowledging that the terms of the Intercreditor Agreement shall be applicable to such holders. Under the Intercreditor Agreement, each of the Trustee, the Administrative Agent and each such designated agent of Additional Pari-Passu Lien Obligations shall be an “Authorized Representative” with respect to the applicable class of Pari-Passu Lien Obligations; in addition, the Administrative Agent under the letter of credit facility, in its capacity as the Authorized Representative of the holders of the LC Facility Obligations, shall be the “LC Facility Representative.”

The Intercreditor Agreement contains procedures with respect to the coordination of instructions from the LC Facility Representative, acting as representative of the holders of the LC Facility Obligations, and the “Applicable Authorized Representative” (as defined below under “—Applicable Authorized Representative”), acting as representative for the particular class of Specified Pari-Passu Lien Obligations for which the Applicable Authorized Representative is the Authorized Representative (and not as representative of any other holders of Specified Pari-Passu Lien Obligations), with respect to the security interests in the Collateral. If (a) any Event of Default under the Indenture (or any event of default under the Pari-Passu Lien Document for which the Applicable Authorized Representative is the Authorized Representative) or an event of default under the documentation relating to LC Facility Obligations shall have occurred and be continuing, (b) an insolvency proceeding with respect to either of the Issuers or any Guarantor is occurring or (c) the LC Facility Obligations have been accelerated pursuant to applicable law, the Collateral Agent shall act in relation to the Collateral in accordance with the instructions of (i) on or prior to the date of the Discharge of LC Facility Obligations, the LC Facility Representative and the Applicable Authorized Representative, and (ii) after the date of the Discharge of LC Facility Obligations, the Applicable Authorized Representative. Any Person entitled to instruct the Collateral Agent to exercise any right or remedy with respect to the Collateral may give or refrain from giving instructions to the Collateral Agent to exercise or refrain from exercising the Collateral as it sees fit in accordance with the other provisions of the Security Documents and the Intercreditor Agreement.

Subject to the next succeeding paragraph, before giving any instructions to the Collateral Agent to exercise any right or remedy under the Security Documents and the Intercreditor Agreement with respect to the Collateral, the LC Facility Representative and the Applicable Authorized Representative will consult with one another and with the Collateral Agent in good faith, with a view to coordinating those instructions, for a period of up to 45 days or such shorter period as the LC Facility Representative and the Applicable Authorized Representative may agree.

The LC Facility Representative and the Applicable Authorized Representative shall not be obligated to consult in accordance with the immediately preceding paragraph if the LC Facility Representative and the Applicable Authorized Representative determine in good faith that to enter into such consultation and thereby delay the commencement of enforcement of the Collateral could reasonably be expected to have a material adverse effect on (A) their ability to enforce any of the security interests in the Collateral or (B) the realization of any proceeds of any enforcement of the security interests in the Collateral. If the instructions given to the Collateral Agent by the LC Facility Representative or the Applicable Authorized Representative conflict with the instructions given to the Collateral Agent by the other party: (i) the Collateral Agent shall promptly notify the LC Facility Representative and Applicable Authorized Representative and (ii) following such notification, the LC Facility Representative and such Applicable Authorized Representative shall consult with one another in good faith over the course of at least 15 days (the “Consultation Period”) with a view to resolving the conflict in such instructions, provided that the Consultation Period shall end immediately if the LC Facility Representative and the Applicable Authorized Representative determine in good faith that such consultation and thereby the delay in the enforcement of the security interest in the Collateral could reasonably be expected to have a material adverse effect on (A) their ability to enforce any of the security interests in the Collateral or (B) the realization of any proceeds of any enforcement of the security interests in the Collateral.

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If, following the end of the Consultation Period, the Collateral Agent has not received consistent instructions from the LC Facility Representative and the Applicable Authorized Representative, the Collateral Agent shall enforce the security interests in the Collateral in accordance with the instructions of the LC Facility Representative.

Applicable Authorized Representative

As of the Issue Date, the Trustee is the Applicable Authorized Representative. The Trustee (or any successor Applicable Authorized Representative) will remain as such until such time as either (i) the Notes (or the applicable class of Specified Pari-Passu Lien Obligations represented by the then-Applicable Authorized Representative) do not represent the largest class of Specified Pari-Passu Lien Obligations (determined based on the aggregate principal amount of Indebtedness under such class of Specified Pari-Passu Lien Obligations then outstanding, taking into account the accretion of original issue discount with respect to any such Indebtedness issued at a discount) (a “Larger Holder Event”) or (ii) the occurrence of a Non-Controlling Authorized Representative Enforcement Date (such earlier date, the “Applicable Authorized Representative Change Date”). Following an Applicable Authorized Representative Change Date, either (x) in the event that a Larger Holder Event has occurred, the Authorized Representative under the largest class of Specified Pari-Passu Lien Obligations then outstanding and (y) in the event that a Non-Controlling Authorized Representative Enforcement Date has occurred, the Major Non-Controlling Authorized Representative, will become the Applicable Authorized Representative.

As of any date, the “Major Non-Controlling Authorized Representative” is the Authorized Representative of the second largest class of Specified Pari-Passu Lien Obligations then outstanding (determined on the same basis as described above for determining the largest class of Specified Pari-Passu Lien Obligations then outstanding). The “Non-Controlling Authorized Representative Enforcement Date” is the date that is 90 days (throughout which 90-day period the applicable Authorized Representative was the Major Non-Controlling Authorized Representative) after the occurrence of both (a) an event of default under the terms of the applicable class of Specified Pari-Passu Lien Obligations and (b) the Collateral Agent’s and each other Authorized Representative’s receipt of written notice from that Authorized Representative certifying that (i) such Authorized Representative is the Major Non-Controlling Authorized Representative and that an event of default with respect to the class of Specified Pari-Passu Lien Obligations represented by the Major Non-Controlling Authorized Representative has occurred and is continuing and (ii) such class of Specified Pari-Passu Lien Obligations is currently due and payable in full (whether as a result of acceleration thereof or otherwise) in accordance with the terms of that class of Specified Pari-Passu Lien Obligations; provided, however, that the Non-Controlling Authorized Representative Enforcement Date shall be stayed and shall not occur and shall be deemed not to have occurred with respect to any Collateral (1) at any time the Collateral Agent (pursuant to instructions from the LC Facility Representative or the Applicable Authorized Representative) has commenced and is pursuing any enforcement action with respect to such Collateral with reasonable diligence in light of the then-existing circumstances or (2) at any time the Company or any other grantor that has granted a security interest in such Collateral is then a debtor under or with respect to (or otherwise subject to) any insolvency or liquidation proceeding.

Subject to the discussion set forth under “—Enforcement of the Security” above, the (i) LC Facility Representative and the Applicable Authorized Representative or (ii) the Applicable Authorized Representative, as applicable, will have the sole right to instruct the Collateral Agent to act or refrain from acting with respect to the Collateral, and the Collateral Agent will not follow any instructions with respect to such Collateral from any other Person. No Authorized Representative of any Specified Pari-Passu Lien Obligations secured by the Collateral (other than the Applicable Authorized Representative) will instruct the Collateral Agent to commence any judicial or non-judicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its interests in or realize upon, or take any other action available to it in respect of, the Collateral. Other than with respect to the application of proceeds resulting from realization upon the Collateral, the Collateral Agent, acting on the instructions of the LC Facility

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Representative or the Applicable Authorized Representative, may deal with the Collateral as if the LC Facility Obligations and the class of Specified Pari-Passu Lien Obligations then represented by the Applicable Authorized Representative were the only classes of Pari-Passu Lien Obligations outstanding. No Authorized Representative of any class of Specified Pari-Passu Lien Obligations (other than the Applicable Authorized Representative) may contest, protest or object to any foreclosure proceeding or action brought by the Collateral Agent (acting on the instructions of the LC Facility Representative and the Applicable Authorized Representative). The Collateral Agent, the LC Facility Representative and each other Authorized Representative will agree that it will not accept any Lien on any Collateral for the benefit of any Pari-Passu Lien Secured Parties (other than funds deposited for the discharge or defeasance of an applicable class of Pari-Passu Lien Obligations) other than pursuant to the Security Documents and the Intercreditor Agreement. Each Pari-Passu Lien Secured Party, including the Holders of the Notes by acceptance thereof, will be deemed to have agreed that it will not contest or support any other Person in contesting, in any proceeding (including any insolvency or liquidation proceeding), the perfection, priority, validity or enforceability of a Lien granted pursuant to the Security Documents, or any of the provisions of the Security Documents or the Intercreditor Agreement.

None of the Pari-Passu Lien Secured Parties may institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Collateral Agent or any other Pari-Passu Lien Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Collateral. In addition, none of the Pari-Passu Lien Secured Parties may seek to have any Collateral or any part thereof marshaled upon any foreclosure or other disposition of such Collateral. If any Pari-Passu Lien Secured Party obtains possession of any Collateral or realizes any proceeds or payment in respect thereof, in each case, as a result of the enforcement of remedies, at any time prior to the discharge of each class of Pari-Passu Lien Obligations, then it must hold such Collateral, proceeds or payment in trust for the other Pari-Passu Lien Secured Parties and promptly transfer such Collateral, proceeds or payment to the Collateral Agent to be distributed in accordance with the provisions of the Intercreditor Agreement.

In addition, the Pari-Passu Lien Secured Parties shall authorize and instruct the Collateral Agent to execute and deliver such lien subordination, non-disturbance, attornment and other similar agreements as the Company may from time to time request so long as the Company certifies to the Collateral Agent that the Lien or other encumbrance proposed to be made senior in priority to the Lien held by the Collateral Agent is permitted to be incurred under the Pari-Passu Lien Documents and is a Permitted Priority Lien, as defined in the Indenture.

Application of Proceeds; Post-Petition Interest

The Intercreditor Agreement provides that the net proceeds from any sale, disposition or other realization of the Collateral upon the enforcement of the security for the Pari-Passu Lien Obligations (including for these purposes distributions of cash, securities or other property on account of the value of the Collateral in a bankruptcy case of either of the Issuers or any of the Guarantors) shall be applied to any LC Facility Obligations prior to any application to any Specified Pari-Passu Lien Obligations (including the Notes Obligations).

Subject to the rights of the holders of any Permitted Priority Liens, proceeds received upon a realization of the Collateral will be applied as follows:

first, to the payment of all costs and expenses incurred by the Collateral Agent in connection with the collection of proceeds or sale of any Collateral or otherwise in connection with the Security Documents and the Intercreditor Agreement, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent on behalf of either of the Issuers or any Guarantor and any other costs or expenses incurred in connection with the exercise of any right or remedy of any of the Pari-Passu Lien Secured Parties;

second, to the payment of any Obligations in respect of any expense reimbursements or indemnities then due to any of the Authorized Representatives, in their capacities as such;

third, to the payment of all LC Facility Obligations on a pro rata basis based on the respective amounts of LC Facility Obligations then outstanding; and

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fourth, to the payment of any Specified Pari-Passu Lien Obligations (including the Notes Obligations) on a pro rata basis based on the respective amounts of such Specified Pari-Passu Lien Obligations then outstanding.

In a bankruptcy case of either of the Issuers or any Guarantor, the holders of the LC Facility Obligations will be entitled to receive all Post-Petition Interest accruing thereon, whether or not allowable in such bankruptcy case, prior to the Holders of the Notes receiving any payments in respect of the Notes Obligations. If it is held that the claims with respect to the LC Facility Obligations and the Specified Pari-Passu Lien Obligations constitute only one secured class (rather than separate classes for the LC Facility Obligations and the Specified Pari-Passu Lien Obligations), all distributions in such bankruptcy case shall be made as if there were separate classes of claims, with the effect being that, to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all Specified Pari-Passu Lien Obligations), the holders of the LC Facility Obligations shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of Post-Petition Interest before any distribution is made in respect of the Specified Pari-Passu Lien Obligations. The Collateral Agent, the Trustee and the Holders of the Notes agree to turn over to the holders of the LC Facility Obligations amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of the foregoing, even if such turnover has the effect of reducing their claim or recovery.

Release of Liens

Under the Intercreditor Agreement, if at any time the Applicable Authorized Representative forecloses upon or otherwise exercises remedies against any Collateral, then (whether or not any insolvency or liquidation proceeding is pending at the time) the Liens in favor of the Collateral Agent for the benefit of the Trustee and the holders of the Notes and each other class of Pari-Passu Secured Parties upon such Collateral will automatically be released and discharged. However, any proceeds of any Shared Collateral realized therefrom will be applied as described under “—Intercreditor Agreement.”

The Security Documents, the Intercreditor Agreement and the Indenture provide that the Pari-Passu Liens securing the Guarantee of any Guarantor will be automatically released when such Guarantor’s Guarantee is released in accordance with the terms of the Indenture. In addition, the Pari-Passu Liens securing the Notes will be released:

(a) upon discharge of the Indenture or defeasance of the Notes as set forth below under “—Discharge and Defeasance of Indenture,”

(b) upon payment in full of principal, interest and all other Obligations on the Notes issued under the Indenture,

(c) with the consent of the requisite Holders of the Notes in accordance with the provisions under “—Amendment, Supplement and Waiver,” including consents obtained in connection with a tender offer or exchange offer for, or purchase of, Notes, and

(d) in connection with any disposition of Collateral to any Person other than the Company, the Corporate Issuer or any Guarantor (but excluding any transaction subject to “Certain Covenants—Limitations on Mergers, Consolidations and Sales of Assets” where the recipient is required to become the obligor on the Notes or a Guarantee) that is permitted by the Indenture (with respect to the Lien on such Collateral).

To the extent applicable, the Issuers will comply with Section 313(b) of the TIA, relating to reports, and Section 314(d) of the TIA, relating to the release of property and to the substitution therefor of any property to be pledged as Collateral for the Notes. Any certificate or opinion required by Section 314(d) of the TIA may be made by Officers of the Issuers except in cases where Section 314(d) requires that such certificate or opinion be made by an independent engineer, appraiser or other expert, who shall be reasonably satisfactory to the Trustee.

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Notwithstanding anything to the contrary herein, the Issuers and the Guarantors will not be required to comply with all or any portion of Section 314(d) of the TIA if they determine, in good faith based on advice of counsel (which may be internal counsel), that under the terms of that section and/or any interpretation or guidance as to the meaning thereof of the Commission and its staff, including “no-action” letters or exemptive orders, all or any portion of Section 314(d) of the TIA is inapplicable to the released Collateral. Without limiting the generality of the foregoing, certain no-action letters issued by the Commission have permitted an indenture qualified under the TIA to contain provisions permitting the release of collateral from Liens under such indenture in the ordinary course of the issuer’s business without requiring the issuer to provide certificates and other documents under Section 314(d) of the TIA. In addition, under interpretations provided by the Commission, to the extent that a release of a Lien is made without the need for consent by the Holders or the Trustee, the provisions of Section 314(d) may be inapplicable to the release.

No Impairment of the Security Interests

Neither of the Issuers nor any of the Guarantors are permitted to take any action, or knowingly or negligently omit to take any action, which action or omission would reasonably be expected to materially impair the security interest with respect to the Collateral for the benefit of the Collateral Agent, the Trustee and the Holders of the Notes.

The Indenture provides that any actions taken in compliance with (or otherwise contemplated by) the Indenture, the Intercreditor Agreement and the Security Documents, including without limitation, any release of Collateral in accordance with the provisions thereof, will be deemed not to impair the security under the Indenture, and that any engineer, appraiser or other expert may rely on such provision in delivering a certificate requesting release so long as all other provisions of the Indenture with respect to such release have been complied with.

The Guarantees

Each of the Guarantors have guaranteed on a joint and several basis all of the Issuers’ obligations under the Notes and the Indenture, including the Issuers’ obligations to pay principal, premium, if any, and interest with respect to the Notes. The obligations of each Guarantor are limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Guarantor in an amount pro rata, based on the net assets of each Guarantor, determined in accordance with GAAP. Except as provided in “Certain Covenants” below, the Company is not restricted from selling or otherwise disposing of any of the Guarantors.

The initial Guarantors are all of the direct and indirect wholly-owned Subsidiaries of the Company on the Issue Date (other than (1) Partners Insurance Company and (2) any other wholly owned Subsidiary of the Issuers that is prohibited from becoming a Guarantor as a result of any requirement of law, rule or regulation binding on such Subsidiary or as a result of an existing contractual limitation when a waiver is not reasonably able to be obtained), Vistancia Marketing, LLC and Vistancia Construction, LLC. After the Issue Date, additional wholly-owned Subsidiaries of the Issuers (other than any wholly owned Subsidiary that is prohibited from becoming a Guarantor as a result of any requirement of law, rule or regulation binding on such Subsidiary) may from time to time become Guarantors to the extent required by the covenant described under “—Certain Covenants—Future Guarantors.” All Guarantors of the Notes also guarantee the Company’s obligations under the letter of credit facility.

The Indenture provides that if all or substantially all of the assets of any Guarantor or all of the Equity Interests of any Guarantor is sold (including by consolidation, merger, issuance or otherwise) or disposed of

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(including by liquidation, dissolution or otherwise) by the Company or any of its Subsidiaries, or, unless the Company elects otherwise, if any Guarantor is designated an Unrestricted Subsidiary in accordance with the terms of the Indenture, then such Guarantor (in the event of a sale or other disposition of all of the Equity Interests of such Guarantor or a designation as an Unrestricted Subsidiary) or the Person acquiring such assets (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) shall be deemed automatically and unconditionally released and discharged from any of its obligations under the Indenture without any further action on the part of the Trustee or any Holder of the Notes.

An Unrestricted Subsidiary that is a Guarantor shall be deemed automatically and unconditionally released and discharged from all obligations under its Guarantee upon notice from the Company to the Trustee to such effect, without any further action required on the part of the Trustee or any Holder.

A sale of assets or Equity Interests of a Guarantor may constitute an Asset Disposition subject to the “Limitations on Asset Dispositions” covenant described under “—Certain Covenants.”

Optional Redemption

The Notes are redeemable, in whole or in part, at the option of the Issuers only as set forth below.

At any time or from time to time prior to May 15, 2015, the Issuers are entitled at their option to redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date).

At any time or from time to time on and after May 15, 2015, the Issuers will be entitled at their option to redeem all or a portion of the Notes at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on May 15 of the years set forth below:

Period	Redemption Price
2015		104.313%
2016		102.156%
2017 and thereafter		100.000%

In addition, at any time prior to May 15, 2014, the Issuers are entitled at their option on one or more occasions to redeem the Notes (which includes Additional Notes, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 108.625%, plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), with the net cash proceeds from one or more Equity Offerings; provided, however, that

(1) at least 65% of such aggregate principal amount of Notes (which includes Additional Notes, if any) remains outstanding immediately after the occurrence of each such redemption (other than the Notes held, directly or indirectly, by the Company or Affiliates of the Company); and

(2) each such redemption occurs within 60 days after the date of the consummation of the related Equity Offering.

“Applicable Premium” means with respect to a Note at any redemption date, the excess of (A) the present value at such redemption date of (1) the redemption price of such Note on May 15, 2015 (such redemption price

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being described in the third paragraph in this “—Optional Redemption” section exclusive of any accrued interest) plus (2) all required remaining scheduled interest payments due on such Note through May 15, 2015 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, over (B) the principal amount of such Note on such redemption date.

“Adjusted Treasury Rate” means, with respect to any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after May 15, 2015, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third Business Day immediately preceding the redemption date, plus 0.50%.

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Notes from the redemption date to May 15, 2015, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to May 15, 2015.

“Comparable Treasury Price” means, with respect to any redemption date, if clause (ii) of the Adjusted Treasury Rate is applicable, the average of three, or such lesser number as is obtained by the Trustee, Reference Treasury Dealer Quotations for such redemption date.

“Quotation Agent” means the Reference Treasury Dealer selected by the Issuers after consultation with the Trustee.

“Reference Treasury Dealer” means Credit Suisse Securities (USA) LLC and two other primary U.S. Government securities dealers in New York City (each, a “Primary Treasury Dealer”), and their respective successors and assigns; provided, however, that if any such entity ceases to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day immediately preceding such redemption date.

Selection and Notice

If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem appropriate and fair. Notice of each redemption must be mailed by first-class mail to each Holder’s registered address, not less than 30 nor more than 60 days prior to the applicable redemption date.

No Notes of $2,000 in original principal amount or less shall be redeemed in part. Notices of redemption may not be conditional.

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If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

The Issuers are not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Issuers may be required to offer to purchase Notes as described under “Certain Covenants—Change of Control” and “Certain Covenants—Limitations on Asset Dispositions.” In addition, the Issuers may at any time and from time to time purchase Notes in the open market or otherwise.

Certain Covenants

The following is a summary of certain covenants that are contained in the Indenture. Such covenants are applicable (unless waived or amended as permitted by the Indenture) so long as any of the Notes are outstanding or until discharge of the Indenture or the Notes are defeased pursuant to provisions described under “Discharge and Defeasance of Indenture.”

Change of Control

In the event that there shall occur a Change of Control, each Holder of the Notes shall have the right, at such Holder’s option, to require the Issuers to purchase all or any part of such Holder’s Notes (a “Change of Control Offer”) on a date (the “Repurchase Date”) that is no later than 90 days after notice of the Change of Control, at 101.0% of the principal amount thereof plus accrued and unpaid interest, if any, to the Repurchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or before the thirtieth day after any Change of Control, the Issuers are obligated to mail or cause to be mailed to all Holders of record of the Notes with a copy to the Trustee, a notice stating (i) that a Change of Control has occurred and each Holder has a right to require the Issuers to purchase such Holder’s Notes at 101.0% of the principal amount thereof plus accrued and unpaid interest, if any, to the Repurchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), (ii) the Repurchase Date, (iii) the date by which the repurchase right must be exercised, and (iv) the procedure which the Holder must follow to exercise such right. To exercise such right, the Holder of such Note must deliver, at least ten days prior to the Repurchase Date, written notice to the Issuers (or an agent designated by the Issuers for such purpose) of the Holder’s exercise of such right, together with the Note with respect to which the right is being exercised, duly endorsed for transfer; provided, however, that if mandated by applicable law, a Holder may be permitted to deliver such written notice nearer to the Repurchase Date than may be specified by the Issuers.

The Issuers will comply with applicable law, including Section 14(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 14e 1 thereunder, if applicable, if the Issuers are required to give a notice of a right of repurchase as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under the covenant described hereunder by virtue thereof.

With respect to any disposition of assets, the phrase “all or substantially all” as used in the Indenture (including in the definition of “Change of Control”) varies in meaning according to the facts and circumstances

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of the subject transaction, has no clearly established meaning under New York law (which governs the Indenture) and is subject to judicial interpretation. Accordingly, in certain circumstances, upon a sale of less than all of the assets of the Company, there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of “all or substantially all” of the assets of the Company, and therefore it may be unclear as to whether a Change of Control has occurred and whether the Holders have the right to require the Issuers to repurchase Notes.

None of the provisions relating to a repurchase upon a Change of Control is waivable by the Governing Body of either of the Issuers. The Company could, in the future, enter into certain transactions, including certain recapitalizations of the Company, that would not result in a Change of Control, but would increase the amount of Indebtedness outstanding at such time or otherwise affect the Company’s capital structure or credit ratings. Restrictions on our ability to Incur additional Indebtedness are contained in the covenants described under “Certain Covenants—Limitations on Indebtedness” and “Certain Covenants—Limitations on Liens.” Such restrictions in the Indenture can be waived only with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Except for the limitations contained in such covenants, however, the Indenture does not contain any covenants or provisions that may afford Holders of the Notes protection in the event of a highly leveraged transaction.

The Indenture requires the payment of money for Notes or portions thereof validly tendered to, and accepted for payment by, the Issuers pursuant to a Change of Control Offer. In the event that a Change of Control has occurred under the Indenture, a change of control may also have occurred under the instruments governing the Company’s other Indebtedness or instruments that the Company enters into to govern any future Indebtedness permitted to be Incurred under the Indenture. If a Change of Control were to occur, there can be no assurance that the Issuers would have sufficient funds to pay the purchase price for all the Notes and amounts due under other Indebtedness that the Company may be required to repurchase or repay or that the Company or the other Guarantors would be able to make such payments. In the event that the Issuers were required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company expects that it would need to seek third-party financing to the extent the Issuers do not have available funds to enable them to meet their purchase obligations. However, there can be no assurance that the Company would be able to obtain such financing.

Failure by the Issuers to purchase the Notes when required upon a Change of Control will constitute an Event of Default with respect to the Notes.

The Change of Control purchase feature of the Notes may in certain circumstances make more difficult or discourage a sale or takeover of the Company and, thus, the removal of incumbent management. We have no present intention to engage in a transaction involving a Change of Control, although it is possible that we could decide to do so in the future.

Limitations on Indebtedness

The Indenture provides that the Company will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume, become liable for or guarantee the payment of (collectively, “Incur”) any Indebtedness (including Acquired Indebtedness) unless, immediately after giving effect thereto and the application of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 (any such Indebtedness Incurred pursuant to this paragraph being herein referred to as “Coverage Indebtedness”).

The provisions described in the immediately-preceding paragraph will not apply to the Incurrence of any of the following items of Indebtedness (collectively, “Permitted Indebtedness”):

(1) Indebtedness of the Company or any Guarantor under letters of credit not in excess of $75.0 million aggregate principal amount outstanding at any one time; provided, however, that such $75.0 million shall be

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reduced to the extent such letters of credit are drawn upon and the use of proceeds thereof constitute Investments (other than Permitted Investments described in clauses (3), (8), (9) and (10) of the definition thereof);

(2) Indebtedness with respect to the Notes (and Exchange Notes) and Guarantees thereof, other than Additional Notes;

(3) Indebtedness (other than Indebtedness described in clauses (1) and (2) above) outstanding on the Issue Date after giving effect to the anticipated use of proceeds from the sale of the Notes;

(4) Indebtedness owed to and held by the Company, the Corporate Issuer or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Equity Interests which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company, the Corporate Issuer or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Company or the Corporate Issuer is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;

(5) Indebtedness of the Company or any Restricted Subsidiary under any Interest Protection Agreements in a notional amount no greater than the outstanding principal amount (at the time the related Interest Protection Agreement is entered into) of the Indebtedness being hedged;

(6) Purchase Money Indebtedness and Capitalized Lease Obligations Incurred by the Company or any Restricted Subsidiary in connection with the acquisition of equipment and fixtures or other property in an aggregate principal amount outstanding at any one time (including all Refinancing Indebtedness Incurred to Refinance any Indebtedness Incurred pursuant to this clause (6)) not to exceed $10.0 million (which amount shall not include any obligations that would not be required to be classified or accounted for as Capital Lease Obligations in accordance with GAAP as of March 31, 2011, without giving effect to any changes therein after the Issue Date);

(7) to the extent a portion of the Notes (other than Additional Notes) are redeemed or repurchased and retired, Indebtedness of the Company or any Guarantor in an aggregate amount (including all Refinancing Indebtedness Incurred to Refinance any Indebtedness Incurred pursuant to this clause (7)) not to exceed the lesser of (x) 75% of the aggregate principal amount of the Notes so redeemed or repurchased and retired and (y) $100.0 million;

(8) Indebtedness of the Company or any Guarantor which, together with all other Indebtedness Incurred under this clause (8), including all Indebtedness Incurred to Refinance any Indebtedness Incurred under this clause (8), does not exceed $25.0 million aggregate principal amount outstanding at any one time;

(9) all obligations under any arrangement (including (x) adjustments to land purchase price and (y) profit participations) by which future payments are due to the sellers of real property acquired by either of the Issuers or any Restricted Subsidiary after a specified period of time following such acquisition or at the time of the subsequent sale of the subject real property, which future payments (i) are based on the subsequent sale price of the subject real property, the allocated costs of developing the subject real property or an amount specified at the time of such acquisition and (ii) may include fixed minimum amounts in respect of such arrangements and true-up payments;

(10) Refinancing Indebtedness Incurred by the Company or any Guarantor in respect of (i) any Coverage Indebtedness or (ii) any Permitted Indebtedness Incurred pursuant to clause (2) or (3) or this clause (10);

(11) bank overdrafts arising in the ordinary course of business;

(12) obligations under an agreement with any government authority, adjoining (or common masterplan) landowner or seller of real property, in each case entered into in the ordinary course of business in connection with the acquisition of real property, to entitle, develop or construct infrastructure thereupon;

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(13) Indebtedness deemed to exist pursuant to the terms of a joint venture agreement as a result of the failure of the Company or any Restricted Subsidiary to make a required capital contribution therein; provided, however, that the only recourse on such Indebtedness is limited to the Company’s or such Restricted Subsidiary’s equity interests in the related joint venture;

(14) obligations relating to, and guarantees and pledges of assets Incurred in the ordinary course of business in respect of, (x) surety bonds and (y) payments due in respect of community facility district, metro-district, mello-roos, subdivision improvement and similar bonding requirements;

(15) repayment guarantees that constitute Investments made pursuant to the JV Payment Basket; provided, however, that, after giving effect to such guarantees, the Company could invest least $1.00 in a Restricted Investment pursuant to clause (M) of the second paragraph under the covenant described in “—Limitations on Restricted Payments”;

(16) Indebtedness that is Non-Recourse Indebtedness with respect to the Company and the Restricted Subsidiaries;

(17) any guarantee by the Company or any Guarantor of any Coverage Indebtedness or any Permitted Indebtedness (other than Permitted Indebtedness incurred pursuant to clause (13) or (16) above); provided, however, that in the event such Indebtedness that is being guaranteed is subordinated to the Notes or a Guarantee, as the case may be, then the related guarantee shall be subordinated in right of payment to the Notes or such Guarantee, as the case may be; and

(18) any Indebtedness Incurred by the Corporate Issuer as a co-issuer or co-guarantor of such Indebtedness with the Company.

For purposes of determining compliance with this covenant:

(1) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of more than one of the types of Indebtedness permitted above, the Issuers, in their sole discretion, will classify such item of Indebtedness (or any portion thereof) at the time of Incurrence and will only be required to include the amount and type of such Indebtedness in one of the categories of Permitted Indebtedness or as Coverage Indebtedness;

(2) the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness permitted above; and

(3) any Permitted Indebtedness originally classified as Incurred pursuant to one of the clauses in the immediately preceding paragraph (other than pursuant to clause (1)) may later be reclassified by the Company such that it will be deemed as having been Incurred as Coverage Indebtedness or as Permitted Indebtedness pursuant to another clause in the immediately preceding paragraph, as applicable, to the extent that such reclassified Indebtedness could be Incurred pursuant thereto at the time of such reclassification.

The Indenture also provides that the Company will not, and will not cause or permit any Guarantor to, directly or indirectly, Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Company or of such Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Guarantee of such Guarantor, as the case may be, to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the applicable Issuer or such Guarantor, as the case may be.

Limitations on Restricted Payments

The Indenture provides that the Company will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, make any Restricted Payment unless:

(1) no Default shall have occurred and be continuing at the time of or immediately after giving effect to such Restricted Payment;

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(2) immediately after giving effect to such Restricted Payment, the Company could Incur at least $1.00 of Coverage Indebtedness pursuant to the “Limitations on Indebtedness” covenant; and

(3) immediately after giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments (including the Fair Market Value of any non-cash Restricted Payment) declared or made on or after the Issue Date (other than those Restricted Payments described in clauses (C) through (M) of the next paragraph) does not exceed the sum of:

(a) 50% of the Consolidated Net Income of the Company on a cumulative basis during the period (taken as one accounting period) from and including the first day of the Company’s fiscal quarter during which the Issue Date occurs and ending on the last day of the Company’s fiscal quarter immediately preceding the date of such Restricted Payment (or in the event such Consolidated Net Income shall be a deficit, minus 100% of such deficit), plus

(b) 100% of the aggregate net cash proceeds of and the Fair Market Value of any Property or other asset received by the Company from (1) any capital contribution to the Company after the Issue Date or any issue or sale after the Issue Date of any Qualified Equity Interests and (2) the issue or sale after the Issue Date of any Indebtedness or other securities of the Company convertible into or exercisable for Qualified Equity Interests that have been so converted or exercised, plus

(c) in the case of a distribution on or disposition or repayment of any Restricted Investment, an amount (to the extent not included in the calculation of Consolidated Net Income referred to in (a)) equal to the lesser of (x) the return of capital with respect to such Investment (including by dividend, distribution or sale of Equity Interests) and (y) the amount of such Investment that was treated as a Restricted Payment, in either case, less the cost of the disposition or repayment of such Investment (to the extent not included in the calculation of Consolidated Net Income referred to in (a)), plus

(d) with respect to any Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary after the Issue Date in accordance with the definition of Unrestricted Subsidiary (so long as the designation of such Subsidiary as an Unrestricted Subsidiary was treated as a Restricted Payment made after the Issue Date, and only to the extent not included in the calculation of Consolidated Net Income referred to in (a)), an amount equal to the lesser of (x) the proportionate interest of the Company or any Restricted Subsidiary in an amount equal to the excess of (I) the total assets of such Unrestricted Subsidiary, valued on an aggregate basis at the lesser of book value and Fair Market Value thereof, over (II) the total liabilities of such Unrestricted Subsidiary, determined in accordance with GAAP, and (y) the Designation Amount at the time of such Unrestricted Subsidiary’s designation as an Unrestricted Subsidiary.

The foregoing provisions will not prohibit:

(A) the payment of any dividend or redemption of any Equity Interests or Subordinated Indebtedness within 60 days after the date of declaration thereof or call for redemption if, at such date of declaration or call for redemption, such payment or redemption was permitted by the provisions of the preceding paragraph as of the date of declaration (and the payment itself will be deemed to have been paid on such date of declaration);

(B) any Restricted Payment made in exchange for, or out of the net proceeds of the substantially concurrent sale of, Qualified Equity Interests;

(C) the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value by the Company of any Subordinated Indebtedness of the Corporate Issuer, the Company or any Restricted Subsidiary in exchange for, or out of proceeds of, Refinancing Indebtedness Incurred as permitted by and in compliance with the covenant described under “Limitations on Indebtedness”;

(D) Restricted Investments after the Issue Date not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $10.0 million;

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(E) Restricted Investments after the Issue Date in joint ventures not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $100.0 million; provided, however, that, at the time any such Investment is made, the net book value of the Company’s inventory (including “work-in-progress” inventory, land held for development and land held for sale) and cash securing the Notes and any other Pari-Passu Lien Obligations is at least 275% of the aggregate principal amount of the Notes then outstanding plus the aggregate amount of such other Pari-Passu Lien Obligations;

(F) Restricted Payments made after the Issue Date in respect of Specified Obligations not to exceed $70.0 million; provided, however, that such Restricted Payments may exceed $70.0 million to the extent that the Company receives a cash equity contribution from JFSCI in the amount of such excess within 10 Business Days following such Restricted Payment;

(G) Tax Distributions (other than payments with respect to Specified Obligations);

(H) the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary with the proceeds of the offering of the Notes as described in the Offering Circular dated as of May 3, 2011;

(I) the declaration and payment of dividends to holders of any class or series of Disqualified Equity Interests of the Company or any of its Restricted Subsidiaries issued in accordance with and to the extent permitted by the covenant described under “Certain Covenants—Limitations on Indebtedness”; provided, however, that, at the time of payment of such dividend, no Default shall have occurred and be continuing (or result therefrom);

(J) repurchases of Equity Interests deemed to occur upon exercise of equity options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

(K) Restricted Payments that are made with Excluded Contributions;

(L) the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to provisions similar to those described under the captions “Certain Covenants—Change of Control” and “Certain Covenants—Limitations on Asset Dispositions;” provided, however, that all Notes tendered by Holders in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been purchased, redeemed, defeased or acquired for value; or

(M) Restricted Investments after the Issue Date in joint ventures (other than amounts expended in respect of Specified Obligations) in an amount not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $70.0 million (any Investment made pursuant to this clause (M) being an Investment made pursuant to the “JV Payment Basket”).

For purposes of determining the aggregate and permitted amounts of Restricted Payments made, the amount of any guarantee of any Investment in any Person that was initially treated as a Restricted Payment and which was subsequently terminated or expired, net of any amounts paid by either of the Issuers or any Restricted Subsidiary in respect of such guarantee, shall be deducted.

Limitations on Transactions with Affiliates

The Indenture provides that the Company will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, (i) any Affiliate of the Company, (ii) any Affiliate of any of the Company’s Subsidiaries, (iii) any holder of 10% or more of the Common Equity of the Company or (iv) any Affiliates of such holders (collectively, “Affiliated Persons”), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate

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Transaction the terms of which are at least as favorable as the terms which could reasonably be obtained by the Company or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s-length basis with Persons who are not Affiliated Persons.

In addition, the Issuers will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction:

(1) in the case of transfers of real property involving more than $10.0 million, unless the consideration paid in respect thereof exceeds the greatest of not less than three Independent Valuations, and

(2) in all other cases:

(A) having a value of more than $2.0 million unless the terms of such Affiliate Transaction are set forth in writing and a majority of the Company’s Governing Body has determined in good faith that the criterion set forth in the immediately preceding paragraph has been satisfied, and

(B) having a value of more than $5.0 million unless the terms of such Affiliate Transaction are set forth in writing and the Company has received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm’s-length transaction with a Person who is not an Affiliated Person.

The Indenture also provides that notwithstanding the foregoing, an Affiliate Transaction will not include:

(1) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Governing Body of the Company,

(2) Equity Interests issuances to directors, officers and employees of the Company or its Subsidiaries pursuant to plans approved by the holders of Equity Interests of the Company,

(3) any Permitted Investment (other than Permitted Investments described in clause (3)(b) of the definition of “Permitted Investments”) or Restricted Payment permitted under the “Limitations on Restricted Payments” covenant,

(4) any transaction between or among the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries; provided, however, no such transaction shall involve any other Affiliated Person (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the Indenture),

(5) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to the Company or a Restricted Subsidiary,

(6) any Affiliate Transactions consummated in accordance with written agreements existing on the Issue Date with Affiliates, or entities in which an Affiliate owns an interest, including amendments thereto, that are no more favorable to the Affiliate in any material respect than the terms existing on the Issue Date;

(7) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company, the Corporate Issuer or any Restricted Subsidiary; and

(8) any transaction with an Affiliate that is a joint venture in which the Company or any Restricted Subsidiary has a direct or indirect equity interest so long as the other joint venture partners not constituting Affiliates of the Company approve the subject transaction.

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Limitations on Asset Dispositions

The Indenture provides that the Company will not, and will not cause or permit any Restricted Subsidiary to, make any Asset Disposition unless:

(a) the Company (or such Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Disposition at least equal to the Fair Market Value thereof (or at least 90% of the Fair Market Value thereof in the case of a Sale/Leaseback Transaction of a model house), and

(b) not less than 70% of the consideration received by the Company (or such Restricted Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and Marketable Securities.

The amount of (i) any Indebtedness (other than any Subordinated Indebtedness) of the Company or any Restricted Subsidiary that is actually assumed by the transferee in such Asset Disposition (provided that the Company or Restricted Subsidiary, as the case may be, making the Asset Disposition is released from its obligations with respect to such Indebtedness), (ii) any notes or other obligations received by the Issuers or any Restricted Subsidiary which are immediately converted into cash and (iii) the Fair Market Value of any Property or other asset (including Equity Interests of any Person that will be a Restricted Subsidiary following receipt thereof) received that are used or useful in a Real Estate Business (provided that to the extent that the assets disposed of in such Asset Disposition were Collateral, such property or assets are pledged as Collateral under the Security Documents substantially contemporaneously with such sale, to the extent required to do so pursuant to such Security Documents), shall be deemed to be consideration required by clause (b) above for purposes of determining the percentage of such consideration received by the applicable Issuer or Restricted Subsidiary.

The Net Cash Proceeds of an Asset Disposition shall, within one year of such Asset Disposition, at the Company’s election, (a) be used by the Company or a Restricted Subsidiary to invest in assets (including Equity Interests of any Person that is or will be a Restricted Subsidiary following investment therein) used or useful in the Real Estate Business of the Company and the Restricted Subsidiaries(provided that to the extent that the assets disposed of in such Asset Disposition were Collateral, such assets are pledged as Collateral under the Security Documents to the extent required to do so pursuant to such Security Documents, (b) be used to permanently prepay or permanently repay any (1) Indebtedness which had been secured by the assets sold in the relevant Asset Disposition or (2) Indebtedness of a Restricted Subsidiary that is not a Guarantor, to the extent the assets sold were not Collateral, or (c) be applied to make an offer to purchase Notes and, if the Company or a Restricted Subsidiary elects or is required to do so, to repay, purchase or redeem any other Pari-Passu Lien Obligations (or cash collateralize letters of credit that constitute Pari-Passu Lien Obligations Incurred in connection with Indebtedness Incurred pursuant to clause (1) of the definition of Permitted Indebtedness or a Credit Facility) and, if the Company or a Restricted Subsidiary elects or is required to do so and the assets disposed of were not Collateral, repay, purchase or redeem any unsubordinated Indebtedness (on a pro rata basis if the amount available for such repayment, purchase, redemption or cash collateralization is less than the aggregate amount of (i) the principal amount of the Notes tendered in such offer to purchase, (ii) the lesser of the principal amount, or accreted value, of such other Pari-Passu Lien Obligations tendered or to be repaid, redeemed, repurchased or cash collateralized and (iii) the lesser of the principal amount, or accreted value, of such unsubordinated Indebtedness tendered or to be repaid, repurchased or redeemed, plus, in each case, accrued interest to the date of repayment, purchase or redemption) at 100% of the principal amount or accreted value thereof, as the case may be, plus accrued and unpaid interest, if any, to the date of repurchase, repayment or redemption. Pending any such application under this paragraph, Net Cash Proceeds may be used to temporarily reduce Indebtedness or otherwise be invested in any manner not prohibited by the Indenture.

Any Net Cash Proceeds from the Asset Disposition that are not invested or applied as provided and within the time period set forth in the preceding paragraph (which will include the Fair Market Value of any Cash Equivalents and Marketable Securities received in connection with such Asset Disposition which have not been converted into cash) will be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Issuers shall make an offer to all Holders of the Notes and, if required by the

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terms of any Indebtedness that is pari-passu with the Notes (“Pari-Passu Indebtedness”), to the holders of such Pari-Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount (or accreted value, as applicable) of the Notes and such Pari-Passu Indebtedness that is an integral multiple of $1,000 that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount (or accreted value, as applicable) thereof, plus accrued and unpaid interest to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. The Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceed $10.0 million by delivering the notice required pursuant to the terms of the Indenture, with a copy to the Trustee.

To the extent that the aggregate amount of Notes and such Pari-Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuers may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in the Indenture. If the aggregate principal amount of Notes and the Pari-Passu Indebtedness surrendered by holders thereof exceeds the amount of Excess Proceeds, the Notes and such Pari-Passu Indebtedness will be purchased on a pro rata basis based on the principal amount (or accreted value, as applicable) of the Notes and such Pari-Passu Indebtedness tendered. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reduced by the amount of such Asset Sales Offer.

The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in the Indenture by virtue thereof.

Limitations on Liens

The Indenture provides that the Company will not, and will not cause or permit any Restricted Subsidiary to, create, Incur or suffer to exist any Liens, other than Permitted Liens, on any of their respective Properties.

Limitation on Sale/Leaseback Transactions

The Indenture provides that the Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless:

(1) the Company or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to the covenant described under “—Limitations on Indebtedness” and (B) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Notes pursuant to the covenant described under “—Limitation on Liens”;

(2) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the Fair Market Value of such property (or at least 90% of such Fair Market Value in the case of a Sale/Leaseback Transaction of a model house); and

(3) the Company applies the proceeds of such transaction in compliance with the covenant described under “—Limitations on Asset Dispositions.”

Limitations on Restrictions Affecting Restricted Subsidiaries

The Indenture provides that the Company will not, and will not cause or permit any Restricted Subsidiary to, create, assume or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Equity Interests or any other interest or participation in, or measured by, its profits, owned by the Company, the Corporate Issuer or any other

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Restricted Subsidiary, or pay interest on or principal of any Indebtedness owed to the Company or any other Restricted Subsidiary,

(2) make loans or advances to the Company, the Corporate Issuer or any other Restricted Subsidiary, or

(3) transfer any of its property or assets to the Company, the Corporate Issuer or any other Restricted Subsidiary.

The Indenture provides, notwithstanding the foregoing, that the encumbrances and restrictions referenced in the preceding clauses (1), (2) or (3) will not apply to:

(a) encumbrances or restrictions existing under or by reason of applicable law, including judicial or regulatory actions,

(b) contractual encumbrances or restrictions in effect at or entered into on the Issue Date,

(c) any restrictions or encumbrances arising under (A) Acquired Indebtedness or (B) appearing in any agreements acquired or assumed in connection with the acquisition of Property; provided, however, that such encumbrance or restriction applies only to either the assets that were subject to the restriction or encumbrance at the time of the acquisition or the obligor on such Indebtedness and its Subsidiaries prior to such acquisition,

(d) any Permitted Lien, or any other agreement restricting the sale or other disposition of property, if such Permitted Lien or agreement does not expressly restrict the ability of a Subsidiary of the Company to pay dividends or make or repay loans or advances prior to default thereunder,

(e) reasonable and customary borrowing base covenants set forth in agreements evidencing Indebtedness otherwise permitted by the Indenture,

(f) customary non-assignment provisions in leases, licenses, encumbrances, contracts or similar assets entered into or acquired in the ordinary course of business,

(g) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all of the Equity Interests or assets of such Restricted Subsidiary pending the closing of such sale or disposition,

(h) encumbrances or restrictions existing under or by reason of (A) the Indenture, the Notes or the Guarantees, (B) the letter of credit facility or (C) the definitive agreements governing any other Pari-Passu Indebtedness permitted to be Incurred subsequent to the Issue Date in accordance with the “Limitations on Indebtedness” covenant; provided, however, that in the case of clause (C), (x) either (i) the encumbrance or restriction applies only in the event of and during the continuance of a payment default or a default with respect to a financial covenant contained in such definitive agreements or (ii) the Company determines at the time any such Pari-Passu Indebtedness is Incurred (and at the time of any modification of the terms of any such encumbrance or restriction) that any such encumbrance or restriction will not materially affect the Company’s or any Restricted Subsidiary’s ability to make principal or interest payments on the Notes and any other Indebtedness that is an obligation of the Company or any Restricted Subsidiary, as applicable, and (y) the encumbrance or restriction is not materially more disadvantageous to the holders of the Notes than is customary in comparable financings or agreements (as determined by the Company in good faith),

(i) purchase money obligations that impose restrictions on the property so acquired of the nature described in clause (3) of this covenant,

(j) Liens permitted under the Indenture securing Indebtedness that limit the right of the debtor to dispose of the assets subject to such Lien,

(k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, assets sale agreements, stock sale agreements and other similar agreements,

(l) customary provisions of any franchise, distribution or similar agreements,

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(m) restrictions on cash or other deposits or net worth imposed by contracts entered into in the ordinary course of business,

(n) any encumbrances or restrictions existing under (A) development agreements or other contracts entered into with municipal entities, agencies or sponsors in connection with the entitlement or development of real property or (B) agreements for funding of infrastructure, including in respect of the issuance of community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds, and similar bonding requirements arising in the ordinary course of business of a homebuilder;

(o) any encumbrances or restrictions contained in any joint venture agreement entered into by the Company or any of its Restricted Subsidiaries, to the extent binding upon the assets of the relevant joint venture, together with any encumbrances or restrictions contained in any agreement entered into by any such joint venture; and

(p) any encumbrance or restrictions of the type referred to in clauses (1), (2) or (3) of this covenant imposed by any amendments, modifications, restatements, renewals, supplements, replacements or Refinancings of the contracts, instruments or obligations referred to in clauses (b), (c), (h) and (i) of this covenant; provided, however, that such amendments, modifications, restatements, renewals, supplements, replacements or Refinancings are, in the good faith judgment of the Company’s Governing Body, no more restrictive in any material respect with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, supplement, replacement or Refinancing.

Limitations on Mergers, Consolidations and Sales of Assets

The Indenture provides that neither of the Issuers nor any of the Guarantors will consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets (including, without limitation, by way of liquidation or dissolution), or assign any of its obligations under the Notes, the Guarantees or the Indenture (as an entirety or substantially as an entirety in one transaction or in a series of related transactions), to any Person (in each case other than in a transaction in which the Company, the Corporate Issuer or a Guarantor is the survivor of a consolidation or merger, or the transferee in a sale, lease, conveyance or other disposition, liquidation or dissolution) unless:

(1) the Person formed by or surviving such consolidation or merger (if other than the Company, the Corporate Issuer or the Restricted Subsidiary as the case may be), or to which such sale, lease, conveyance or other disposition or assignment will be made (collectively, the “Successor”), is a corporation or other legal entity organized and existing under the laws of the United States or any state thereof or the District of Columbia, and the Successor assumes by supplemental indenture in a form reasonably satisfactory to the Trustee all of the obligations of the Company, the Corporate Issuer or the Restricted Subsidiary, as the case may be, under the Notes or a Guarantee, as the case may be, and the Indenture, the Intercreditor Agreement and the Security Documents,

(2) immediately after giving effect to such transaction, no Default has occurred and is continuing, and

(3) immediately after giving effect to such transaction, the Company (or its Successor) could Incur at least $1.00 of Coverage Indebtedness pursuant to the “Limitations on Indebtedness” covenant.

The foregoing provisions shall not apply to:

(a) a transaction involving the sale or disposition of Equity Interests of a Guarantor, or the consolidation or merger of a Guarantor, or the sale, lease, conveyance or other disposition of all or substantially all of the assets of a Guarantor, that in any such case results in such Guarantor being released from its Guarantee as provided under “The Guarantees” above, or

(b) a transaction the purpose of which is to change the state of incorporation of the Company, the Corporate Issuer or any Restricted Subsidiary,

(c) a liquidation or dissolution of any Restricted Subsidiary, other than the Corporate Issuer, or

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(d) a sale, lease, conveyance or other disposition of all or substantially all of the assets of any Restricted Subsidiary in connection with the sale or wind-down of retail or other land sales by such Restricted Subsidiary.

Reports to Holders of Notes

The Indenture provides that the Company will (i) furnish to the Trustee, (ii) upon request, furnish to Holders and prospective holders of the Notes and (iii) prior to the earlier of (a) consummation of the Exchange Offer and (b) 360 days after the Issue Date, make publicly available on its website, a copy of all of the information and reports referred to in clauses (1) and (2) below within the time periods specified in the Commision’s rules and regulations applicable to the filing of the related reports:

(1) the description of the business of the Company and all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Company’s certified independent accountants; and

(2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports.

After the earlier of (a) consummation of the Exchange Offer and (b) 360 days after the Issue Date, whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the Commission, subject to the next sentence, and provide the Trustee and Holders with, such annual and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such reports to be so filed and provided at the times specified for the filings of such reports under such Sections and containing all the information, audit reports and exhibits required for such reports. The Company will not take any action for the purpose of causing the Commission not to accept any such filings. If, notwithstanding the foregoing, the Commission will not accept any of the Company’s filings for any reason, the Company will post such reports on its website within the time periods that would apply if the Company were required to file those reports with the Commission. In addition, to the extent not satisfied by the foregoing, the Company will agree that, for so long as any Notes are outstanding, it will furnish to Holders and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of them will not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Corporate Issuer’s and/or the Company’s compliance with any of its covenants in the Indenture (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

Limitation on Line of Business

The Indenture provides that the Company will not, and will not permit any Restricted Subsidiary, to engage in any business other than a Real Estate Business.

Limitation on Co-Issuer

The Corporate Issuer may not hold any material assets (other than Indebtedness owing to the Corporate Issuer by the Company or any Restricted Subsidiary and non-material Cash Equivalents), become liable for any obligations or engage in any business activities (other than treasury, cash management and activities incidental thereto); provided, however, that the Corporate Issuer may be a co-obligor or co-guarantor with respect to the Notes or any other Indebtedness or other obligations if the Company is an obligor or guarantor of such Indebtedness or obligations. The Corporate Issuer shall be a wholly-owned Subsidiary of the Company at all times. At any time after the Company or any successor to the Company is a corporation, the Corporate Issuer may merge with or consolidate into the Company or any Subsidiary of the Company.

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Limitations Relating to Partners Insurance Company

The Indenture provides that the Company will not permit Partners Insurance Company (i) to engage in any business other than its existing business on the Issue Date or (ii) to Incur any Indebtedness.

Future Guarantors

The Indenture provides that the Company will cause each wholly-owned Restricted Subsidiary (other than any wholly-owned Subsidiary that is prohibited from becoming a Guarantor as a result of any requirement of law, rule or regulation binding on such Subsidiary) that Incurs any Indebtedness to, contemporaneously, (i) execute and deliver to the Trustee a supplemental indenture to the Indenture, pursuant to which such Restricted Subsidiary will guarantee payment of the Notes on the same terms and conditions as those set forth in the Indenture and applicable to the other Guarantors and (ii) execute and deliver an amendment, supplement or other instrument in respect of the Security Documents necessary to cause such Restricted Subsidiary to become a grantor thereunder and take all action required thereunder to perfect the Liens created thereunder, as well as to execute and deliver to the Trustee joinders to the Intercreditor Agreement, in each case at the time such Person becomes a Restricted Subsidiary or Guarantees any such Indebtedness, as applicable.

Collateral Requirement; Further Assurances; Costs

The Indenture provides that, on the Issue Date, the Issuers and each Guarantor shall grant Liens on all their property (other than Excluded Property) and take all appropriate steps to cause such Liens to be perfected Liens (subject to Permitted Liens), including through recordation of mortgages, entry into control agreements, filing of UCC-1 financing statements or otherwise, pursuant to, and to the extent required by, the Security

Documents to be entered into on the Issue Date and the Indenture. Notwithstanding the foregoing, the requirements of this paragraph are subject to the provisions of the fourth paragraph under this “—Collateral Requirement; Further Assurances; Costs” covenant.

The Indenture provides that, if either of the Issuers or any of the Guarantors at any time grants, assumes, perfects or becomes subject to any Lien upon any of its property (other than Excluded Property) then owned or thereafter acquired as security for any other Pari-Passu Lien Obligation, such Issuer will, or will cause such Guarantor to, as promptly as practical (subject to the provisions of the fourth paragraph under this “—Collateral Requirement; Further Assurances; Costs” covenant):

(i) grant a Lien on such property to the Collateral Agent for the benefit of the Holders and, to the extent such grant would require the execution and delivery of a Security Document, such Issuer or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the agreement or instrument executed and delivered to secure such other Pari-Passu Lien Obligations;

(ii) cause the Lien granted in such Security Document to be duly perfected in any manner permitted by law to the same extent as the Liens granted for the benefit of such other Pari-Passu Lien Obligations are perfected; and

(iii) instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this paragraph, including as necessary under the Security Documents.

The Indenture provides that, if either of the Issuers or any Guarantor at any time after the Issue Date acquires any new property (other than Excluded Property) that is not automatically subject to a Lien under the Security Documents, or a Restricted Subsidiary becomes a Guarantor, such Issuer will, or will cause such Guarantor, subject to the requirements of the Security Documents, to as soon as practical after such property’s acquisition or it no longer being Excluded Property (subject to the provisions of the fourth paragraph under this “—Collateral Requirement; Further Assurances; Costs” covenant):

(i) grant a Lien on such property (or, in the case of a new Guarantor, all of its assets except Excluded Property) to the Collateral Agent for the benefit of the Holders (and, to the extent such grant would require

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the execution and delivery of a Security Document, such Issuer or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the Security Documents executed and delivered on the Issue Date);

(ii) cause the Lien granted in such Security Document to be duly perfected in any manner permitted by law to the same extent as the Liens granted on the Issue Date are perfected; and

(iii) instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this paragraph including as necessary under the Security Documents.

The Company shall deliver an Opinion of Counsel to the Trustee in respect of any Lien grant referred to by the foregoing provisions of this paragraph by a new Guarantor or with respect to real property, addressing customary matters (and containing customary exceptions) consistent with the Opinion of Counsel delivered on the Issue Date in respect of such matters; provided, however, that, an Opinion of Counsel shall not be required with respect to any mortgage or similar instrument for real property located in a jurisdiction for which an Opinion of Counsel has been previously delivered to the Trustee pursuant to the Indenture.

Notwithstanding anything to the contrary set forth in this “—Collateral Requirement; Further Assurances; Costs” covenant or elsewhere in the Indenture or any Security Document:

(i) any mortgages or similar instruments (and any related Security Documents) required to be granted pursuant to the Indenture or the Security Documents with respect to real property owned by the Issuers or a Guarantor on the Issue Date shall be granted, together with Opinions of Counsel delivered to the Trustee in respect of the enforceability and validity of such mortgages and similar instruments, addressing customary matters (and containing customary exceptions), as soon as commercially reasonable following the Issue Date, but in no event later than 90 days following the Issue Date; and

(ii) in the event that Rule 3-16 of Regulation S-X under the Securities Act requires or would require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the Commission of separate financial statements of a Guarantor that are not otherwise required to be filed, then the securities of such Person need not be pledged pursuant to this “—Collateral Requirement; Further Assurances; Costs” covenant and shall automatically be deemed released and to not be and to not have been part of the Collateral, but only to the extent necessary to not be subject to such requirement. In such event, the Security Documents may be amended or modified, without the consent of any Holder of Notes, to the extent necessary to evidence the release of Liens securing the Notes and the Guarantees on the securities that are so deemed to no longer constitute part of the Collateral.

The Issuers will bear and pay all legal expenses, filing fees, insurance premiums and other costs associated with the performance of the obligations of the Issuers and the Guarantors set forth in this “—Collateral Requirement; Further Assurances; Costs” covenant and will also pay or reimburse the Trustee and Collateral Agent for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee and Collateral Agent in connection therewith, including the reasonable compensation and expenses of the Trustee and Collateral Agent’s agents and counsel.

The Indenture provides that neither of the Issuers nor any of the Guarantors will be permitted to take any action, or knowingly or negligently omit to take any action, which action or omission would reasonably be expected to materially impair the security interest with respect to the Collateral for the benefit of the Trustee and the Holders of the Notes.

Events of Default

The following are Events of Default under the Indenture:

(1) the failure by the Issuers and the Guarantors to pay interest on any Note when the same becomes due and payable and the continuance of any such failure for a period of 30 days;

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(2) the failure by the Issuers and the Guarantors to pay the principal of or premium on any Note when the same becomes due and payable at maturity, upon acceleration or otherwise;

(3) the failure by the Issuers or any Restricted Subsidiary to comply with any of its agreements or covenants in, or provisions of, the Notes, the Guarantees or the Indenture and such failure continues for the period and after the notice specified below (except in the case of a default under covenants described under “Certain Covenants—Change of Control” and “Certain Covenants—Limitations on Mergers, Consolidations and Sales of Assets,” which will constitute Events of Default with notice but without passage of time);

(4) the failure by either of the Issuers or any Restricted Subsidiary to make any principal or interest payment in an amount of $10.0 million or more, individually or in the aggregate, in respect of Indebtedness (other than Non-Recourse Indebtedness) of either of the Issuers or any Restricted Subsidiary within 30 days of such principal or interest becoming due and payable (after giving effect to any applicable grace period set forth in the documents governing such Indebtedness);

(5) a final judgment or judgments that exceed $10.0 million or more (net of insurance available to the applicable Issuer or Restricted Subsidiary and expected (in the good faith judgment of the Company) to be available to satisfy such judgment), individually or in the aggregate, for the payment of money having been entered by a court or courts of competent jurisdiction against either of the Issuers or any of the Restricted Subsidiaries and such judgment or judgments is not satisfied, bonded, stayed, annulled or rescinded within 60 days of being entered;

(6) either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(a) commences a voluntary case,

(b) consents to the entry of an order for relief against it in an involuntary case,

(c) consents to the appointment of a Custodian of it or for all or substantially all of its property, or

(d) makes a general assignment for the benefit of its creditors;

(7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(a) is for relief against either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary as debtor in an involuntary case,

(b) appoints a Custodian of either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary or a Custodian for all or substantially all of the property of either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary, or

(c) orders the liquidation of either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary,

and the order or decree remains unstayed and in effect for 60 days;

(8) any Guarantee of a Guarantor which is a Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Guarantee and the Indenture) or is declared in any judicial proceeding to be null and void and unenforceable or found to be invalid or any Guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantor from its Guarantee in accordance with the terms of the Indenture and the Guarantee); or

(9) the Liens created by the Security Documents shall at any time not constitute valid and perfected Liens on any material portion of the Collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required by the Indenture, the Intercreditor Agreement or the Security Documents) other than in accordance with the terms of the relevant Security Document, the Indenture and the Intercreditor Agreement and other than the satisfaction in full of all Obligations under the Indenture or the release or amendment of any such Lien in accordance with the terms of the Indenture, the

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Intercreditor Agreement or the Security Documents, or, except for expiration in accordance with its terms or amendment, modification, waiver, termination or release in accordance with the terms of the Indenture, the Intercreditor Agreement and the relevant Security Document, any of the Security Documents shall for whatever reason be terminated or cease to be in full force and effect, if in either case, such default continues for 30 days after notice, or the enforceability thereof shall be contested by the Issuers or any Guarantor.

A Default as described in subclause (3) above will not be deemed an Event of Default until the Trustee notifies the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes notify the Issuers and the Trustee, of the Default and (except in the case of a default with respect to covenants described under “Certain Covenants—Change of Control” and “Certain Covenants—Limitations on Mergers, Consolidations and Sales of Assets”) the Issuers do not cure the Default within 60 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a “Notice of Default.” If such a Default is cured within such time period, it ceases to be a Default.

If an Event of Default (other than an Event of Default with respect to either of the Issuers resulting from subclauses (6) or (7) above), shall have occurred and be continuing under the Indenture, the Trustee by notice to the Issuers, or the Holders of at least 25% in principal amount of the Notes then outstanding by notice to the Issuers and the Trustee, may declare all Notes to be due and payable immediately. Upon such declaration of acceleration, the amounts due and payable on the Notes will be due and payable immediately. If an Event of Default with respect to either of the Issuers specified in subclauses (6) or (7) above occurs, such an amount will ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee and the Issuers or any Holder.

The Holders of a majority in principal amount of the Notes then outstanding by written notice to the Trustee and the Issuers may waive any Default (other than any Default in payment of principal, premium or interest) on the Notes under the Indenture. Holders of a majority in principal amount of the then outstanding Notes may rescind an acceleration and its consequence (except an acceleration due to nonpayment of principal, premium or interest on the Notes) if the rescission would not conflict with any judgment or decree, if the Issuers have paid or deposited with the Trustee a sum sufficient to pay the reasonable compensation, disbursements, expenses and advancements of the Trustee and if all existing Events of Default (other than the non-payment of accelerated principal) have been cured or waived.

The Holders may not enforce the provisions of the Indenture, the Notes or the Guarantees except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power; provided, however, that such direction does not conflict with the terms of the Indenture. The Trustee may withhold from the Holders notice of any continuing Default (except any Default in payment of principal, premium or interest on the Notes or that resulted from the failure to comply with the covenant entitled “Change of Control”) if the Trustee determines that withholding such notice is in the Holders’ interest.

The Issuers are required to deliver to the Trustee an annual statement regarding compliance with the Indenture and include in such statement, if any officer of either of the Issuers is aware of any Default, a statement specifying such Default and what action the Issuers are taking or propose to take with respect thereto. In addition, the Issuers are required to deliver to the Trustee prompt written notice of the occurrence of any Default.

Discharge and Defeasance of Indenture

The Issuers and the Guarantors may discharge their obligations under the Notes, the Guarantees, the Indenture, the Security Documents and the Intercreditor Agreement and cause the release of all Liens on the Collateral granted under the Security Documents by irrevocably depositing in trust with the Trustee money or U.S. Government Obligations sufficient to pay principal of, premium and interest on the Notes to maturity or redemption and the Notes mature or are to be called for redemption within one year, subject to meeting certain other conditions.

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The Indenture also permits the Issuers and the Guarantors to terminate all of their respective obligations under the Indenture with respect to the Notes and the Guarantees and under the Intercreditor Agreement and the Security Documents and cause the release of all Liens on the Collateral granted under the Security Documents, other than the obligation to pay interest on and the principal of and premium on the Notes and certain other obligations (“legal defeasance”), at any time by:

(1) depositing in trust with the Trustee, under an irrevocable trust agreement, money or U.S. Government Obligations in an amount sufficient to pay principal of and premium and interest on the Notes to their maturity or redemption, as the case may be, and

(2) complying with certain other conditions, including delivery to the Trustee of an opinion of counsel or a ruling received from the Internal Revenue Service, to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of such right and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case otherwise, which opinion of counsel is based upon a change in the applicable federal tax law since the Issue Date.

In addition, the Indenture permits the Issuers and the Guarantors to terminate all of their obligations under the Indenture with respect to certain covenants and Events of Default specified in the Indenture, and the Guarantors and the Liens on the Collateral granted under the Security Documents will be released (“covenant defeasance”), at any time by:

(1) depositing in trust with the Trustee, under an irrevocable trust agreement, money or U.S. Government Obligations in an amount sufficient to pay principal of, premium and interest on the Notes to their maturity or redemption, as the case may be, and

(2) complying with certain other conditions, including delivery to the Trustee of an opinion of counsel or a ruling received from the Internal Revenue Service, to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of such right and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case otherwise.

Notwithstanding the foregoing, no discharge, legal defeasance or covenant defeasance described above will affect the following obligations to, or rights of, the Holders of the Notes:

• rights of registration of transfer and exchange of Notes;

• rights of substitution of mutilated, defaced, destroyed, lost or stolen Notes;

• rights of Holders of the Notes to receive payments of principal thereof, premium, if any, and interest thereon, upon the original due dates therefor, but not upon acceleration;

• rights, obligations, duties and immunities of the Trustee;

• rights of Holders of Notes that are beneficiaries with respect to property so deposited with the Trustee payable to all or any of them; and

• obligations of the Issuers or the Guarantors to maintain an office or agency in respect of the Notes.

The Issuers or the Guarantors may exercise the legal defeasance option with respect to the Notes notwithstanding the prior exercise of the covenant defeasance option with respect to the Notes. If the Issuers or the Guarantors exercise the legal defeasance option with respect to the Notes, payment of the Notes may not be accelerated due to an Event of Default with respect to the Notes. If the Issuers or the Guarantors exercise the covenant defeasance option with respect to the Notes, payment of the Notes may not be accelerated due to an Event of Default with respect to the covenants to which such covenant defeasance is applicable. However, if acceleration were to occur by reason of any Event of Default still applicable to the Notes, the realizable value at the acceleration date of the cash and U.S. Government Obligations in the defeasance trust could be less than the

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principal of, premium, if any, and interest then due on the Notes, in that the required deposit in the defeasance trust is based upon scheduled cash flow rather than market value, which will vary depending upon interest rates and other factors.

Transfer and Exchange

A Holder may transfer or exchange Notes only in accordance with the provisions of the Indenture. The Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.

Amendment, Supplement and Waiver

Subject to certain exceptions, the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents may be amended or supplemented with the consent (which may include written consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and future compliance with any provision of the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents may be waived (other than any continuing Default in the payment of interest on or the principal of the Notes) with the consent (which may include waivers obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding.

Without the consent of, or notice to, any Holder, the Issuers, the Guarantors, the Trustee and the Collateral Agent may amend or supplement the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents:

(a) to cure any ambiguity, defect or inconsistency;

(b) to comply with the “Limitations on Mergers, Consolidations and Sales of Assets” covenant set forth in the Indenture;

(c) to comply with any requirements of the Commission in connection with the qualification of the Indenture under the TIA;

(d) to evidence and provide for the acceptance of appointment under the Indenture by a successor or replacement Trustee or under the Intercreditor Agreement or the Security Documents of a successor or replacement Collateral Agent;

(e) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(f) to provide for any Guarantee of the Notes;

(g) to add security to or for the benefit of the Notes and, in the case of the Security Documents, to or for the benefit of the other secured parties named therein or to confirm and evidence the release, termination or discharge of any Guarantee of or Lien securing the Notes when such release, termination or discharge is permitted by the Indenture, the Intercreditor Agreement and the Security Documents;

(h) to make any change that does not adversely affect the legal rights of any Holder;

(i) to evidence the assumption by a successor entity of either of the Issuers of the obligations of such Issuer under the Indenture and the Notes;

(j) to add covenants or new events of default for the protection of the Holders of the Notes;

(k) to conform any provision of the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents to this “Description of the Notes” to the extent that this “Description of the Notes” was intended to be a verbatim recitation of a provision in the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents;

(l) to provide for the issuance of Additional Notes as permitted under the Indenture; or

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(m) to make any amendment to the provisions of the Indenture relating to the transfer and legending of Notes; provided, however, that (a) compliance with the Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of Holders to transfer Notes.

In addition, the Collateral Agent and the Trustee are authorized to amend the Intercreditor Agreement and the Security Documents to add additional secured parties to the extent Liens securing Indebtedness and other Obligations held by such parties are permitted under the Indenture.

Without the consent of each Holder affected, the Issuers, the Guarantors, the Trustee and the Collateral Agent may not:

(1) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver,

(2) reduce the rate of or extend the time for payment of interest, including default interest, on any Note,

(3) reduce the principal of or change the fixed maturity of any Note or alter the provisions (including related definitions) with respect to redemptions described under “Optional Redemption” or with respect to offers to repurchase Notes described under “Certain Covenants—Limitations on Asset Dispositions” or “Certain Covenants—Change of Control,”

(4) make any Note payable in money other than that stated in the Note,

(5) make any change in the “Waiver of Defaults by Majority of Holders” or the “Proceedings by Holders” sections set forth in the Indenture,

(6) adversely modify the ranking or priority of the Notes or any Guarantee, except for releases of Guarantees or Collateral permitted by the Indenture and the Intercreditor Agreement,

(7) release any Guarantor from any of its obligations under its Guarantee or the Indenture otherwise than in accordance with the Indenture and the Intercreditor Agreement,

(8) waive a continuing Default in the payment of principal of or interest or premium on the Notes, or

(9) effect a release of all or substantially all of the Collateral other than pursuant to the terms of the Intercreditor Agreement and the Security Documents or as otherwise permitted by the Indenture.

The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and our obligation to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee in a notice furnished to Holders in accordance with the terms of the Indenture.

Neither the Issuers nor any Affiliated Entity may, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to all Holders and is paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

Governing law

The Indenture, the Notes, the Guarantees, the Intercreditor Agreement and the Security Documents are governed by the laws of the State of New York.

Definitions of certain terms used in the Indenture

Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all terms used in the Indenture.

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“Acquired Indebtedness” means (1) with respect to any Person that becomes a Restricted Subsidiary (or is merged into the Company, the Corporate Issuer or any Restricted Subsidiary) after the Issue Date, Indebtedness of such Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary (or is merged into the Company, the Corporate Issuer or any Restricted Subsidiary) that was not Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary (or being merged into the Company, the Corporate Issuer or any Restricted Subsidiary) and (2) with respect to the Company, the Corporate Issuer or any Restricted Subsidiary, any Indebtedness expressly assumed by the Company, the Corporate Issuer or any Restricted Subsidiary in connection with the acquisition of any assets from another Person (other than the Company, the Corporate Issuer or any Restricted Subsidiary), which Indebtedness was not Incurred by such other Person in connection with or in contemplation of such acquisition. Indebtedness Incurred in connection with or in contemplation of any transaction described in clause (1) or (2) of the preceding sentence shall be deemed to have been Incurred by the Company, the Corporate Issuer or a Restricted Subsidiary, as the case may be, at the time such Person becomes a Restricted Subsidiary (or is merged into the Company, the Corporate Issuer or any Restricted Subsidiary) in the case of clause (1) or at the time of the acquisition of such assets in the case of clause (2), but shall not be deemed Acquired Indebtedness.

“Additional Pari-Passu Lien Obligations” has the meaning specified in the Intercreditor Agreement.

“Additional Pari-Passu Lien Secured Party” means the holder of any Additional Pari-Passu Lien Obligations and any Authorized Representative with respect thereto.

“Affiliate” means, when used with reference to a specified Person, any Person directly or indirectly controlling, or controlled by or under direct or indirect common control with the Person specified.

“Affiliate Obligations” means obligations of Shea Properties, LLC, Shea Properties II, LLC or any of their respective Subsidiaries (or joint ventures in which they own an interest) or other Shea-family owned entities (or joint ventures in which they own an interest, excluding, however, any of the foregoing that is a Guarantor), including development loans; provided, however, that, capital calls required to be made by the Company or its Restricted Subsidiaries to or for the benefit of a joint venture pro rata on the basis of the Company’s or a Restricted Subsidiary’s ownership in such joint venture, which capital calls are not being made to enable such joint venture to pay amounts owed under any Indebtedness, shall not be Affiliate Obligations but will be treated as Restricted Payments.

“Asset Acquisition” means (1) an Investment by the Company, the Corporate Issuer or any Restricted Subsidiary in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary or shall be consolidated or merged with or into the Company, the Corporate Issuer or any Restricted Subsidiary or (2) the acquisition by the Company, the Corporate Issuer or any Restricted Subsidiary of the assets of any Person, which constitute all or substantially all of the assets or of an operating unit or line of business of such Person or which is otherwise outside the ordinary course of business.

“Asset Disposition” means:

(1) any sale, transfer, conveyance, lease or other disposition (including by way of merger, consolidation or sale and leaseback or sale of Equity Interests in any Subsidiary) (each, a “transaction”), whether in a single transaction or series of related transactions, of any Property or assets of either of the Issuers or any Restricted Subsidiary to any other Person; or

(2) the issuance or sale of Equity Interests of the Corporate Issuer or any Restricted Subsidiary, whether in a single transaction or a series of related transactions.

The term “Asset Disposition” shall not include:

(a) a transaction between either of the Issuers and any Restricted Subsidiary or a transaction between Issuers or Restricted Subsidiaries,

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(b) a transaction in the ordinary course of business, including sales (directly or indirectly), Required Dedications, leases and sales and leasebacks of (A) homes, improved land and unimproved land and (B) real estate (including related amenities and improvements),

(c) a transaction involving the sale of Equity Interests of, or the disposition of assets in, an Unrestricted Subsidiary,

(d) any exchange or swap of assets (including land swaps) of either of the Issuers or any Restricted Subsidiary for assets (including Equity Interests of any Person that is or will be a Restricted Subsidiary following receipt thereof) that (x) are to be used by either of the Issuers or any Restricted Subsidiary in the ordinary course of its Real Estate Business and (y) have a Fair Market Value substantially equivalent to the Fair Market Value of the assets exchanged or swapped; provided; however; that to the extent that the assets exchanged or swapped were Collateral, the assets received are pledged as Collateral under the Security Documents substantially contemporaneously with such exchange or swap to the extent required to do so pursuant to the Security Documents,

(e) any sale, transfer, conveyance, lease or other disposition of assets and properties that is governed by the provisions set forth under “Certain Covenants—Limitations on Mergers, Consolidation and Sales of assets,”

(f) the creation of a Permitted Lien and dispositions in connection with Permitted Liens,

(g) the making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under the covenant described under “Certain Covenants—Limitation on Restricted Payments,” or

(h) any single transaction or series of related transactions that involves property, assets or Equity Interests having a Fair Market Value of less than $1.0 million.

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/ Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligation.”

“Baker JV” means the joint venture conducted by Shea/Baker Ranch Associates LLC, a California limited liability company.

“Bankruptcy Law” means title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.

“Capitalized Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligations will be the capitalized amount thereof determined in accordance with GAAP.

“Cash Equivalents” means:

(1) U.S. dollars;

(2) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof having maturities of one year or less from the date of acquisition;

(3) demand deposits, certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500 million;

(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) entered into with any financial institution meeting the qualifications specified in clause (3) above;

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(5) commercial paper rated P-1, A-1 or the equivalent thereof by Moody’s or S&P, respectively, and in each case maturing within one year after the date of acquisition; and

(6) investments in money market funds substantially all of the assets of which consist of securities described in the foregoing clauses (1) through (5).

“Change of Control” means:

(1) any sale, lease or other transfer (in one transaction or a series of transactions) of all or substantially all of the consolidated assets of the Company and its Restricted Subsidiaries to any Person (other than a Restricted Subsidiary); provided, however, that a transaction where the holders of all classes of Common Equity of the Company immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of such Person immediately after such transaction shall not be a Change of Control;

(2) a “person” or “group” (within the meaning of Section 13(d) of the Exchange Act (other than the Permitted Holders)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of Common Equity of the Company representing more than 50% of the voting power of the Common Equity of the Company;

(3) the holders of Equity Interests of the Company approve any plan or proposal for the liquidation or dissolution of the Company; provided, however, that a liquidation or dissolution of the Company which is part of a transaction described in the proviso to clause (1) above shall not constitute a Change of Control; or

(4) a change of control shall occur as defined in the instrument governing any publicly traded debt securities of the Company or the Corporate Issuer which requires the Company or the Corporate Issuer to repay or repurchase such debt securities.

“class” means (a) with respect to the Pari-Passu Lien Secured Parties, each of (i) the LC Facility Secured Parties (in their capacities as such), (ii) the holders of Notes and the Trustee (each in their capacity as such) and (iii) the Additional Pari-Passu Lien Secured Parties that become subject to the Intercreditor Agreement after the date of the Indenture that are represented by a common Authorized Representative (in its capacity as such for such Additional Pari-Passu Lien Secured Parties) and (b) with respect to any Pari-Passu Lien Obligations, each of (i) the LC Facility Obligations, (ii) the Notes Obligations and (iii) the Additional Pari-Passu Lien Obligations Incurred pursuant to any applicable agreement, which pursuant to any joinder agreement are to be represented under the Intercreditor Agreement by a common Authorized Representative (in its capacity as such for such Additional Pari-Passu Lien Obligations).

“Common Equity” of any Person means Equity Interests of such Person that is generally entitled to (1) vote in the election of directors of such Person or (2) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.

“Company Equity Plan” means any management equity or equity option or ownership plan or any other management or employee benefit plan of the Company or any Subsidiary of the Company.

“Consolidated Cash Flow Available for Fixed Charges” means, for any period, Consolidated Net Income for such period plus the sum of the following (but only to the extent deducted in calculating such Consolidated Net Income) for such period, but without duplication:

(1) income taxes and Tax Distributions,

(2) Consolidated Interest Expense,

(3) depreciation and amortization expenses, and

(4) all other non-cash charges (unless such non-cash charge represents an accrual of or reserve for cash expenditures in any future period), minus

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all non-cash items (other than the receipt of notes receivable) increasing such Consolidated Net Income for such period.

“Consolidated Fixed Charge Coverage Ratio” means, with respect to any determination date (each, a “Transaction Date”), the ratio of (x) Consolidated Cash Flow Available for Fixed Charges for the prior four full fiscal quarters (the “Four Quarter Period”) for which financial statements are available immediately preceding the Transaction Date, to (y) the aggregate Consolidated Interest Expense for the Four Quarter Period. For purposes of this definition, “Consolidated Cash Flow Available for Fixed Charges” and “Consolidated Interest Expense” shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

(1) the Incurrence or the repayment, repurchase, defeasance or other discharge (collectively, “repayment”) of any Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary (and the application of the proceeds thereof) giving rise to the need to make such calculation, and any Incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), at any time on or after the first day of the Four Quarter Period and on or prior to the Transaction Date, as if such Incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period, except that Indebtedness under revolving Credit Facilities shall be deemed to be the average daily balance of such Indebtedness during the Four Quarter Period (as reduced on such pro forma basis by the application of any proceeds of the Incurrence of Indebtedness giving rise to the need to make such calculation);

(2) any Asset Disposition or Asset Acquisition (including any Asset Acquisition giving rise to the need to make such calculation as a result of the Company, the Corporate Issuer or any Restricted Subsidiary (including any Person that becomes a Restricted Subsidiary as a result of any such Asset Acquisition) Incurring Acquired Indebtedness at any time on or after the first day of the Four Quarter Period and on or prior to the Transaction Date), as if such Asset Disposition or Asset Acquisition (including the Incurrence or repayment of any such Indebtedness) and the inclusion, notwithstanding clause (2) of the definition of “Consolidated Net Income,” of any Consolidated Cash Flow Available for Fixed Charges associated with such Asset Acquisition as if it occurred on the first day of the Four Quarter Period; provided, however, that the Consolidated Cash Flow Available for Fixed Charges associated with any Asset Acquisition shall not be included to the extent the net income so associated would be excluded pursuant to the definition of “Consolidated Net Income,” other than clause (2) thereof, as if it applied to the Person or assets involved before they were acquired; and

(3) the Consolidated Cash Flow Available for Fixed Charges and the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with GAAP, shall be excluded.

Furthermore, in calculating “Consolidated Cash Flow Available for Fixed Charges” for purposes of determining the denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage Ratio,”

(a) interest on Indebtedness in respect of which a pro forma calculation is required that is determined on a fluctuating basis as of the Transaction Date (including Indebtedness actually Incurred on the Transaction Date) and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date, and

(b) notwithstanding clause (a) above, interest on such Indebtedness determined on a fluctuating basis, to the extent such interest is covered for at least one year by agreements relating to Interest Protection Agreements, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

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“Consolidated Interest Expense” means, for any period, the total interest expense of the Company, its consolidated Restricted Subsidiaries and the Corporate Issuer (other than non-cash interest expense attributable to convertible indebtedness under Accounting Practices Bulletin 14 or any successor provision), plus, to the extent not included in such total interest expense, and to the extent Incurred by the Company, its Restricted Subsidiaries or the Corporate Issuer, without duplication:

(1) interest expense attributable to Capitalized Lease Obligations, Attributable Debt and the interest component of any deferred payment obligations;

(2) amortization of debt discount (including the amortization of original issue discount resulting from the issuance of Indebtedness at less than par) and debt issuance cost; provided, however, that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense;

(3) capitalized interest;

(4) non-cash interest expense; provided, however, that any non-cash interest expense or income attributable to the movement in the mark to mark valuation of Interest Protection Agreements or other derivative instruments pursuant to GAAP shall be excluded from the calculation of Consolidated Interest Expense);

(5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

(6) net payments (or minus net receipts) pursuant to Interest Protection Agreements;

(7) the product of (a) all dividends accrued in respect of all Disqualified Equity Interests of the Company and all Preferred Equity Interests of the Company or any Restricted Subsidiary, in each case, held by Persons other than the Company or a Restricted Subsidiary (other than dividends payable solely in Qualified Equity Interests of the Company), times (b) a fraction of the numerator of which is one and the denominator of which is one minus the effective combined tax rate of the issuer of such Disqualified Equity Interests or Preferred Equity Interests (expressed as a decimal) for such period (as estimated by the chief financial officer of the Company in good faith);

(8) interest Incurred in connection with Investments in discontinued operations; and

(9) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is guaranteed by (or secured by a Lien on the assets of) the Company or any Restricted Subsidiary; provided, however, that this clause (9) shall not include any interest accruing on Indebtedness (A) subject to guarantees constituting Specified Obligations of the Company or any Restricted Subsidiary or (B) of the type described in subsection (y) of clause (14) of the definition of Permitted Indebtedness.

“Consolidated Net Income” for any period means the aggregate net income (or loss) of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided, however, that there will be excluded from such net income (loss) (to the extent otherwise included therein), without duplication:

(1) the net income (or loss) of (x) any Unrestricted Subsidiary or (y) any Person (other than a Restricted Subsidiary) in which any Person other than the Company, the Corporate Issuer or any Restricted Subsidiary has an ownership interest, except, in each case, to the extent that any such income has actually been received by the Company, the Corporate Issuer or any Restricted Subsidiary in the form of cash dividends or similar cash distributions during such period,

(2) except to the extent includable in Consolidated Net Income pursuant to the foregoing clause (1), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged with or into or consolidated with the Company, the Corporate Issuer or any of its Restricted Subsidiaries (except, in the case of an Unrestricted Subsidiary that is redesignated a Restricted

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Subsidiary during such period, to the extent of its retained earnings from the beginning of such period to the date of such redesignation) or (b) the assets of such Person are acquired by the Company, the Corporate Issuer or any Restricted Subsidiary,

(3) the net income of any Restricted Subsidiary that is not a Guarantor to the extent that (but only so long as) the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary during such period; provided, however, that the net income of any such Restricted Subsidiary during such period shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution,

(4) the gains or losses, together with any related provision for taxes, realized during such period by the Company, the Corporate Issuer or any Restricted Subsidiary resulting from (a) the acquisition of securities, or extinguishment of Indebtedness, of the Company, the Corporate Issuer or any Restricted Subsidiary or (b) any Asset Disposition by the Company, the Corporate Issuer or any Restricted Subsidiary,

(5) any extraordinary gain or loss together with any related provision for taxes, realized by the Company, the Corporate Issuer or any Restricted Subsidiary and

(6) any Tax Distributions paid during such period by the Company, the Corporate Issuer or any Restricted Subsidiary.

“control” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Credit Facilities” means, collectively, one or more credit facilities and lines of credit among or between the Company or one or more Restricted Subsidiaries and one or more lenders pursuant to which the Company or one or more Restricted Subsidiaries may Incur Indebtedness for working capital and general corporate purposes (including acquisitions), as any such facility or line of credit may be amended, restated, supplemented or otherwise modified from time to time, and includes any agreement extending the maturity of, increasing the amount of, or restructuring, all or any portion of the Indebtedness under such facility or line of credit or any successor facilities or lines of credit and includes any facility or line of credit with one or more lenders refinancing or replacing all or any portion of the Indebtedness under such facility or line of credit or any successor facility or line of credit.

“Currency Agreement” of any Person means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in currency values.

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

“Default” means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default.

“Designation Amount” has the meaning provided in the definition of Unrestricted Subsidiary. “Discharge of LC Facility Obligations” has the meaning specified in the Intercreditor Agreement.

“Discharge of LC Facility Obligations” has the meaning specified in the Intercreditor Agreement.

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the

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holder thereof, in whole or in part, on or prior to 91 days following the final maturity date of the Notes or (2) is convertible into or exchangeable or exercisable for (whether at the option of the issuer or the holder thereof) (a) debt securities or (b) any Equity Interests referred to in (1) above, in each case, at any time prior to 91 days following the final maturity date of the Notes; provided, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Company to repurchase or redeem such Equity Interests upon the occurrence of a change in control or asset disposition occurring prior to 91 days following the final maturity “date of the Notes shall not constitute Disqualified Equity Interests if the change in control or asset disposition provision applicable to such Equity Interests are no more favorable to such holders than the provisions described under the captions “Certain Covenants—Change of Control” or “Certain Covenants—Limitations on Asset Dispositions,” as applicable, and such Equity Interests specifically provide that the Company will not repurchase or redeem any such Equity Interests pursuant to such provisions prior to the Company’s repurchase of the Notes as are required pursuant to the provisions described under the captions “Certain Covenants—Change of Control” or “Certain Covenants— Limitations on Asset Dispositions,” as applicable.

“Equity Interests” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of or in such Person’s capital stock or other equity interests, and options, rights or warrants to purchase such capital stock or other equity interests, whether now outstanding or issued after the Issue Date, including all Disqualified Equity Interests and Preferred Equity Interests.

“Equity Offering” means any public or private sale, after the Issue Date, of Qualified Equity Interests of the Company, other than (i) public offerings registered on Form S-4 or S-8 or any successor form thereto or (ii) any issuance pursuant to employee benefit plans or otherwise in compensation to officers, directors or employees.

“Event of Default” has the meaning set forth in “Events of Default.”

“Excluded Contribution” means cash or Cash Equivalents received by the Company as capital contributions to its equity or from the issuance or sale of Qualified Equity Interests of the Company, in each case, after the Issue Date and to the extent designated at the time as an Excluded Contribution pursuant to an Officers’ Certificate of the Company.

“Fair Market Value” means, with respect to any Property or other asset, the price (after taking into account any liabilities relating to such assets) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction, as such price is determined in good faith by the Governing Body of the Company or a duly authorized committee thereof, as evidenced by a resolution of such Governing Body or committee; provided, however, that for purposes of clause (3)(b) under “Certain Covenants—Limitation on Restricted Payments,” if the Fair Market Value of the Property or assets in question is so determined to be in excess of $1.0 million, such determination must be confirmed by an Independent Qualified Party.

“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 in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date.

“Governing Body” means, as to any Person, the board of directors of such Person or, if such Person is not a corporation or otherwise governed by a board of directors, the governing body of such Person (including in the case of a partnership, the general partner of such partnership or group otherwise exercising the authority over such Person which would generally be vested in a board of directors of a corporation); provided, however, to the extent a Person is a partnership and its general partner is itself a partnership, the Governing Body shall be the governing group of individuals with ultimate authority to control such general partner.

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“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person: (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part; provided, however, that the term “guarantee” does not include (x) endorsements for collection or deposit in the ordinary course of business or (y) indemnification obligations of the Company, the Corporate Issuer or any Restricted Subsidiary entered into in the ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning.

“Guarantee” means the guarantee of the Notes by each Guarantor under the Indenture.

“Guarantors” means (i) initially, the Persons that execute the Indenture as guarantors and (ii) in addition, each of the Company’s Subsidiaries that subsequently becomes a Guarantor of the Notes pursuant to the provisions of the Indenture, including in each case, their successors and assigns, in each case until released from their respective Guarantee pursuant to the Indenture.

“Holder” or “Holders of the Notes” means the Person in whose name a Note is registered in the books of the Registrar for the Notes.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;

(2) all Capitalized Lease Obligations of such Person and all Attributable Debt in respect of Sale/ Leaseback Transactions entered into by such Person;

(3) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding (A) any accounts payable or other liability to trade creditors arising in the ordinary course of business and (B) any obligation to pay a contingent purchase price as long as such obligation remains contingent);

(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth business day following payment on the letter of credit);

(5) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Equity Interests of such Person or, with respect to any Preferred Equity Interests of any Subsidiary of such Person, the amount of such Preferred Equity Interests to be determined in accordance with the Indenture (but excluding, in each case, any accrued dividends);

(6) all guarantees by such Person of obligations of the type referred to in clauses (1) through (5) or dividends of other Persons (excluding any preferred returns payable pursuant to any joint venture documentation);

(7) all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the

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amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or assets and the amount of the obligation so secured; and

(8) to the extent not otherwise included in this definition, the obligations of such Person under Currency Agreements or Interest Protection Agreements.

Notwithstanding the foregoing, (i) in connection with the purchase by the Company, the Corporate Issuer or any Restricted Subsidiary of any business, the term “Indebtedness” will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter, (ii) guarantees constituting Specified Obligations shall not constitute Indebtedness and (iii) repayment guarantees constituting Investments made pursuant to the JV Payment Basket shall constitute Indebtedness.

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.

The amount of any Preferred Equity Interests that has a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Preferred Equity Interests as if such Preferred Equity Interests were redeemed, repaid or repurchased on any date on which the amount of such Preferred Equity Interests are to be determined pursuant to the Indenture; provided, however, that if such Preferred Equity Interests could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be calculated as of the first date thereafter on which such Preferred Equity Interests could be required to be so redeemed, repaid or repurchased. If any Preferred Equity Interests do not have a fixed redemption, repayment or repurchase price, the amount of such Preferred Equity Interests will be their maximum liquidation value.

“Independent Qualified Party” means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Real Estate Businesses of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged; provided, however, that such firm or consultant is not an Affiliate of the Company.

“Independent Valuation” of real property means (x) with respect to the sale of real property by the Company, the Corporate Issuer or any Restricted Subsidiary, any amount proposed to be paid for such real property pursuant to a bona fide offer to purchase made by an unaffiliated Person and which the Company, the Corporate Issuer or the Restricted Subsidiary, as applicable, would be willing to accept or (y) any appraised value of such real property as determined by an Independent Qualified Party.

“Interest Protection Agreement” of any Person means any interest rate swap agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in interest rates with respect to Indebtedness permitted to be Incurred under the Indenture and not for speculative purposes.

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Equity Interests, Indebtedness or other similar instruments

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issued by such Person (including, for the avoidance of doubt, the purchase of equity interests in joint ventures pursuant to customary buy/sell provisions contained in the agreements governing such joint ventures). If the Company, the Corporate Issuer or any Restricted Subsidiary issues, sells or otherwise disposes of any Equity Interests of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company, the Corporate Issuer or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. The acquisition by the Company, the Corporate Issuer or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company, the Corporate Issuer or such Restricted Subsidiary, as applicable, in such third Person at such time. Except as otherwise provided for herein, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value.

For purposes of the definition of “Unrestricted Subsidiary,” the definition of “Restricted Payment” and the covenant described under “Certain Covenants—Limitation on Restricted Payments”:

(1) “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Company’s Governing Body.

“Issue Date” means May 10, 2011.

“JFSCI” means J.F. Shea Co., Inc., a Nevada corporation.

“LC Facility Obligations” means the obligations of the Company pursuant to the terms of the agreement governing the letter of credit facility.

“LC Facility Secured Parties” has the meaning specified in the Intercreditor Agreement.

“Lien” means, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this definition, a Person shall be deemed to own, subject to a Lien, any Property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such Property.

“Marketable Securities” means (a) equity securities that are listed on the New York Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market and (b) debt securities that are rated by a nationally recognized rating agency, listed on the New York Stock Exchange or the American Stock Exchange or covered by at least two reputable market makers.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to its debt rating business.

“Net Cash Proceeds” means with respect to an Asset Disposition, payments received in cash (including any such payments received by way of deferred payment of principal pursuant to a note, other obligation or installment receivable or otherwise (including any cash received upon sale, conversion or other disposition of such note, other obligation or receivable), but only as and when received), excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the

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property disposed of in such Asset Disposition or received in any other non-cash form unless and until such non-cash consideration is converted into cash therefrom, in each case, net of all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state and local taxes required to be accrued as a liability under GAAP as a consequence of such Asset Disposition, and in each case net of a reasonable reserve for the after-tax cost of any indemnification or other payments (fixed and contingent) attributable to the seller’s indemnities or other obligations to the purchaser undertaken by the Company, the Corporate Issuer or any of the Restricted Subsidiaries in connection with such Asset Disposition, and net of all payments made on any Indebtedness which is secured by or relates to such Property (other than Indebtedness secured by Liens on the Collateral) in accordance with the terms of any Lien or agreement upon or with respect to such Property or which such Indebtedness must by its terms or by applicable law be repaid out of the proceeds from such Asset Disposition, and net of all contractually required distributions and payments made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of such Asset Disposition.

“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of such Person for which (1) the sole legal recourse for collection of principal and interest on such Indebtedness (other than in respect of customary “bad-boy” guarantees) is against the specific property identified in the instruments evidencing or securing such Indebtedness and such property was acquired with the proceeds of such Indebtedness or such Indebtedness was Incurred within 90 days after the acquisition of such property and (2) no other assets may be realized upon in collection of principal or interest on such Indebtedness; provided, however, that such Indebtedness cannot serve as a basis for a cross default to any other Indebtedness. Indebtedness which is otherwise Non-Recourse Indebtedness will not lose its character as Non-Recourse Indebtedness because there is recourse for (a) environmental warranties and indemnities or (b) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance and condemnation proceeds and other sums actually received by the obligor from secured assets to be paid to the lender, waste and mechanics’ liens.

“Notes Obligations” means Obligations in respect of the Notes, the Guarantees or the Indenture.

“Obligations” means with respect to any Indebtedness, all obligations (whether in existence on the Issue Date or arising afterwards, absolute or contingent, direct or indirect) for or in respect of principal (when due, upon acceleration, upon redemption, upon mandatory repayment or repurchase pursuant to a mandatory offer to purchase, or otherwise), premium, interest, penalties, fees, indemnification, reimbursement and other amounts payable and liabilities with respect to such Indebtedness, including all interest accrued or accruing after the commencement of any bankruptcy, insolvency or reorganization or similar case or proceeding at the contract rate (including, without limitation, any contract rate applicable upon default) specified in the relevant documentation, whether or not the claim for such interest is allowed as a claim in such case or proceeding.

“Offering Circular” means the Confidential Offering Circular dated May 3, 2011, pursuant to which the outstanding notes were offered and sold.

“Officer” means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company.

“Officers’ Certificate” means a certificate signed by two Officers.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

“Pari-Passu Lien Documents” means the credit, guarantee and security documents governing the Pari-Passu Lien Obligations, including the Indenture, the letter of credit facility and the Security Documents.

“Pari-Passu Lien Obligations” means all Indebtedness secured by Pari-Passu Liens on the Collateral, as permitted by clauses (8), (9) and (10) of the definition of “Permitted Liens,” and all Obligations in respect thereof, including the Notes Obligations, the LC Facility Obligations and each class of Additional Pari-Passu Lien Obligations.

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“Pari-Passu Lien Secured Parties” means (i) the LC Facility Secured Parties, (ii) the holders of the Notes and the Trustee and (iii) the Additional Pari-Passu Lien Secured Parties with respect to each class of Additional Pari-Passu Lien Obligations; provided, however, that any such Additional Pari-Passu Secured Parties are subject to the Intercreditor Agreement.

“Partners Insurance Company” means Partners Insurance Company, Inc., a Hawaii corporation, and its successors and assigns.

“Permitted Holders” means, collectively, John F. Shea, Peter O. Shea, Peter O. Shea, Jr., Mary Shea, John Morrissey and their respective family trusts, spouses, sons and daughters and lineal descendants, siblings and other familial relatives of any of them, including any corporation, limited liability companies or other entities more than 50% of the issued and outstanding equity interests of which are held, directly or indirectly, by any of the foregoing persons.

“Permitted Investment” means

(1) Cash Equivalents;

(2) guarantees (but not payments thereon) with respect to Specified Obligations;

(3) any Investment in (a) the Company or any Guarantor or (b) any Person that becomes a Guarantor as a result of such Investment or that is consolidated or merged with or into, or transfers all or substantially all of the assets of it or an operating unit or line of business to, the Company or a Guarantor;

(4) any receivables, loans or other consideration taken by either of the Issuers or any Restricted Subsidiary in connection with any asset sale otherwise permitted by the Indenture; provided that non-cash consideration received in an Asset Disposition or an exchange or swap of assets shall be pledged as Collateral under the Security Documents to the extent the assets subject to such Asset Disposition or exchange or swap of assets constituted Collateral;

(5) Investments received in connection with any bankruptcy or reorganization proceeding, or as a result of foreclosure, perfection or enforcement of any Lien or any judgment or settlement of any Person in exchange for or satisfaction of Indebtedness or other obligations or other property received from such Person, or for other liabilities or obligations of such Person created, in accordance with the terms of the Indenture;

(6) Investments in Interest Protection Agreements permitted by the Indenture;

(7) any loan or advance to an executive officer, director or employee of the Company or any Restricted Subsidiary made in the ordinary course of business or in accordance with past practice; provided, however, that any such loan or advance exceeding $1 million shall have been approved by the Governing Body of the Company or a committee thereof consisting of disinterested members;

(8) obligations (but not payments thereon) with respect to homeowners association obligations, community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds and similar bonding requirements arising in the ordinary course of business of a homebuilder;

(9) guarantee or indemnification obligations (other than for the payment of borrowed money) entered into in the ordinary course of business and incurred for the benefit of any adjoining landowner, seller of real property or municipal government authority (or enterprises thereof) in connection with the acquisition, entitlement and development of real property;

(10) guaranty and indemnification obligations arising in connection with surety bonds issued in the ordinary course of business;

(11) prepaid expenses, negotiable instruments held for collection and insurance, lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business;

(12) current Investments acquired in the ordinary course of business for cash management purposes; and

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(13) guarantees and related extensions of credit constituting Permitted Indebtedness (other than indebtedness incurred pursuant to clause (15) of the definition of Permitted Indebtedness, but including, in case of clause (1) of the definition of Permitted Indebtedness, any payments made in respect of letters of credit issued pursuant to such clause) or Coverage Indebtedness.

“Permitted Liens” means

(1) Liens for taxes, assessments or governmental or quasi-government charges or claims that (a) are not yet delinquent, (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, if required, or (c) encumber solely property abandoned or in the process of being abandoned,

(2) Liens of landlords and carriers’, warehousemen’s, mechanics’, suppliers’, materialmen’s, repairmen’s or other Liens arising in the ordinary course of business and with respect to amounts that, to the extent applicable, either (a) are not yet delinquent or (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, if required,

(3) Liens (other than any Lien imposed by the Employer Retirement Income Security Act of 1974, as amended) Incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security,

(4) Liens Incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, development obligations, progress payments, government contacts, utility services, developer’s or other obligations to make on-site or off-site improvements and other obligations of like nature (exclusive of obligations for the payment of borrowed money), in each case Incurred in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(5) attachment or judgment Liens not giving rise to a Default,

(6) recorded or unrecorded easements, rights-of-way, dedications, covenants, conditions, restrictions, reservations, assessment district or similar Liens in connection with municipal or special district financing, agreements with adjoining landowners or state or local government authorities and other similar charges, burdens and encumbrances which do not, individually or in the aggregate, materially impair the use or development of the assets to which they relate in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(7) zoning restrictions, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do not materially impair the use of such real property in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(8) Liens securing Indebtedness Incurred pursuant to clauses (1), (5) and (7) of the definition of “Permitted Indebtedness”; provided, however, that any such Liens rank pari-passu with the Notes and such Indebtedness is subject to the Intercreditor Agreement,

(9) Liens securing Indebtedness Incurred pursuant to clause (9) of the definition of “Permitted Indebtedness”; provided, however, that such Liens apply only to the property acquired in connection with the Incurrence of such Indebtedness and related properties acquired from the same seller,

(10) Liens securing (i) the Notes (other than Additional Notes) and Exchange Notes, the Guarantees thereof and other Obligations under the Indenture and the Security Documents and in respect thereof and (ii) any obligations owing to the Trustee or the Collateral Agent under the Indenture, the Intercreditor Agreement or the Security Documents,

(11) Liens securing Non-Recourse Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary,

(12) Liens securing Indebtedness Incurred pursuant to clause (6) of the definition of “Permitted Indebtedness”; provided, however, that such Liens apply only to the property acquired in connection with the Incurrence of such Indebtedness,

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(13) Liens on property or assets of the Company, the Corporate Issuer or any Restricted Subsidiary securing Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary owing to the Company, the Corporate Issuer or one or more Restricted Subsidiaries,

(14) leases or subleases granted to others not materially interfering with the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(15) any right of first refusal, right of first offer, option, contract or other agreement to sell an asset; provided, however, that such sale is not otherwise prohibited under the Indenture,

(16) any right of a lender or lenders to which the Company, the Corporate Issuer or a Restricted Subsidiary may be indebted to offset against, or appropriate and apply to the payment of such, Indebtedness any and all balances, credits, deposits, accounts or money of the Company, the Corporate Issuer or a Restricted Subsidiary with or held by such lender or lenders or its Affiliates,

(17) any pledge or deposit of cash or property in conjunction with obtaining surety, performance, completion or payment bonds and letters of credit or other similar instruments or providing earnest money obligations, escrows or similar purpose undertakings or indemnifications in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(18) Liens for homeowner and property owner association developments and assessments,

(19) Liens on deposits made in the ordinary course of business as security for the obligations of the Company, the Corporate Issuer and the Restricted Subsidiaries with respect to indemnification in respect of title insurance providers,

(20) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company or becomes a Subsidiary of the Company; provided, however that such Liens were in existence prior to the contemplation of such merger or consolidation or acquisition and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Subsidiary or acquired by the Company or its Subsidiaries,

(21) Liens on property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company, provided, however, that such Liens were in existence prior to the contemplation of such acquisition,

(22) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods,

(23) Liens Incurred in the ordinary course of business to secure (i) profit and price participation arrangements and (ii) fees, taxes and carry costs on, in respect of or owing to governmental issuers (including enterprises thereof) of community facility district, mello-roos, metro-district or similar bonding obligations,

(24) Liens to secure any Refinancing (or successive Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clause (9), (10), (12), (20) or (21); provided, however, that:

(A) such new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(B) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clause (9), (10), (12), (20) or (21) at the time the original Lien became a Permitted Lien and (y) an amount necessary to pay any fees and expenses, including premiums, related to such Refinancing,

(25) Licenses of intellectual property granted in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Company or any Restricted Subsidiary,

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(26) Liens of lessor, sublessor or licensor arising under any lease, sublease or license entered into by the Company or any Restricted Subsidiary in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Company or any Restricted Subsidiary, and covering only the Property or assets so leased, subleased or licensed,

(27) any (i) interest or title of a lessor or sublessor under any lease of a Property or asset not prohibited by the Indenture, (ii) Lien or restriction that the interest or title of such lessor or sublessor may be subject to or (iii) subordination of the interest of the lessee or sublessee under such lease to any Lien or restriction referred to in the preceding clause (ii), so long as the holder of such Lien or restriction agrees to recognize the rights of such lessee or sublessee under such lease,

(28) pledges, deposits and other Liens existing under, or required to be made in connection with, (i) earnest money obligations, escrows or similar purpose undertakings or indemnifications in connection with any purchase and sale agreement, (ii) development agreements or other contracts entered into with governmental authorities (or an entity sponsored by a governmental authority), in connection with the entitlement of real property or (iii) agreements for the funding of infrastructure, including in respect of the issuance of community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds, and similar bonding requirements arising in the ordinary course of business of a homebuilder,

(29) Liens, encumbrances or other restrictions contained in any joint venture agreement entered into by the Company or any Restricted Subsidiary with respect to the equity interests issued by the relevant joint venture or the assets of such joint venture,

(30) assignments of insurance or condemnation proceeds provided to landlords (or their mortgagees) pursuant to the terms of any lease of Property leased by the Company or any Restricted Subsidiary, in each case with respect to the Property so leased, and customary Liens and rights reserved in any lease for rent or for compliance with the terms of such lease,

(31) Liens on cash pledged to secure deductibles, retentions and other obligations to insurance providers in the ordinary course of business, and

(32) Liens securing Indebtedness described under clause (8) of the definition of Permitted Indebtedness; provided, however, that to the extent such Indebtedness constitutes Indebtedness of the type described in clause (1) of the definition of Indebtedness (other than a note evidencing the deferred purchase price of property), any such Liens rank pari-passu with the Notes and such Indebtedness is subject to the Intercreditor Agreement.

“Permitted Priority Liens” means Permitted Liens permitted by clauses (6), (9), (11), (12), (15), (18), (23), (24) (to the extent the Refinancing pertains to Indebtedness secured by Liens referred to in clause (12)), (28) and (32) (unless required pursuant to such clause (32) to rank pari-passu with the Notes) of the definition of “Permitted Liens.”

“Person” means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Post-Petition Interest” means any interest or entitlement to fees or expenses or other charges that accrues after the commencement of any bankruptcy proceeding, whether or not allowed or allowable in any such bankruptcy proceeding.

“Preferred Equity Interests” of any Person means all Equity Interests of such Person which has a preference in liquidation or with respect to the payment of dividends.

“Property” of any Person means all types of real, personal, tangible, intangible or mixed property owned by such Person, whether or not included in the most recent consolidated balance sheet of such Person and its Subsidiaries under GAAP, including Equity Interests and Indebtedness of other Persons.

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“Purchase Money Indebtedness” means Indebtedness of the Company or any Restricted Subsidiary Incurred for the purpose of financing all or any part of the purchase price, or the cost of construction or improvement, of any property to be used in the ordinary course of business by the Company and the Restricted Subsidiaries; provided, however, that (1) the aggregate principal amount of such Indebtedness shall not exceed such purchase price or cost and (2) such Indebtedness shall be Incurred no later than 180 days after the acquisition of such property or completion of such construction or improvement.

“Qualified Equity Interests” of a Person means Equity Interests of such Person other than:

(i) any Disqualified Equity Interests;

(ii) any Equity Interests sold to a Subsidiary of such Person or a Company Equity Plan;

(iii) any Equity Interests financed, directly or indirectly, using funds borrowed from such Person, a Subsidiary of such Person or any Company Equity Plan or contributed, extended, advanced or guaranteed by such Person, a Subsidiary of such person or any Company Equity Plan;

(iv) any Equity Interests issued upon conversion of, or issued in exchange for, debt securities owned by any Subsidiary of such Person or Company Equity Plan;

(v) any Equity Interests issued in connection with any cash contribution made in accordance with clause (F) of the second paragraph of the covenant described in “Certain Covenants—Limitations on Restricted Payments”; and

(vi) except for purposes of the definition of “Excluded Contribution,” any Equity Interest to the extent the cash or Cash Equivalents received in connection therewith are designated as Excluded Contributions.

Unless otherwise specified, Qualified Equity Interests refer to Qualified Equity Interests of the Company.

“Real Estate Business” means homebuilding, housing construction, real estate (including masterplan) development or construction and the sale of homes and related real estate activities, including the provision of mortgage financing or title insurance or any other business substantially related or reasonably incidental thereto.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with the Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:

(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced;

(2) such Refinancing Indebtedness has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being Refinanced;

(3) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; and

(4) if the Indebtedness being Refinanced is subordinated in right of payment to the Notes, such Refinancing Indebtedness is subordinated in right of payment to the Notes to at least the same extent as the Indebtedness being Refinanced;

provided further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or the Corporate Issuer or (B) Indebtedness of the Company, the Corporate Issuer or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.

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“Required Dedication” means a dedication or conveyance of any Property at the direction of a governmental authority or a public utility, or pursuant to or in connection with a development agreement, or to a homeowners or condominium owners association, to (i) such governmental authority (or any designee of such governmental authority), (ii) a utility provider, (iii) a special foundation which holds land for preservation of the environment or (iv) a homeowners or condominium owners association, in any case for parks, schools, recreation centers, common community facilities, public streets, utility easements and installations, slopes or other rights-of-way or public use, in each case in the ordinary course of business (as determined by the Company in good faith and in the exercise of its reasonable commercial judgment).

“Restricted Payment” means any of the following:

(1) the declaration or payment of any dividend or any other distribution on Equity Interests of the Company, the Corporate Issuer or any Restricted Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Company, the Corporate Issuer or any Restricted Subsidiary (other than (a) dividends or distributions payable solely in Qualified Equity Interests and (b) in the case of the Corporate Issuer or Restricted Subsidiaries, dividends or distributions payable ratably to the Company, the Corporate Issuer or a Restricted Subsidiary and each other Person entitled thereto);

(2) the purchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company, the Corporate Issuer or any Restricted Subsidiary (other than a payment made to the Company, the Corporate Issuer or any Restricted Subsidiary);

(3) any Investment (other than any Permitted Investment), including any Investment in any joint venture, any Investment in an Unrestricted Subsidiary (including by the designation of a Subsidiary of the Company as an Unrestricted Subsidiary) or any Investment in a Restricted Subsidiary that is not a Guarantor (each Investment described in this clause (3), a “Restricted Investment”);

(4) the purchase, repurchase, redemption, acquisition or retirement for value, prior to one year before the date for any scheduled maturity, sinking fund or amortization or other principal installment payment, of any Subordinated Indebtedness (other than (a) Indebtedness permitted under clause (4) of the definition of Permitted Indebtedness or (b) the purchase, repurchase, redemption, defeasance, or other acquisition or retirement of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, amortization or principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement); and

(5) any payment by either Issuer or any Restricted Subsidiary with respect to a Specified Obligation.

“Restricted Subsidiary” means any Subsidiary of the Company which is not an Unrestricted Subsidiary, including the Corporate Issuer.

“Sale/Leaseback Transaction” means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc., a New York corporation, or any successor to its debt rating business.

“Security Documents” means the security documents granting a security interest in any assets of any Person to secure the Indebtedness and related Obligations under the Notes, the Guarantees, the letter of credit facility and any other Pari-Passu Lien Obligations, as each may be amended, restated, supplemented or otherwise modified from time to time.

“Significant Subsidiary” means any Subsidiary of the Company which would constitute a “significant subsidiary” as defined in Rule 1-02(w)(1) or (2) of Regulation S-X under the Securities Act and the Exchange

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Act as in effect on the Issue Date and, for purpose of determining whether an Event of Default has occurred, any group of Restricted Subsidiaries that combined would be such a Significant Subsidiary.

“Specified Obligations” means (1) interest-coverage, re-margin and completion guarantees with respect to (a) any joint venture in which either Issuer or any Restricted Subsidiary has a direct or an indirect equity interest or (b) the Baker JV, (2) customary “bad-boy” guarantees, (3) guarantees of Affiliate Obligations existing on the Issue Date (and any extension, modification or replacement of such Affiliate Obligation provided that such extension, modification or replacement does not increase the obligations of the Company or any Restricted Subsidiary with respect to such Affiliate Obligations) and (4) tax payments (including interest and penalties) or Tax Distributions, as applicable, attributable to any U.S. federal income tax proceeding (whether or not still contested or subject to appeal) regarding the completed contract method (as defined in U.S. Treasury Regulation Section 1.460-4(d)) of accounting for periods prior to 2011 (other than any increase in taxes payable for periods after 2010 as a result of such proceeding).

“Specified Pari-Passu Lien Obligations” means all Pari-Passu Lien Obligations other than the LC Facility Obligations.

“Stated Maturity” means, with respect to any Indebtedness, the date specified in such Indebtedness as the fixed date on which the final payment of principal of such Indebtedness is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such Indebtedness at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

“Subordinated Indebtedness” means Indebtedness subordinated in right of payment to the Notes, or the Guarantees, as the case may be, pursuant to a written agreement and includes any Indebtedness ranking equally in right of payment to the Notes or the applicable Guarantee, as the case may be, but unsecured or secured by the Collateral on a basis entirely junior to that of the Notes and the Guarantees.

“Subsidiary” of any Person means any corporation or other entity of which a majority of the Equity Interests having ordinary voting power to elect a majority of the Governing Body or other persons performing similar functions is at the time directly or indirectly owned or controlled by such Person.

“Tax Distribution Agreement” means the Tax Distribution Agreement dated as of the Issue Date between the Company, the direct and indirect holders of ownership interests in the Company and each of the Persons party to the Sixth Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership, dated as of April 1, 2005 (as amended, restated, supplemented or otherwise modified from time to time).

“Tax Distributions” means, so long as the Company is treated as a pass-through or disregarded entity for United States federal income tax purposes, the distributions in respect of income taxes permitted under Section 2 of the Tax Distribution Agreement as in effect on the Issue Date.

“Trustee” means the party named as such above until such time, if any, a successor replaces such party in accordance with the applicable provisions of the Indenture and thereafter means the successor serving as trustee under the Indenture in respect of the Notes.

“Unrestricted Subsidiary” means:

(1) Partners Insurance Company and its Subsidiaries and

(2) any other Subsidiary of the Company (other than the Corporate Issuer) so designated after the Issue Date by a resolution adopted by the Governing Body of the Company or a duly authorized committee thereof as provided below; provided, however, that (a) the holders of Indebtedness of such Subsidiary of the Company do not have direct or indirect recourse against the Company, the Corporate Issuer or any

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Restricted Subsidiary, and neither the Company, the Corporate Issuer nor any Restricted Subsidiary otherwise has liability for, or any payment obligations in respect of such Indebtedness (including any undertaking, agreement or instrument evidencing such Indebtedness), except, in each case, to the extent that (i) the amount thereof constitutes a Restricted Payment permitted by the Indenture, (ii) in the case of Non-Recourse Indebtedness, such recourse or liability is for the matters discussed in the last sentence of the definition of “Non-Recourse Indebtedness,” or (iii) such Indebtedness is a guarantee by such Subsidiary of Indebtedness of the Company, the Corporate Issuer or a Restricted Subsidiary and (b) no holder of any Indebtedness of such Subsidiary shall have a right to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity as a result of a default on any Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary.

Subject to the foregoing, the Governing Body of the Company or a duly authorized committee thereof may designate any Subsidiary to be an Unrestricted Subsidiary; provided, however, that (1) the net amount (the “Designation Amount”) then outstanding of all previous Investments by the Company and the Restricted Subsidiaries in such Subsidiary and its Subsidiaries will be deemed to be a Restricted Payment at the time of such designation and will reduce the amount available for Restricted Payments under the “Limitations on Restricted Payments” covenant set forth in the Indenture, to the extent provided therein, (2) the Company must be permitted under the “Limitations on Restricted Payments” covenant set forth in the Indenture to make the Restricted Payment deemed to have been made pursuant to clause (1), and (3) after giving effect to such designation, no Default shall have occurred or be continuing. In accordance with the foregoing, and not in limitation thereof, Investments made by any Person in any Subsidiary of such Person prior to such Person’s merger with the Company or any Restricted Subsidiary (but not in contemplation or anticipation of such merger) shall not be counted as an Investment by the Company or such Restricted Subsidiary if such Subsidiary of such Person is designated as an Unrestricted Subsidiary.

The Governing Body of the Company or a duly authorized committee thereof may also redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that (1) the Indebtedness of such Unrestricted Subsidiary as of the date of such redesignation could then be Incurred under the “Limitations on Indebtedness” covenant and (2) immediately after giving effect to such redesignation and the Incurrence of any such additional Indebtedness, the Company and the Restricted Subsidiaries could Incur $1.00 of additional Coverage Indebtedness under the “Limitations on Indebtedness” covenant.

Any such designation or redesignation by the Governing Body of the Company or a committee thereof will be evidenced to the Trustee by the filing with the Trustee of a certified copy of the resolution of the Governing Body of the Company or a committee thereof giving effect to such designation or redesignation and an Officers’ Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth the underlying calculations of such Officers’ Certificate. The designation of any Person as an Unrestricted Subsidiary shall be deemed to include a designation of all Subsidiaries of such Person as Unrestricted Subsidiaries.

“U.S. Government Obligations” means non-callable, non-payable bonds, notes, bills or other similar obligations issued or guaranteed by the United States government or any agency thereof the full and timely payment of which are backed by the full faith and credit of the United States.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness or portion thereof at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including, without limitation, payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the sum of all such payments described in clause (i)(a) above.

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Concerning the Trustee

The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee is permitted to engage in other transactions with the Company and its Subsidiaries; however, if it acquires any conflicting interest, it must, upon the occurrence of any Default, it must, so long as such Default has not been cured or duly waived, eliminate that conflicting interest within 90 days, apply to the Commission for permission to continue or resign.

The holders of a majority in principal amount of the Notes then outstanding will have the right to direct the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of Notes, unless that holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

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BOOK-ENTRY, DELIVERY AND FORM

Exchange notes will be represented by permanent global notes in fully registered form without interest coupons (each a “global note”) and will be deposited with the Trustee as a custodian for The Depository Trust Company (“DTC”) and registered in the name of a nominee of such depositary.

The Global Notes

We expect that pursuant to procedures established by DTC (i) upon the issuance of the global notes, DTC or its custodian will credit, on its internal system, the principal amount at maturity of the individual beneficial interests represented by such global notes to the respective accounts of persons who have accounts with such depositary and (ii) ownership of beneficial interests in the global notes will be shown on, and the transfer of such ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants (as defined below)) and the records of participants (with respect to interests of persons other than participants). Such accounts initially will be designated by or on behalf of the Exchange Agent and ownership of beneficial interests in the global notes will be limited to persons who have accounts with DTC (“participants”) or persons who hold interests through participants. Holders may hold their interests in the global notes directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system.

So long as DTC, or its nominee, is the registered owner or holder of the Notes, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such global notes for all purposes under the Indenture. No beneficial owner of an interest in the global notes will be able to transfer that interest except in accordance with DTC’s procedures, in addition to those provided for under the Indenture with respect to the Notes.

Payments of the principal of, premium (if any) and interest (including additional interest) on, the global notes will be made to DTC or its nominee, as the case may be, as the registered owner thereof. None of us, the Trustee, or any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the global notes or for maintaining, supervising, or reviewing any records relating to such beneficial ownership interest.

We expect that DTC or its nominee, upon receipt of any payment of principal of, premium (if any) and interest (including additional interest) on the global notes, will credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the global notes as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in the global notes held through such participants will be governed by standing instructions and customary practice, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants.

Transfers between participants in DTC will be effected in the ordinary way through DTC’s same-day funds system in accordance with DTC rules and will be settled in same day funds. If a holder requires physical delivery of a certificated security for any reason, including to sell Notes to persons in states which require physical delivery of the Notes, or to pledge such securities, such holder must transfer its interest in a global note in accordance with the normal procedures of DTC and with the procedures set forth in the Indenture.

DTC has advised us that it will take any action permitted to be taken by a Holder of Notes (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in the global notes are credited and only in respect of such portion of the aggregate

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principal amount of Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Indenture, DTC will exchange the global notes for certificated securities, which it will distribute to its participants and which will be legended.

DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “Clearing Agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly (“indirect participants”).

Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the global note among participants of DTC, it is under no obligation to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the Trustee will have any responsibility for the performance by DTC, its participants, or indirect participants of their respective obligations under the rules and procedures governing their operations.

Certificated Securities

Certificated securities shall be issued in exchange for beneficial interests in the global notes (i) after the occurrence and during the continuation of a Default, or (ii) if DTC is at any time unwilling or unable to continue as a depositary for the global notes or has ceased to be a clearing agency registered under the Exchange Act, and in either case, a successor depositary is not appointed by us within 120 days.

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CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of certain material U.S. federal income tax consequences of an exchange of the outstanding notes for the exchange of notes in the exchange offer, and the acquisition, ownership and disposition of the exchange notes (also referred to as the “notes”). It is based on provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury regulations promulgated thereunder (the “Treasury Regulations”) and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis. No ruling from the IRS has been or is expected to be sought with respect to any aspect of the transactions described herein. Accordingly, no assurance can be given that the IRS will agree with the views expressed in this summary, or that a court will not sustain any challenge by the IRS in the event of litigation. The following relates only to notes acquired in this offering for an amount of cash equal to their offering price and that are held as capital assets (generally, property held for investment).

This summary does not address all of the U.S. federal income tax consequences that may be relevant to particular holders in light of their personal circumstances, or to certain types of holders that may be subject to special tax treatment (such as banks and other financial institutions, employee stock ownership plans, partnerships or other pass-through entities for U.S. federal income tax purposes, former citizens or residents of the United States, controlled foreign corporations, foreign personal holding companies, corporations that accumulate earnings to avoid U.S. federal income tax, insurance companies, tax-exempt organizations, dealers in securities, brokers, “U.S. holders” (as defined below) whose functional currency is not the U.S. dollar, persons subject to the alternative minimum tax or persons who hold the notes as a hedge or who hedge the interest rate on the notes). In addition, this summary does not include any description of the tax laws of any state, local or non-U.S. government that may be applicable to a particular holder and does not consider any aspects of U.S. federal tax law other than income taxation.

For purposes of this discussion, a “U.S. holder” is a beneficial owner of the notes that is, for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation (or other business entity treated as a corporation) created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

• an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust if a court within the United States can exercise primary supervision over its administration, and one or more U.S. persons have the authority to control all of the substantial decisions of that trust (or the trust was in existence on August 20, 1996, and validly elected to continue to be treated as a U.S. trust).

A “non-U.S. holder” is a beneficial owner of the notes that is an individual, corporation, estate, or trust and is not a U.S. holder.

The U.S. federal income tax treatment of a partner in a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) that holds the notes generally will depend on such partner’s particular circumstances and on the activities of the partnership. Partners in such partnerships should consult their own tax advisors.

U.S. federal income tax consequences of the exchange offer to U.S. holders and non-U.S. holders

The exchange of outstanding notes for exchange notes pursuant to the exchange offer will not be a taxable transaction for U.S. federal income tax purposes. U.S. holders and non-U.S. holders will not recognize any gain or loss as a result of such exchange and will have the same adjusted issue price, tax basis, and holding period in the exchange notes as they had in the outstanding notes immediately before the exchange.

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U.S. federal income tax consequences to U.S. holders

Classification of the notes

In certain circumstances (see “Description of the Notes—Certain Covenants—Change of Control”), the notes provide for the payment of certain amounts in excess of the stated interest and principal. These contingencies could subject the notes to the provisions of the Treasury Regulations relating to “contingent payment debt instruments.” Under these regulations, however, one or more contingencies will not cause a debt instrument to be treated as a contingent payment debt instrument if, as of the issue date, each such contingency is “remote” or is considered to be “incidental.” We believe and intend to take the position that the foregoing contingencies should be treated as remote and/or incidental. Our position is binding on a holder, unless the holder discloses in the proper manner to the IRS that it is taking a different position. However, this determination is inherently factual and we can give no assurance that our position would be sustained if challenged by the IRS. A successful challenge of this position by the IRS could affect the timing and amount of a holder’s income and could cause the gain from the sale or other disposition of a note to be treated as ordinary income, rather than capital gain. This disclosure assumes that the notes will not be considered contingent payment debt instruments. Holders are urged to consult their own tax advisors regarding the potential application to the notes of the contingent payment debt regulations and the consequences thereof.

Treatment of interest

Since the outstanding notes were not issued with original issue discount, the exchange notes will not have any original issue discount. Stated interest on the notes will be treated as “qualified stated interest” (i.e., stated interest that is unconditionally payable at least annually at a single fixed rate over the entire term of the note) and will be taxable to U.S. holders as ordinary interest income as the interest accrues or is paid in accordance with the holder’s regular method of tax accounting.

Market Discount

A note that is acquired for an amount that is less than its principal amount by more than a de minimis amount (generally 0.25% of the principal amount multiplied by the number of remaining whole years to maturity), will be treated as having “market discount” equal to such difference. Unless the U.S. holder elects to include such market discount in income as it accrues, a U.S. holder will be required to treat any principal payment on, and any gain on the sale, exchange, retirement or other disposition (including a gift) of, a note as ordinary income to the extent of any accrued market discount that has not previously been included in income. In general, market discount on the notes will accrue ratably over the remaining term of the notes or, at the election of the U.S. holder, under a constant yield method. In addition, a U.S. holder could be required to defer the deduction of all or a portion of the interest paid on any indebtedness incurred or continued to purchase or carry a note unless the U.S. holder elects to include market discount in income currently. Such an election applies to all debt instruments held by a taxpayer and may not be revoked without the consent of the IRS.

Amortizable Premium

A U.S. holder who purchases a note for an amount in excess of stated principal amount will be considered to have purchased the note with “amortizable bond premium” equal to the excess. A U.S. holder may elect to amortize that premium under a constant yield method over the remaining term of the note (which will result in a corresponding decrease in the adjusted tax basis of the note) and may offset interest otherwise required to be included in respect of the note during any taxable year by the amortized amount of such premium for the taxable year. However, if the note may be redeemed at a price that is greater than its stated principal amount, special rules would apply that could result in a deferral of the amortization of a portion of the bond premium until later in the term of the note. Any election to amortize bond premium applies to all taxable debt obligations then owned and thereafter acquired by the U.S. holder and may be revoked only with the consent of the IRS. Holders that acquire a note with bond premium should consult their tax advisors regarding the manner in which such premium is calculated and the election to amortize bond premium over the life of the instrument.

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Sale, exchange or other disposition of the notes

In general, upon the sale, exchange, redemption, retirement or other taxable disposition of a note, a U.S. holder will recognize taxable gain or loss equal to the difference between (1) the amount of the cash and the fair market value of any property received on the sale or other taxable disposition (less an amount equal to any accrued and unpaid stated interest, which will be taxable as interest income as discussed above) and (2) the U.S. holder’s adjusted tax basis in the note. Gain or loss realized on the sale or other taxable disposition of a note will generally be capital gain or loss (except as provided under the market discount rule described above) and will be a long-term capital gain or loss if at the time of the disposition the U.S. holder has held the note for more than one year. For non-corporate U.S. holders, long-term capital gains are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

Medicare tax

For taxable years beginning after December 31, 2012, a U.S. holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) the U.S. holder’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000 depending on the individual’s circumstances). Net investment income generally includes interest income and net gains from the disposition of the notes, unless such interest income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). A U.S. holder that is an individual, estate or trust should consult its own tax advisor regarding the applicability of the Medicare tax to its income and gains in respect of its investment in the notes.

Backup withholding and information reporting

In general, a U.S. holder of the notes will be subject to backup withholding with respect to interest on the notes and the proceeds of a sale or other disposition (including a retirement or redemption) of the notes at the applicable tax rate (currently 28%), unless such holder (a) is an entity that is exempt from backup withholding and, when required, demonstrates this fact, or (b) provides the payor with its taxpayer identification number (“TIN”), certifies that the TIN provided to the payor is correct and that the holder has not been notified by the IRS that such holder is subject to backup withholding due to underreporting of interest or dividends, and otherwise complies with applicable requirements of the backup withholding rules. In addition, such payments to U.S. holders that are not exempt entities will generally be subject to information reporting requirements. A U.S. holder that does not provide the payor with its correct TIN may be subject to penalties imposed by the IRS. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

U.S. federal income tax consequences to non-U.S. holders

Treatment of interest

Subject to the discussion of backup withholding below, under the “portfolio interest exemption,” a non-U.S. holder will generally not be subject to U.S. federal income tax (or any withholding tax) on payments of stated interest on the notes that is not effectively connected with the non-U.S. holder’s trade or business, provided that:

• the non-U.S. holder does not actually or constructively own 10% or more of the capital or profits interest in SHLP;

• the non-U.S. holder is not, and is not treated as, a bank receiving interest on an extension of credit pursuant to a loan agreement entered into in the ordinary course of its trade or business;

• the non-U.S. holder is not a “controlled foreign corporation” that is related (actually or constructively) to us; and

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• certain certification requirements are met.

Under current law, the certification requirement will be satisfied in any of the following circumstances:

• If a non-U.S. holder provides to us or our paying agent a statement on IRS Form W-8BEN (or suitable successor form), together with all appropriate attachments, signed under penalties of perjury, identifying the non-U.S. holder by name and address and stating, among other things, that the non-U.S. holder is not a U.S. person.

• If a note is held through a securities clearing organization, bank or another financial institution that holds customers’ securities in the ordinary course of its trade or business, (i) the non-U.S. holder provides such a form to such organization or institution, and (ii) such organization or institution, under penalty of perjury, certifies to us that it has received such statement from the beneficial owner or another intermediary and furnishes us or our paying agent with a copy thereof.

• If a financial institution or other intermediary that holds the note on behalf of the non-U.S. holder has entered into a withholding agreement with the IRS and submits an IRS Form W-8IMY (or suitable successor form) and certain other required documentation to us or our paying agent.

If the requirements of the portfolio interest exemption described above are not satisfied, a 30% withholding tax will apply to the gross amount of interest on the notes that is paid to a non-U.S. holder, unless either: (a) an applicable income tax treaty reduces or eliminates such tax, and the non-U.S. holder claims the benefit of that treaty by providing a properly completed and duly executed IRS Form W-8BEN (or suitable successor form) establishing qualification for benefits under the treaty, or (b) the interest is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States and the non-U.S. holder provides an appropriate statement to that effect on a properly completed and duly executed IRS Form W-8ECI (or suitable successor form).

If a non-U.S. holder is engaged in a trade or business in the United States and interest on a note is effectively connected with the conduct of that trade or business, the non-U.S. holder will be required to pay U.S. federal income tax on that interest on a net income basis generally in the same manner as a U.S. holder. If a non-U.S. holder is eligible for the benefits of an income tax treaty between the United States and its country of residence, any interest income that is effectively connected with a U.S. trade or business will be subject to U.S. federal income tax in the manner specified by the treaty and generally only will be subject to tax if such income is attributable to a permanent establishment (or a fixed base in the case of an individual) maintained by the non-U.S. holder in the United States, provided that the non-U.S. holder claims the benefit of the treaty by properly submitting an IRS Form W-8BEN. In addition, a non-U.S. holder that is treated as a foreign corporation for U.S. federal income tax purposes may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of its earnings and profits for the taxable year, subject to adjustments, that are effectively connected with its conduct of a trade or business in the United States.

Sale, exchange or other disposition of the notes

Subject to the discussion of backup withholding below, a non-U.S. holder generally will not be subject to U.S. federal income tax (or any withholding thereof) on any gain realized by such holder upon a sale, exchange, redemption, retirement at maturity or other disposition of a note (except amounts received with respect to accrued and unpaid stated interest, which would be taxable as described above), unless:

• the non-U.S. holder is an individual who is present in the U.S. for 183 days or more during the taxable year and who has a “tax home” in the United States and certain other conditions are met; or

• the gain is effectively connected with the conduct of a U.S. trade or business of the non-U.S. holder.

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If the first exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax at a rate of 30% on the amount by which its U.S.-source capital gains exceed its U.S.-source capital losses. If the second exception applies, the non-U.S. holder will generally be subject to U.S. federal income tax on the net gain derived from the sale or other disposition of the notes in the same manner as a U.S. holder. In addition, corporate non-U.S. holders may be subject to a 30% branch profits tax on any effectively connected earnings and profits. If a non-U.S. holder is eligible for the benefits of an income tax treaty between the United States and its country of residence, the U.S. federal income tax treatment of any such gain may be modified in the manner specified by the treaty.

Information reporting and backup withholding

When required, we or our paying agent will report to the IRS and to each non-U.S. holder the amount of any interest paid on the notes in each calendar year, and the amount of U.S. federal income tax withheld, if any, with respect to these payments.

Non-U.S. holders that have provided certification as to their non-U.S. status or that have otherwise established an exemption will generally not be subject to backup withholding tax if neither we nor our agent has actual knowledge or reason to know that such certification is unreliable or that the conditions of the exemption are in fact not satisfied. However, certain information reporting may still apply with respect to interest payments even if certification is provided.

Payments of the proceeds from the sale or other disposition (including a retirement or redemption) of a note to or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, additional information reporting, but generally not backup withholding, may apply to those payments if the broker is one of the following: (a) a U.S. person (as defined in the Code), (b) a controlled foreign corporation for U.S. federal income tax purposes, (c) a foreign person 50% or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment was effectively connected with a U.S. trade or business, or (d) a foreign partnership with specified connections to the United States.

Payment of the proceeds from a sale or other disposition (including a retirement or redemption) of a note to or through the U.S. office of a broker will be subject to information reporting and backup withholding unless the non-U.S. holder certifies as to its non-U.S. status or otherwise establishes an exemption from information reporting and backup withholding, provided that neither we nor our agent have actual knowledge or reason to know that such certification is unreliable or that the conditions of the exemption are in fact not satisfied.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a non-U.S. holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided the required information is timely furnished to the IRS.

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CERTAIN ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the purchase of the notes by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) or provisions under any Federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA (collectively, “Similar Laws”), and entities whose underlying assets are considered to include “plan assets” of such plans, accounts and arrangements (each, a “Plan”).

General Fiduciary Matters

ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

In considering an investment in the notes of a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to the fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

Prohibited Transaction Laws

Sections 406 and 407 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of Section 3(14) of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the ERISA Plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code.

The acquisition and/or holding of the notes by an ERISA Plan with respect to which we or the initial purchaser is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Sections 406 and 407 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions (“PTCEs”) that may apply to the acquisition and holding of the notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers, although there can be no assurance that all of the conditions of any such exemptions will be satisfied.

Because of the foregoing, the notes should not be purchased or held by any person investing “plan assets” of any Plan, unless such purchase and holding will not constitute a non-exempt prohibited transaction under Sections 406 and 407 of ERISA and Section 4975 of the Code or a violation of any applicable Similar Laws.

167

Representation

Accordingly, by acceptance of a note each purchaser and holder will be deemed to have represented and warranted that either (1) it is not a Plan and no portion of the assets used to acquire or hold the notes constitutes assets of any Plan or (2) the purchase and holding of the notes will not constitute a non-exempt prohibited transaction under Sections 406 and 407 of ERISA or Section 4975 of the Code or a violation under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the notes on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the purchase and holding of the notes.

168

PLAN OF DISTRIBUTION

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market-making activities or other trading activities. We have agreed that for a period of 180 days after the expiration of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until              2011, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of exchange notes by brokers-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days after the expiration of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer, (including the expenses of one counsel for the holders of the notes), other than commissions or concessions of any brokers or dealers and will indemnify the holders of the notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

169

LEGAL MATTERS

Certain legal matters with respect to the issuance and sale of the notes being offered hereby will be passed upon for us by Gibson, Dunn & Crutcher LLP, New York, New York.

EXPERTS

Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements at December 31, 2010 and 2009, and for each of the three years in the period ended December 31, 2010, as set forth in their report. We have included our financial statements in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.

170

INDEX TO FINANCIAL STATEMENTS

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at June 30, 2011 (unaudited) and December 31, 2010	F-2
Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June  30, 2011 and 2010	F-3
Unaudited Consolidated Statements of Changes in Equity for the Six Months Ended June  30, 2011 and 2010	F-4
Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010	F-5
Notes to Consolidated Financial Statements at June 30, 2011 (unaudited) and December 31, 2010 and for the Three and Six Months Ended June 30, 2011 and 2010 (unaudited)	F-6
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm	F-33
Consolidated Balance Sheets at December 31, 2010 and 2009	F-34
Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008	F-35
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2010, 2009 and 2008	F-36
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008	F-37
Notes to Consolidated Financial Statements at December  31, 2010 and 2009 and for the Three Years in the Period Ended December 31, 2010	F-38

F-1

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Balance Sheets

(In thousands)

	June 30, 2011		December 31, 2010
	(unaudited)
Assets
Cash and cash equivalents	$	176,116	$	166,874
Restricted cash		14,016		11,695
Investments		14,333		11,822
Accounts and other receivables, net		121,283		107,423
Receivables from related parties, net		59,602		204,412
Housing projects and land under development		892,083		800,029
Investments in joint ventures		30,330		36,553
Property and equipment, net		17,543		18,369
Other assets, net		27,545		57,709
Total assets	$	1,352,851	$	1,414,886
Liabilities and equity
Liabilities:
Notes payable	$	752,520	$	730,005
Payables to related parties		6,659		9,210
Accounts payable		53,612		38,035
Other liabilities		210,924		205,323
Total liabilities		1,023,715		982,573
Equity:
SHLP equity:
Owners’ equity		297,469		406,863
Accumulated other comprehensive income		7,314		5,363
Total SHLP equity		304,783		412,226
Non-controlling interests		24,353		20,087
Total equity		329,136		432,313
Total liabilities and equity	$	1,352,851	$	1,414,886

See accompanying notes

F-2

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Statements of Operations

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(unaudited)
Revenues	$	114,934		$	220,503		$	188,993		$	298,252
Cost of sales		(104,856	)		(188,139	)		(168,302	)		(252,631	)
Gross margin		10,078			32,364			20,691			45,621
Selling expenses		(11,170	)		(15,540	)		(19,388	)		(23,302	)
General and administrative expenses		(8,265	)		(9,213	)		(16,488	)		(18,092	)
Equity in (loss) income from joint ventures		(102	)		7,643			(495	)		7,069
Loss on debt extinguishment		(88,384	)		—			(88,384	)		—
Interest and other expense, net		(3,589	)		(16,064	)		(5,909	)		(14,312	)
Loss before income taxes		(101,432	)		(810	)		(109,973	)		(3,016	)
Income tax benefit (expense)		676			(446	)		1,017			(1,497	)
Net loss		(100,756	)		(1,256	)		(108,956	)		(4,513	)
Less: Net income attributable to non-controlling interests		(349	)		(5,953	)		(438	)		(6,165	)
Net loss attributable to SHLP	$	(101,105	)	$	(7,209	)	$	(109,394	)	$	(10,678	)

See accompanying notes

F-3

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Statements of Changes in Equity

(In thousands)

	Shea Homes Limited Partnership															Non- controlling Interests			Total       Equity
	Limited Partner									General Partner			Accumulated Other Comprehensive Income (Loss)
	Common			Preferred    Series B			Preferred   Series D			Common
Balance, December 31, 2009	$	118,934		$	194,240		$	109,992		$	31,286			$ 9,398		$	17,356		$	481,206
Comprehensive loss:
Net (loss) income		(8,358	)		—			(131	)		(2,189	)		—			6,165			(4,513	)
Change in unrealized losses, net		—			—			—			—			(5,345	)		—			(5,345	)
Total comprehensive loss																				(9,858	)
Contributions from owners and non-controlling interests		—			—			12,500			—			—			613			13,113
Distributions to non-controlling interests		—			—			—			—			—			(181	)		(181	)
Balance, June 30, 2010 (unaudited)	$	110,576		$	194,240		$	122,361		$	29,097			$ 4,053		$	23,953		$	484,280
Balance, December 31, 2010	$	71,830		$	194,240		$	121,892		$	18,901			$ 5,363		$	20,087		$	432,313
Comprehensive loss:
Net (loss) income		(71,798	)		(17,787	)		(916	)		(18,893	)		—			438			(108,956	)
Change in unrealized gains, net		—			—			—			—			1,951			—			1,951
Total comprehensive loss																				(107,005	)
Contributions from non-controlling interests		—			—			—			—			—			3,918			3,918
Distributions to non-controlling interests		—			—			—			—			—			(90	)		(90	)
Balance, June 30, 2011 (unaudited)	$	32		$	176,453		$	120,976		$	8			$ 7,314		$	24,353		$	329,136

See accompanying notes

F-4

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Statements of Cash Flows

(In thousands)

	Six Months Ended June 30,
	2011			2010
	(unaudited)			(unaudited)
Operating activities
Net loss	$	(108,956	)	$	(4,513	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in loss (income) from joint ventures		495			(8,141	)
Loss from debt extinguishment		88,384			—
Write-off of professional fees in connection with debt modification		—			20,914
Net gain on sale of available-for-sale investments		(409	)		(4,394	)
Depreciation and amortization expense		4,489			5,203
Impairment of housing projects and land under development		10,302			1,778
Impairment of investments in joint ventures		—			1,072
Net interest capitalized on investment in joint ventures		(144	)		(459	)
Changes in operating assets and liabilities:
Restricted cash		(1,569	)		12,010
Receivables and other assets		(4,863	)		(12,211	)
Housing projects and land under development		(48,224	)		(4,321	)
Payables and other liabilities		15,987			(80,818	)
Net cash used in operating activities		(44,508	)		(73,880	)
Investing activities
Proceeds from sale of available-for-sale investments		895			51,514
Net decrease (increase) in promissory notes from related parties		101,741			(3,674	)
Investments in joint ventures		(15,800	)		(16,366	)
Distributions from joint ventures		6,989			740
Other investing activities, net		14			(5,329	)
Net cash provided by investing activities		93,839			26,885
Financing activities
(Repayments) borrowings on revolving lines of credit		(80,448	)		12,647
Borrowings from financial institutions		750,000			—
Principal payments to financial institutions and others		(720,835	)		(17	)
Accrued interest on notes payable		1,839			—
Amortization of notes payable discount		5,527			—
Contributions from non-controlling interests		3,918			613
Distributions to non-controlling interests		(90	)		(181	)
Contributions from owners		—			12,500
Net cash (used in) provided by financing activities		(40,089	)		25,562
Net increase (decrease) in cash and cash equivalents		9,242			(21,433	)
Cash and cash equivalents at beginning of period		166,874			203,076
Cash and cash equivalents at end of period	$	176,116		$	181,643

See accompanying notes, including supplemental disclosure of cash flow information in Note 18

F-5

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements

June 30, 2011

1. Basis of Presentation

The accompanying unaudited, consolidated financial statements include the accounts of Shea Homes Limited Partnership (“SHLP”) and its wholly-owned subsidiaries, including Shea Homes, Inc. (“SHI”) and its wholly-owned subsidiaries. The Company consolidates all joint ventures in which it has a controlling interest or other ventures in which it is the primary beneficiary of a variable interest entity (“VIE”). Material intercompany accounts and transactions are eliminated. The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information. Adjustments, consisting of normal, recurring accruals, loss reserves and deferred tax asset valuation allowance adjustments, considered necessary for a fair presentation, are included.

Certain reclassifications were made in the prior year’s consolidated financial statements to conform to classifications used in the current year.

These consolidated financial statements do not include all information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended December 31, 2010. Unless the context otherwise requires, the terms “we”, “us”, “our” and “the Company” refer to SHLP and its subsidiaries.

Organization

SHLP, a California limited partnership, was formed January 4, 1989, pursuant to an agreement of partnership (the “Agreement”), as most recently amended January 1, 2009, by and between J.F. Shea LP, a Delaware limited partnership, as general partner, and the Company’s limited partners who are comprised of entities and trusts, including J.F. Shea Co., Inc. (“JFSCI”), that are under the common control of Shea family members (collectively, the “Partners”). J.F. Shea LP is 96% owned by JFSCI.

Nature of Operations

Our principal business purpose is homebuilding, which includes acquiring and developing land and constructing and selling residential homes thereon. The principal markets are California, Arizona, Colorado, Washington, Nevada and Florida.

Partners Insurance Company (“PIC”), a captive insurance company wholly-owned by SHI, provided warranty, general liability, workers’ compensation and completed operations insurance for related companies and independent third-party subcontractors. Effective for the policy years commencing in 2007, PIC ceased issuing policies for these coverages. Thereafter, our warranty program became self-insured, and the general liability, workers’ compensation and completed operations (through July 31, 2009) coverages were insured by an unconsolidated, related-party carrier for primary coverage and by third-party insurance carriers for excess coverage. In February 2011, we purchased completed operations insurance from an unconsolidated, related-party carrier, retroactive to August 1, 2009.

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations. We typically experience the highest new home sales order activity in spring and summer, although this activity is also highly dependent on the number of active selling communities and timing of new community openings and other market factors. Since it typically takes three to eight months to construct a new home, we deliver more homes in

F-6

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

the second half of the year as spring and summer home sales orders convert to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest from April to October, and the majority of cash receipts from home closings occur during the second half of the year. Therefore, operating results for the three and six months ended June 30, 2011 are not necessarily indicative of results expected for the year ended December 31, 2011.

Further, in contrast to this historical seasonal pattern, weakness in homebuilding market conditions during the past four years has distorted our results. Also, in 2010, expiration of the federal homebuyer tax credit impacted the timing of our construction activities and home sales order and closing volumes. Although we may experience our seasonal pattern in the future, given current market conditions, we make no assurances as to when or whether this pattern will recur.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

2. Summary of Significant Accounting Policies

Housing Projects and Land Under Development

Housing projects and land under development are stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventories are written down to fair value. Quarterly, we review our real estate assets at each community for indications of impairment. If events or changes in circumstances indicate the net book value may not be recoverable, real estate assets are tested for recoverability by comparing the asset’s net book value to its estimated future undiscounted net cash flows to be realized from its disposition. These evaluations for impairments require us to make estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine whether expected future undiscounted cash flows will be sufficient to recover the carrying value of the assets. If assets are considered impaired, impairment is determined by the amount the asset’s net book value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets or other valuation techniques. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when assessment is made. These factors are specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage. We generally use discount rates up to 25%, subject to perceived risks associated with the community’s cash flow streams relative to its inventory.

Completed Operations Claim Costs

We record expenses and liabilities related to the estimated costs of completed operations claims when received in the ordinary course of business. In addition, we record expenses and liabilities for estimated costs of potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported and is actuarially estimated using individual case-basis valuations and statistical analysis. Concurrently, we estimate and record insurance receivables under applicable policies when recovery is probable. Expenses, liabilities and receivables related to these claims are subject to a

F-7

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, claim settlement patterns and insurance industry practices.

Revenues

Revenues from housing and other real estate sales are recognized in accordance with Accounting Standards Codification (“ASC”) 360 when the respective units are closed. Housing and other real estate sales are closed when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured. Sales incentives are a reduction of revenues when the respective unit is closed.

Income Taxes

SHLP is treated as a partnership for income tax purposes. As a limited partnership, SHLP is subject to certain minimal state taxes and fees; however, taxes on income or losses realized by SHLP are generally the obligation of the Partners and their owners.

SHI and PIC are C corporations. Federal and state income taxes are provided for these entities in accordance with the provisions of ASC 740. The provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are evaluated to determine whether a valuation allowance should be established based on its determination of whether it is more likely than not some or all of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends primarily on generation of future taxable income during the periods in which those temporary differences become deductible. Judgment is required in determining future tax consequences of events that have been recognized in the consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the consolidated financial position or results of operations.

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, (“ASU 2011-04”). ASU 2011-04 amends ASC 820, Fair Value Measurements, (“ASC 820”), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the ASC 820 disclosure requirements, particularly for Level 3 fair value measurements. ASU 2011-04 will be effective for the Company’s fiscal year beginning January 1, 2012. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in equity. ASU 2011-05 will be effective for the Company’s fiscal year beginning January 1, 2012. The Company believes the adoption of ASU 2011-05 concerns disclosure and presentation only and will not have a material impact on its consolidated financial position or results of operations.

F-8

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

3. Restricted Cash

Restricted cash related to the homebuilding operations included cash used as collateral for potential obligations paid by the Company’s bank, customer deposits temporarily restricted in accordance with regulatory requirements, and cash used in lieu of bonds. At June 30, 2011 and December 31, 2010, restricted cash related to homebuilding operations was $13.6 million and $11.4 million, respectively.

Restricted cash of PIC included cash held in escrow by PIC’s claim administrators. At June 30, 2011 and December 31, 2010, restricted cash of PIC was $0.4 million and $0.3 million, respectively.

4. Investments

Investments consist of available-for-sale securities and are measured at fair value, which is based on quoted market prices or cash flow models. Accordingly, unrealized gains and temporary losses on investments, net of income tax, are reported as accumulated other comprehensive income (loss). Realized gains and losses are determined using the specific identification method.

At June 30, 2011 and December 31, 2010, investments were as follows:

	At June 30, 2011
	Net Book Value  (a)		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Debt securities:
Corporate obligations		$1,023		$     149		$—			$  1,172
Mortgage/asset-backed securities		245		154		—			399
Private debt obligations		1,808		10,954		—			12,762
Total debt securities		3,076		11,257		—			14,333
Equity securities		4		—		(4	)		—
Total investments		$3,080		$11,257		$(4	)		$14,333
	At December 31, 2010
	Net Book Value  (a)		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Debt securities:
Corporate obligations		$1,124		$     224		$—			$  1,348
Mortgage/asset-backed securities		588		279		—			867
Private debt obligations		1,834		7,748		—			9,582
Total debt securities		3,546		8,251		—			11,797
Equity securities		25		4		(4	)		25
Total investments		$3,571		$  8,255		$(4	)		$11,822

(a) Net book value represents the cost of the security, or the amortized cost in instances which the security included a discount or premium.

F-9

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

For the three months ended June 30, 2011 and 2010, realized gains on available-for-sale securities were $0.3 million and $0.5 million, respectively, which were included in interest and other expense, net. For the six months ended June 30, 2011 and 2010, realized gains on available-for-sale securities were $0.4 million and $4.4 million, respectively, which were included in interest and other expense, net.

For the six months ended June 30, 2011, included in accumulated other comprehensive income (loss) were unrealized gains of $2.8 million, reclassification adjustments for realized gains of $0.2 million and tax expense of $(1.0) million. For the six months ended June 30, 2010, included in accumulated other comprehensive income (loss) were unrealized losses of $(6.7) million, reclassification adjustments for realized gains of $3.5 million and tax expense of $(2.2) million.

At June 30, 2011, the contractual maturities of debt securities classified as available-for-sale were as follows:

	Cost		Fair Value
	(In thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		259		367
Due after five years through ten years		1,256		1,403
Due after ten years		1,316		12,164
Mortgage/asset-backed securities		245		399
Total	$	3,076	$	14,333

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalty.

At June 30, 2011 and December 31, 2010, there were equity securities with nominal fair value and unrealized losses that were in a continuous unrealized loss position for less than one year. We evaluated investments with unrealized losses to determine if they experienced an other-than-temporary impairment. This evaluation was based on various factors, including length of time securities were in a loss position, ability and intent to hold investments until temporary losses were recovered or they mature, investee’s industry and amount of the unrealized loss. Based on these factors, at June 30, 2011 and December 31, 2010, the unrealized losses were not deemed an other-than-temporary impairment.

5. Fair Value Disclosures

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:

• Level 1 — Quoted prices for identical instruments in active markets

• Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date

• Level 3 — Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date

F-10

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

The financial instruments measured at fair value on a recurring basis were as follows:

	At June 30, 2011
Description	Level 1		Level 2		Level 3		Total
	(In thousands)
Debt securities	$	—	$	2,640	$	11,693	$	14,333
Equity securities		—		—		—		—
Total investments	$	—	$	2,640	$	11,693	$	14,333
	At December 31, 2010
Description	Level 1		Level 2		Level 3		Total
	(In thousands)
Debt securities	$	—	$	3,199	$	8,598	$	11,797
Equity securities		—		25		—		25
Total investments	$	—	$	3,224	$	8,598	$	11,822

The Level 2 financial instruments are primarily debt and equity securities in which fair values were determined from quoted prices in an inactive market or for similar instruments in an active market. The Level 3 financial instruments are comprised of private debt securities where fair value was determined using a cash flow model that considered estimated interest rates, discount rates, prepayments and defaults.

At June 30, 2011, the summary of changes in fair value of the Level 3 financial instruments was as follows:

	Private Debt Obligations
	(In thousands)
Fair value at December 31, 2010	$	8,598
Unrealized gains		3,095
Fair value at June 30, 2011	$	11,693

At June 30, 2011, the non-financial instruments measured at fair value on a non-recurring basis were as follows:

	Six Months  Ended June 30, 2011 (a)		Fair Value Measurements Using						Total      Losses
Description			Level 1		Level 2		Level 3
	(In thousands)
Housing projects and land under development	$	9,923	$	—	$	—	$	9,923	$	(10,302	)

(a) Amount represents aggregate fair value for communities where we recorded impairments at the fair value measurement date. Net book value for these communities may have increased or decreased since the measurement date.

For the six months ended June 30, 2011, in accordance with ASC 360, housing projects and land under development with a net book value of $20.2 million, were written down to a fair value of $9.9 million, resulting in an inventory impairment of $(10.3) million, which was included in cost of sales.

F-11

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Fair values for housing projects and land under development using Level 3 inputs were primarily based on estimated future cash flows discounted for inherent risk associated with each asset. These discounted cash flows were impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset was located when assessment was made. These factors were specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depended on the community’s projected life and development stage. We generally use discount rates up to 25%, subject to perceived risks associated with the community’s cash flow streams relative to its inventory.

At June 30, 2011 and December 31, 2010, as required by ASC 825, Financial Instruments, the following presents net book values and estimated fair values of notes payable, except those which net book value approximates fair value.

	June 30, 2011				December 31, 2010
	Net Book Value		Estimated Fair Value		Net Book Value		Estimated Fair Value
	(In thousands)
$750,000 senior secured notes	$	750,000	$	736,875	$	—	$	—
$145,000 secured bank term facility	$	—	$	—	$	135,202	$	137,315
$440,000 Series A term loan	$	—	$	—	$	360,003	$	425,488
$30,000 Series A-1 term loan	$	—	$	—	$	25,008	$	30,000
$85,000 Series B term loan	$	—	$	—	$	73,284	$	82,197
$25,000 secured subordinated loan	$	—	$	—	$	31,398	$	24,784
$20,000 secured subordinated loan	$	—	$	—	$	16,888	$	19,948
$5,000 secured subordinated loan	$	—	$	—	$	3,569	$	4,240
Secured Bank Exit Fee	$	—	$	—	$	2,251	$	3,241

Fair value for the senior secured notes at June 30, 2011 was based on the quoted market price at the end of the period. Estimated fair values of the outstanding secured term facility, term loans and Bank Exit Fee at December 31, 2010 were based on cash flow models discounted at market interest rates that consider underlying risks of the debt.

6. Accounts and Other Receivables, net

At June 30, 2011 and December 31, 2010, accounts and other receivables were as follows:

	June 30,     2011			December 31, 2010
	(In thousands)
Insurance receivables	$	115,103		$	102,860
Escrow receivables		823			1,774
Notes receivables		2,983			68
Other receivables		5,928			6,314
Reserve		(3,554	)		(3,593	)
Total accounts and other receivables, net	$	121,283		$	107,423

F-12

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

We record insurance receivables from insurance carriers for reimbursable claims pertaining to resultant damage and injuries from construction defects on our closed homes. At December 31, 2009, as part of the PIC Transaction (see Note 12), we insured our closed homes with third-party insurance carriers for policy years August 1, 2001 to July 31, 2009. In February 2011, we insured our closed homes with an unconsolidated, related-party carrier retroactive to August 1, 2009.

We record a reserve for uncollectible receivables that are specifically identified or outstanding for more than 120 days.

7. Housing Projects and Land Under Development

At June 30, 2011 and December 31, 2010, housing projects and land under development were as follows:

	June 30,     2011		December 31, 2010
	(In thousands)
Model homes	$	103,425	$	91,267
Completed homes for sale		32,228		34,918
Homes under construction		156,616		78,725
Lots available for construction		302,079		308,497
Land under development		161,189		174,245
Land held for future development		127,387		104,217
Land deposits and preacquisition costs		9,159		8,160
Total housing projects and land under development	$	892,083	$	800,029

Impairments

Housing projects and land under development are stated at cost, unless the carrying amount is determined to be unrecoverable, in which case inventories are written down to fair value (see Note 2). For the three and six months ended June 30, 2011, impairment charges were $9.7 million and $10.3 million, respectively, which were included in cost of sales. For the three and six months ended June 30, 2010, impairment charges were $2.9 million, of which $1.8 million were included in cost of sales and $1.1 million were included in equity in (loss) income from joint ventures. Additionally, the three and six months ended June 30, 2010 included a charge of $6.5 million related to the non-realization of a non-controlling interest’s deficit capital balance.

Interest Capitalization

Interest is capitalized on housing projects and land under development, and investments in joint ventures, during development and other qualifying activities. Interest capitalized as cost of housing projects and land under development is included in costs of sales as related units are closed. Interest capitalized as cost of investment in joint ventures is included in equity in loss (income) as related units in the joint venture are closed.

F-13

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

For the six months ended June 30, 2011 and 2010, interest incurred, capitalized and expensed was as follows:

	June 30,
	2011			2010
	(In thousands)
Total interest incurred	$	37,244		$	30,718
Interest expensed (a)	$	8,326		$	3,522
Total interest capitalized as a cost of housing projects and land under development	$	28,133		$	26,739
Interest previously capitalized as a cost of housing projects and land under development, included in cost of sales	$	(14,150	)	$	(20,878	)
Capitalized interest in ending inventories (b)	$	119,934		$	106,878
Total interest capitalized as a cost of investments in joint ventures	$	785		$	457
Interest previously capitalized as a cost of investments in joint ventures, included in equity in (loss) income from joint ventures	$	(455)		$	(113)
Capitalized interest in ending investments in joint ventures	$	1,275		$	1,297

(a) For the six months ended June 30, 2011 and 2010, assets qualifying for interest capitalization did not exceed debt; therefore, non-qualifying interest was expensed and included in interest and other expense, net.

(b) Inventory impairment charges were recorded against total inventory of a community. Capitalized interest reflects the gross amount of capitalized interest as impairment charges recognized were not generally allocated to specific components of inventory.

8. Investments in Joint Ventures

Unconsolidated joint ventures, which we do not control but have significant influence through ownership interests generally up to 50%, are accounted for using the equity method of accounting. These joint ventures are generally involved in real property development. Earnings and losses are allocated in accordance with terms of joint venture agreements.

Distributions from joint ventures in excess of the carrying amount of our investment and losses in excess of our investment (“Deficit Distributions”) are included in other liabilities. We record Deficit Distributions since we are liable for this deficit to respective joint ventures. Deficit Distributions are offset by future earnings of, or future contributions to, joint ventures. At June 30, 2011 and December 31, 2010, Deficit Distributions were $1.0 million and $0.9 million, respectively.

At June 30, 2011, total unconsolidated joint ventures’ notes payable were $118.6 million and included $69.2 million of bank and seller financing notes payable secured by real property and $49.4 million of notes payables with joint ventures’ partners, of which $15.4 million was secured by real property. At December 31, 2010, total unconsolidated joint ventures’ notes payable were $126.3 million and included $77.4 million of bank and seller financing notes payable secured by real property and $48.9 million of notes payable to joint ventures’ partners, of

F-14

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

which $15.4 million was secured by real property. In addition, at June 30, 2011 and December 31, 2010, we had an indirect 12.3% effective ownership in a joint venture that had bank notes payable secured by real property of $7.2 million, in which we have not provided guarantees.

At June 30, 2011 and December 31, 2010, of the $69.2 million and $77.4 million in our unconsolidated joint ventures’ outstanding bank and seller financing secured notes payable, respectively, we provided guarantees on a joint and several basis for one secured note payable, which had an outstanding balance of $16.3 million and $19.5 million at June 30, 2011 and December 31, 2010, respectively. These guarantees include, but are not limited to, project completion and loan-to-value maintenance guarantees. In addition, we have an indemnification agreement from our joint venture partner for 90% of this secured note payable’s outstanding balance of $16.3 million and $19.5 million, respectively. No liabilities were recorded for these guarantees as the fair value of secured real estate assets exceeded the outstanding notes payable. We have not provided guarantees on bank and seller financing secured notes payable of $52.9 million and $57.9 million, respectively, or on notes payable to joint ventures’ partners of $49.4 million and $48.9 million, respectively.

9. Variable Interest Entities

ASC 810 requires a VIE to be consolidated in financial statements of a company if it is the primary beneficiary of the VIE. Accordingly, the primary beneficiary absorbs a majority of the VIE’s expected losses or receives a majority of the VIE’s expected residual return, or otherwise controls the VIE, as a result of ownership, contractual or other financial interest in the VIE. All VIEs with which we were involved at June 30, 2011 and December 31, 2010 were evaluated to determine the primary beneficiary.

Joint Ventures

We routinely enter into joint ventures for homebuilding activities. Investments in these joint ventures may create a variable interest in a VIE, depending on contractual terms of the arrangement. We analyze our joint ventures in accordance with ASC 810 to determine whether they are VIEs and, if so, whether we are the primary beneficiary. At June 30, 2011 and December 31, 2010, these joint ventures were not consolidated into our consolidated financial statements since they were not VIEs, or in the event that they were VIEs, we were not the primary beneficiary.

At June 30, 2011 and December 31, 2010, we have a variable interest in a joint venture which we do not hold a direct, or indirect, investment, and the joint venture was determined to be a VIE. The joint venture, Shea/Baker Ranch Associates (“Baker Ranch”), is owned 50% by our affiliates and 50% by a third-party. We issued an unconditional loan-to-value maintenance guarantee on Baker Ranch’s outstanding bank notes payable which, at June 30, 2011 and December 31, 2010, was $25.4 million. We have not recorded a liability for this obligation as the fair value of the secured real estate assets exceeded the outstanding notes payable (see Note 17).

In accordance with ASC 810, we determined we were not the primary beneficiary of Baker Ranch because we did not have the power to direct activities that most significantly impact the economic performance of Baker Ranch, such as determining or limiting the scope or purpose of the entity, selling or transferring property owned or controlled by the entity, and arranging financing for the entity.

Land Option Contracts

We enter into land option contracts to procure land for home construction. Use of land option and similar contracts allows us to reduce market risks associated with direct land ownership and development, reduces

F-15

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

capital and financial commitments, including interest and other carrying costs, and minimizes land inventory. Under these contracts, we pay a specified deposit for the right to purchase land, usually at a predetermined price. Under the requirements of ASC 810, certain contracts may create a variable interest with the land seller.

In compliance with ASC 810, we analyzed our land option and similar contracts to determine if respective land sellers are VIEs and, if so, if we are the primary beneficiary. Although we do not have legal title to the optioned land, ASC 810 requires us to consolidate a VIE if we are the primary beneficiary. At June 30, 2011 and December 31, 2010, we determined we were not the primary beneficiary of such VIEs because we did not have the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, such as selling, transferring or developing land owned by the VIE.

At June 30, 2011, we had refundable and non-refundable cash deposits of $6.1 million associated with land option contracts with unconsolidated VIEs, having a remaining purchase price of $95.9 million, of which $95.7 million is subject to a specific performance clause. We also had refundable and non-refundable cash deposits of $1.9 million associated with land option contracts that were not with VIEs, having a remaining purchase price of $46.4 million.

Our loss exposure on land option contracts consisted of non-refundable deposits, which were $8.0 million and $7.2 million at June 30, 2011 and December 31, 2010, respectively, and are included in housing projects and land under development in the consolidated balance sheets.

10. Other Assets, Net

At June 30, 2011 and December 31, 2010, other assets were as follows:

	June 30, 2011		December 31, 2010
	(In thousands)
Income tax receivable	$	9,376	$	9,376
Prepaid professional fees		2,136		11,295
Prepaid loan fees		8,262		13,470
Deposits in lieu of letters of credit		4,197		5,319
Prepaid completed operations insurance		—		15,613
Other		3,574		2,636
Total other assets, net	$	27,545	$	57,709

Prepaid Professional and Loan Fees

In accordance with ASC 470, debt issuance costs and loan modification and waiver fees are capitalized to other assets. These costs and fees are amortized as interest expense over the term of the related debt. In accordance with ASC 835, interest expense is capitalized to housing projects and land under development, and investments in joint ventures. On May 10, 2011, the Secured Facilities (see Note 11) were paid off and $23.4 million of prepaid professional and loan fees were written off to interest and other expense, net.

Deposits in Lieu of Letters of Credit

In June 2010, due to maturity of the previous unsecured bank line of credit (see Note 11), certain letters of credit were presented for payment and recorded as deposits in lieu of letters of credit. These deposits may be returned and replaced with new letters of credit or as the collateralization requirement decreases.

F-16

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Prepaid Completed Operations Insurance

Since August 1, 2009, we were self-insured for our completed operations coverage. In anticipation of obtaining coverage, through December 31, 2010, $15.6 million of insurance premiums were paid to JFSCI which, in February 2011, was applied to the purchase of completed operations insurance from an unconsolidated, related-party carrier, retroactive to August 1, 2009.

11. Notes Payable

At June 30, 2011 and December 31, 2010, notes payable were as follows:

	June 30, 2011		December 31, 2010
	(In thousands)
Senior secured notes payable
$750,000 senior secured notes, due May 2019 at 8.625%	$	750,000	$	—
$75,000 bank revolving credit facility, original maturity September 2015. Interest at LIBOR plus 3% to 5% (3.32% to 5.32% at December 31, 2010)		—		75,000
$145,000 bank term facility, original maturity September 2015 at 7.5%		—		135,202
Funded letters of credit against $83,000 revolving letter of credit facility, original maturity September 2015 at 7.5% (see Note 10)		—		5,448
$440,000 Series A term loan, original maturity September 2015 at 7.5%		—		360,003
$30,000 Series A-1 term loan, original maturity September 2015 at 7.5%		—		25,008
$85,000 Series B term loan, original maturity September 2017 at 8.34%		—		73,284
Senior secured subordinated notes payable
$25,000 term loan, original maturity September 2018 at 15%, PIK interest through September 2015		—		31,398
$20,000 term loan, original maturity September 2015 at 8.19% PIK interest		—		16,888
$5,000 term loan, original maturity September 2015 at 8.19% PIK interest		—		3,569
Bank Exit Fee, original maturity September 2015		—		2,251
Other secured notes payable
Promissory notes, interest ranging 1% to 6%, maturing through 2014, secured by deeds of trust on land under development		2,520		1,954
Total notes payable	$	752,520	$	730,005

On November 16, 2010, the Company and JFSCI, as borrowers, executed loan modifications and extensions to its unsecured revolving bank line of credit, private placement debt and unsecured term loans, resulting in the effective exchange for senior secured notes payable and senior secured subordinated notes payable (the “Secured Facilities”). The Secured Facilities include the securitization of the notes by the Company’s assets, the release of J.F. Shea Construction, a related party, as a guarantor, and issuance of $80.0 million of additional principal.

In accordance with ASC 470, the Secured Facilities were accounted for as a debt modification, which required the $80.0 million of additional principal be recorded as interest expense over the term of the notes and the Secured Facilities be recorded net of related discount or premium. The carrying value of the Secured Facilities was unchanged as a result of the modification.

F-17

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

On May 10, 2011, 8.625% senior secured notes were issued in the aggregate principal amount of $750.0 million (the “Secured Notes”) and the outstanding obligations of the Secured Facilities were paid. Principal and interest paid under the Secured Facilities was $779.6 million and $2.5 million, respectively. In connection with payment of the Secured Facilities, all payable-in-kind (PIK) interest, $5.0 million of principal and certain fees were waived. In addition, of $19.1 million of then outstanding letters of credit, $4.0 million was returned and $15.1 million was paid by the Company with $14.5 million reimbursed by JFSCI for its share of the letters of credit paid by the Company.

Concurrent with the payoff of the Secured Facilities, an $88.4 million loss on debt extinguishment was recognized for the $65.0 million write-off of the Secured Facilities discount, which increased the Secured Facilities principal to its face value, $779.6 million, and the $23.4 million write-off of prepaid professional and loan fees incurred in connection with the Secured Facilities.

The Secured Notes were issued pursuant to Rule 144A and Regulation S, with registration rights. The Secured Notes bear interest at 8.625% paid semi-annually on May 15 and November 15, and do not require principal payments until maturity on May 15, 2019.

12. Other Liabilities

At June 30, 2011 and December 31, 2010, other liabilities were as follows:

	June 30, 2011		December 31, 2010
	(In thousands)
Completed operations	$	115,104	$	118,473
Warranty reserves		15,338		16,238
Deferred revenue		24,326		22,799
Provisions for closed homes/communities		12,694		13,107
Deposits		13,948		7,482
Legal reserves		5,497		6,106
Accrued interest		9,362		4,680
Accrued compensation and benefits		4,300		2,971
Deficit Distributions (see Note 8)		1,019		878
Other		9,336		12,589
Total other liabilities	$	210,924	$	205,323

Completed Operations

Reserves for completed operations primarily represent structural warranty claims outside of our one-to-two year warranty period. Specific terms and conditions of completed operations warranties vary depending on the market in which homes are closed and can range up to 12 years. Expenses and liabilities are recorded for (i) estimated costs of completed operations claims when received in the ordinary course of business, and (ii) potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported, and is actuarially estimated using individual case-basis valuations and statistical analysis. From August 1, 2001 to July 31, 2007, completed operations claims were insured through PIC. In December 2009, PIC entered into a series of novation and reinsurance transactions (the “PIC Transaction”).

F-18

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

First, PIC entered into a novation agreement with JFSCI to novate its deductible reimbursement obligations related to its workers’ compensation and general liability risks at September 30, 2009, and its completed operations claims from August 1, 2005 to July 31, 2007. Concurrently, JFSCI entered into insurance arrangements with unrelated third-party insurance carriers to insure these programs. As a result of this novation, PIC recorded a $19.2 million gain, which was deferred in these consolidated financial statements and will be recognized as income (expense) when related claims are paid or actuarial estimates are adjusted. At June 30, 2011 and December 31, 2010, the remaining deferred gain was $15.7 million and $16.6 million, respectively. For the three and six months ended June 30, 2011, we recognized $0.8 million and $0.9 million, respectively, of this deferral as income, which was included in interest and other expense, net. For the three and six months ended June 30, 2010, we recognized $2.1 million of this deferral as income, which was included in interest and other expense, net; no gain was recognized for the three months ended March 31, 2010.

Second, PIC entered into reinsurance agreements with various unrelated reinsurers that reinsures 100% of the completed operations claims coverage from August 1, 2001 to July 31, 2005. As a result of the reinsurance, the $15.6 million gain was deferred in these consolidated financial statements and will be recognized as income (expense) when the related claims are paid or actuarial estimates are adjusted. At June 30, 2011 and December 31, 2010, the remaining deferred gain was $4.7 million and $3.2 million, respectively. For the three and six months ended June 30, 2011, we recognized $(1.6) million and $(1.5) million of this deferral as expense, which was included in interest and other expense, net. For the three and six months ended June 30, 2010, we recognized $4.0 million of this deferral as income, which was included in interest and other expense, net; no gain was recognized for the three months ended March 31, 2010.

Since August 1, 2009, we were self-insured for completed operations coverage. Through December 31, 2010, in anticipation of obtaining coverage, $15.6 million of insurance premiums was paid to JFSCI which, in February 2011, was applied to the purchase of completed operations insurance from an unconsolidated, related-party carrier, retroactive to August 1, 2009.

At June 30, 2011 and December 31, 2010, completed operations claims reserves were $115.1 million and $118.5 million, respectively. For actual completed operations claims and estimates of completed operations incurred but not reported, we estimate and record insurance receivables under applicable policies when recovery is probable. At June 30, 2011 and December 31, 2010, insurance receivables were $115.1 million and $102.9 million, respectively.

Expenses, liabilities and receivables related to these claims are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, claim settlement patterns and insurance industry practices. Although considerable variability is inherent in such estimates, we believe reserves for completed operations claims are adequate.

Warranty Reserve

We offer a limited one or two year warranty for our homes. The specific terms and conditions of these warranties vary depending on the market in which homes are closed. We estimate warranty costs to be incurred and record a liability and an expense to cost of sales when home revenue is recognized. We also include in our warranty reserve the approximate 12.5% deductible related to our insured completed operations coverage. Factors affecting warranty liability include number of homes closed, historical and anticipated warranty claims, and cost per claim. We periodically assess adequacy of our warranty liabilities and adjusts amounts as necessary.

F-19

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

For the six months ended June 30, 2011 and 2010, changes in warranty liability were as follows:

	June 30,
	2011			2010
	(In thousands)
Balance, beginning of the period	$	16,238		$	17,792
Provision for warranties		4,390			4,461
Warranty costs paid		(5,290	)		(4,930	)
Balance, end of the period	$	15,338		$	17,323

13. Related Party Transactions

Related Party Receivables and Payables

At June 30, 2011 and December 31, 2010, receivables from related parties, net were as follows:

	June 30,     2011			December 31, 2010
	(In thousands)
Note receivables from JFSCI, net	$	31,466		$	177,011
Note receivables from unconsolidated joint ventures		25,252			24,817
Note receivables from related parties		14,712			13,100
Reserves for note receivables from related parties		(12,663	)		(12,896	)
Receivables from related parties		835			2,380
Total receivables from related parties, net	$	59,602		$	204,412

We participate in a centralized cash management and treasury function operated by JFSCI, whereby net cash flows from operations are transferred daily with JFSCI. JFSCI also provides corporate services to us, including management, legal, tax, information technology, facilities, accounting, treasury and human resources. This function and services require related party transactions and fund transfers to settle and account for amounts owed. At December 31, 2010, the resultant note receivables and payables were unsecured, due on demand, and accrued interest monthly at market rates based on Prime less 2.05% (1.2% at December 31, 2010). These note receivables and payables had the right of offset due to common control of the Company and its subsidiaries and were therefore presented as a net note receivable from JFSCI. At December 31, 2010, net note receivable due from JFSCI was $177.0 million. On May 10, 2011, concurrent with issuance of the Secured Notes and payoff of the Secured Facilities, through a $75.0 million cash payment and $41.5 million contribution of assets, the receivable from JFSCI was paid down by JFSCI and converted to a $38.9 million unsecured term note receivable from JFSCI, bearing 4% interest, payable in equal quarterly installments and maturing May 15, 2019. On June 17, 2011, JFSCI elected to make a $7.7 million prepayment, including accrued interest, and apply the prepayment to future installments such that JFSCI would not be required to make a payment until November 2012. At June 30, 2011, the note receivable from JFSCI was $31.5 million.

Notes receivables from unconsolidated joint ventures at June 30, 2011 and December 31, 2010 were $25.3 million and $24.8 million, respectively, of which $7.7 million is secured by real property. These notes from unconsolidated joint ventures bear interest ranging from 4.17% to 8% and mature from 2013 through 2020. The note receivable maturing in 2020 earns additional interest to achieve a 17.5% internal rate of return, subject to available cash flows of the joint venture, and can be repaid prior to 2020.

F-20

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Note receivables from other related parties at June 30, 2011 and December 31, 2010 were $2.0 million and $0.2 million, respectively, net of related reserves of $12.7 million and $12.9 million, respectively. These notes receivables are unsecured, bear interest ranging from Prime less 2.05% (1.2% at June 30, 2011 and December 31, 2010) to Prime plus 1% (4.25% at June 30, 2011 and December 31, 2010), and mature through 2021.

The Company, entities under common control and these unconsolidated joint ventures also engage in transactions on behalf of the other, such as payment of invoices and payroll. The amounts resulting from these transactions are recorded in receivables from related parties or payables to related parties, non-interest bearing and due on demand. At June 30, 2011 and December 31, 2010, these receivables were $0.8 million and $2.4 million, respectively, and these payables were $6.7 million and $9.2 million, respectively.

Joint Venture Transactions

In April 2011, through our consolidated joint venture Shea Colorado, LLC, we entered into transactions with the joint venture partner of two of our unconsolidated joint ventures in Colorado, in which we own a 50% ownership interest in each, SB Meridian Villages, LLC (SBMV) and TCD Bradbury, LLC (TCDB). First, we assigned our membership interest in SBMV to our joint venture partner for $4.5 million, resulting in a gain on the sale of our interest of $0.5 million. Second, we contributed $11.5 million of cash to TCDB and received $15.4 million of land and a secured promissory note payable of $0.6 million and our joint venture partner received $12.2 million and $6.5 million of land and cash, respectively. TCDB then paid off a bank note payable that was secured by the land distributed to the TCDB partners.

At June 30, 2011 and June 30, 2010, we were the managing member for nine and ten, respectively, unconsolidated joint ventures and received a management fee from these joint ventures as reimbursement for direct and overhead costs incurred on behalf of the joint ventures. Fees from joint ventures representing reimbursement of our costs are recorded as a reduction to general and administrative expense. Fees from joint ventures representing profit are recorded to revenues. For the three and six months ended June 30, 2011, management fees of $0.8 million and $1.7 million, respectively, were offset against general and administrative expenses, and management fees of $0.3 million and $0.6 million, respectively, were included in revenues. For the three and six months ended June 30, 2010, management fees of $1.1 million and $2.3 million, respectively, were offset against general and administrative expenses, and management fees of $0.4 million and $0.7 million, respectively, were included in revenues.

General and Administrative Related Party Transactions

For the three and six months ended June 30, 2011, general and administrative expenses include $3.3 and $7.3 million, respectively, for corporate services provided by JFSCI. For the three and six months ended June 30, 2010, general and administrative expenses include $3.4 million and $7.3 million, respectively, for corporate services provided by JFSCI.

We lease office space from related parties under non-cancelable operating leases. Leases are for five to ten year terms and generally provide for five year renewal options. For the three and six months ended June 30, 2011, related-party lease expense was $0.2 million and $0.4 million, respectively. For the three and six months ended June 30, 2010, related-party lease expense was $0.2 million and $0.4 million, respectively.

14. Income Taxes

For the six months ended June 30, 2011, income tax benefit was $1.0 million, primarily from losses in SHI and its subsidiaries and offset by an increase in the deferred tax asset valuation allowance. At June 30, 2011, the

F-21

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

net deferred tax asset was $49.2 million, which primarily related to available loss carryforwards, impairments of inventory and available-for-sale investments, housing inventory and land basis differences, and timing of income recognition. The $49.2 million deferred tax asset valuation allowance fully reserves the net deferred tax asset due to inherent uncertainty of future income. The deferred tax asset valuation allowance increased from $48.8 million at December 31, 2010 due to increases in net deferred tax assets. To the extent eligible taxable income exists, which allows tax benefits of these deferred tax assets to be utilized, the effective tax rate may be reduced, subject to certain limitations under Internal Revenue Code Section 382 (“Section 382”), by reducing the valuation allowance and offsetting a portion of taxable income.

In 2009, we filed a petition with the United States Tax Court regarding our position on the completed contract method for homebuilding activities in tax years 2003 – 2006 for SHLP and 2004 – 2005 for SHI and subsidiaries. This petition is in the preliminary stage, however, we believe our position will prevail. Accordingly, no interest or penalties are reflected in the tax provision for SHI and subsidiaries. Furthermore, as a limited partnership, any interest or penalties imposed on SHLP, if applicable, would be the responsibility of the Partners and not be reflected in these consolidated financial statements.

15. Comprehensive Loss

The components of comprehensive loss were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(In thousands)
Net loss	$	(100,756	)	$	(1,256	)	$	(108,956	)	$	(4,513	)
Unrealized gains (losses) in marketable securities, net		1,271			(577	)		1,951			(5,345	)
Comprehensive loss	$	(99,485	)	$	(1,833	)	$	(107,005	)	$	(9,858	)

16. Owners’ Equity

Owners’ equity consists of partners’ preferred and common capital. Common capital was comprised of limited partners with a collective 78.38% ownership and the general partner with a 20.62% ownership. Preferred capital was comprised of limited partners with either series B (“Series B”) or series D (“Series D”) classification. Series B had no ownership but earned a preferred return at Prime less 2.05% (1.2% at June 30, 2011 and December 31, 2010) per annum on unreturned capital balances. At June 30, 2011 and December 31, 2010, accumulated undistributed preferred returns for Series B were $17.9 million and $17.0 million, respectively. Series D had a 1% ownership interest and earned a preferred return at 7% per annum on unreturned preferred capital balances. At June 30, 2011 and December 31, 2010, accumulated undistributed preferred returns for Series D were $34.3 million and $28.7 million, respectively.

Net income is allocated to Partners in a priority order that considers previously allocated net losses and preferred return considerations and, thereafter, in proportion to their respective ownership interests. Net loss is allocated to the Partners generally in proportion to their ownership interests and adjusted capital account balances, and, thereafter, to the general partner.

The general partner, in its sole discretion, may make additional capital contributions or accept additional capital contributions from the limited partners. Cash distributions are made to the Partners in proportion to their unpaid preferred returns and, thereafter, in proportion to their ownership interests. Distributions to the Partners

F-22

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

are made at the discretion of the general partner, including payment of personal income taxes related to the Company or other entities under control of Shea family members. Similarly, distributions to Partners from other entities under control of Shea family members, such as JFSCI, are used for payment of personal incomes taxes related to the Company and other uses.

17. Contingencies and Commitments

At June 30, 2011 and December 31, 2010, in addition to guarantees on our joint venture’s outstanding borrowings, an unconditional loan-to-value maintenance guarantee was issued, on a joint and several basis, for a secured development loan for Baker Ranch, a related party in which we have no ownership interest (see Note 9). At June 30, 2011 and December 31, 2010, the loan had a $25.4 million outstanding principal balance. A liability was not recorded for this guarantee as the fair value of the secured real estate assets exceeded the outstanding notes payable.

At June 30, 2011 and December 31, 2010, joint and several non-recourse (“bad-boy”) guarantees were issued for secured permanent financing loans of related parties in which we have no ownership interest. The bad boy guarantee may become a liability for the Company upon a voluntary bankruptcy filing by the related party borrower or the occurrence of other “bad” acts, including fraud or a material misrepresentation by the related party borrower. At June 30, 2011 and December 31, 2010, these loans had an outstanding principal balance of $46.7 million and $47.3 million, respectively. These loans have maturity dates between December 2011 and September 2012. A liability was not recorded for these guarantees as the probability of payment on these guarantees is remote.

At December 31, 2010, we had an $83.0 million letter of credit facility, which was reduced by $5.4 million of funded letters of credit. In addition, JFSCI issued $18.5 million of new letters of credit that were outstanding and collateralized by this facility at December 31, 2010. On May 10, 2011, concurrent with issuance of the Secured Notes and payoff of the Secured Facilities, this facility was canceled and we entered into a new $75.0 million letter of credit facility. At June 30, 2011, outstanding letters of credit against the new letter of credit facility was $1.1 million.

We are required to provide surety bonds that guarantee completion of certain homebuilding projects. At June 30, 2011 and December 31, 2010, we had exposure of $70.2 million and $77.5 million, respectively, in connection with $177.9 million and $180.7 million, respectively, of surety bonds issued for our projects. We also provided indemnification for bonds issued by unconsolidated joint ventures and other related parties in which we have no ownership interest. At June 30, 2011 and December 31, 2010, we had a $30.0 million and $44.6 million exposure in connection with $72.8 million and $80.2 million, respectively, of surety bonds issued for unconsolidated joint venture projects, and a $3.7 million and $9.4 million exposure in connection with $7.8 million and $14.1 million, respectively, of surety bonds issued for related party projects in which we have no ownership interest.

Certain of our consolidated and joint ventures’ homebuilding projects utilize and may continue to utilize community facility district, metro-district and other local government bond financing programs to fund construction or acquisition of infrastructure improvements. Interest and principal on these bonds are typically paid from taxes and assessments levied on homeowners following the sale of new homes within the project. From time to time we enter into credit support arrangements where we are required to make interest and principal payments on these bonds if the taxes and assessments levied on homeowners are insufficient to cover such obligations. Furthermore, reimbursement of these payments to us is dependent on the district or local government’s ability to generate sufficient tax and assessment revenues from the sale of new homes.

F-23

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

In certain consolidated homebuilding projects, we have contractual obligations for the right to purchase and receive water system connection rights which, at June 30, 2011 and December 31, 2010, were $39.7 million. These water system connection rights are held and then transferred to homebuyers upon closing of their home or transferred upon the sale of land to the respective buyer. These water system connection rights can also be sold or leased but generally only within the local jurisdiction.

Various lawsuits, claims and proceedings have been or may be instituted or asserted against us. In management’s opinion, we have appropriately reserved for these matters. At June 30, 2011 and December 31, 2010, we had reserves of $5.5 million and $6.1 million, respectively, relating to these matters.

18. Supplemental Disclosure to Consolidated Statements of Cash Flows

Supplemental disclosures to the consolidated statements of cash flows were as follows:

	Six Months Ended June 30,
	2011		2010
	(In thousands)
Supplemental disclosure of cash flow information
Income taxes paid	$	34	$	628
Interest paid, net of amounts capitalized	$	7,403	$	3,547
Supplemental disclosure of non-cash activities
Unrealized gain (loss) on available-for-sale investments, net	$	1,951	$	(5,345	)
Reclassification of Deficit Distributions from unconsolidated joint ventures to other liabilities	$	140	$	2,427
Purchase of land in exchange for note payable	$	803	$	1,230
Contribution of net assets for payment on notes receivables from related parties	$	41,524	$	—
Distribution of land from unconsolidated joint venture	$	15,422	$	—
Distribution of note payable from unconsolidated joint venture	$	599	$	—

19. Segment Information

Our homebuilding business, which is responsible for nearly all of our operating results, constructs and sells single-family attached and detached homes designed to appeal to first-time, move-up and active adult homebuyers. Our homebuilding business also provides management services to joint ventures and other related parties. The homebuilding reportable segments conduct operations in the following locations:

• California South, consisting of the results of our Los Angeles, Ventura, Orange County, Inland Empire and San Diego communities;

• California North, consisting of the results of our northern and central California communities; and

• Mountain West / Other, consisting of the results of our Arizona, Colorado, Washington, Nevada and Florida communities.

F-24

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

In accordance with ASC 280, Segment Reporting, these reportable segments are based on similar economic characteristics and geography, and share other characteristics including similar product types, production processes, jurisdictional and political environment, including entitlements, land availability and values, and underlying demand and supply.

Our Corporate segment primarily provides management services to our operating segments, and includes the results of our captive insurance provider, which primarily administers claims that were reinsured to third-party carriers. Results of our insurance brokerage services business are also included in our Corporate segment. Results of our traditional escrow services business, which ceased operations in 2010, are included in the 2010 results presented herein for the Corporate segment.

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 2. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented. As a result of certain organization changes that became effective March 31, 2011, we reclassified certain 2010 amounts to conform to the current year segment presentation.

Financial information relating to reportable segments was as follows:

	June 30, 2011		December 31, 2010
	(In thousands)
Total assets:
California South	$	365,444		$319,692
California North		238,537		216,414
Mountain West/Other		505,899		469,746
Total homebuilding assets		1,109,880		1,005,852
Corporate		242,971		409,034
Total assets	$	1,352,851		$1,414,886

	June 30, 2011		December 31, 2010
	(In thousands)
Housing projects and land under development:
California South	$	311,018		$267,011
California North		220,325		197,303
Mountain West/Other		360,584		335,708
Total homebuilding housing projects and land under development		891,927		800,022
Corporate		156		7
Total housing projects and land under development	$	892,083		$800,029

F-25

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(In thousands)
Revenues:
California South	$	39,965		$	94,165		$	65,499		$	114,723
California North		26,558			52,665			42,413			70,492
Mountain West/Other		48,143			72,994			80,556			112,207
Total homebuilding revenues		114,666			219,824			188,468			297,422
Corporate		268			679			525			830
Total revenues	$	114,934		$	220,503		$	188,993		$	298,252
	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(In thousands)
(Loss) income before income taxes:
California South	$	(10,153	)	$	9,895		$	(13,777	)	$	8,186
California North		(335	)		4,967			(2,063	)		1,797
Mountain West/Other		(2,196	)		(3,092	)		(6,265	)		(6,017	)
Total homebuilding (loss) income before income taxes		(12,684	)		11,770			(22,105	)		3,966
Corporate		(88,748	)		(12,580	)		(87,868	)		(6,982	)
Total loss before income taxes	$	(101,432	)	$	(810	)	$	(109,973	)	$	(3,016	)
	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(In thousands)
Impairment charges:
California South	$	9,684		$	1,231		$	9,684		$	1,231
California North		—			—			—			—
Mountain West/Other		—			1,619			618			1,619
Total impairment charges	$	9,684		$	2,850		$	10,302		$	2,850

20. Non-Guarantor Supplemental Information

On May 10, 2011, SHLP and Shea Homes Funding Corp, a wholly-owned subsidiary of SHLP (collectively “SHLP Corp”), issued 8.625% senior secured notes in the aggregate principal amount of $750.0 million (the “Secured Notes”) and the outstanding obligations of the Secured Facilities were paid. Certain of SHLP’s wholly-owned direct and indirect subsidiaries guarantee the Secured Notes. The guarantees are full and unconditional, and joint and several. The obligations under the Secured Notes are not guaranteed by any SHLP joint venture where SHLP Corp does not own 100% of the economic interest, including those that are consolidated for financial reporting purposes. Presented herein are the condensed consolidated financial statements for the guarantor subsidiaries and non-guarantor subsidiaries.

F-26

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Consolidating Balance Sheet

June 30, 2011

	SHLP Corp (a)		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	29,450	$	132,099		$	14,567	$	—		$	176,116
Restricted cash		11,386		2,142			488		—			14,016
Investments		—		14,333			—		—			14,333
Accounts and other receivables, net		93,855		24,352			48,158		(45,082	)		121,283
Receivables from related parties, net		2,354		32,386			24,862		—			59,602
Housing projects and land under development		673,832		177,477			42,271		(1,497	)		892,083
Investments in joint ventures		4,603		2,271			23,456		—			30,330
Investments in subsidiaries		697,486		87,850			90,997		(876,333	)		—
Property and equipment, net		16,069		1,474			—		—			17,543
Other assets, net		17,825		9,692			28		—			27,545
Total assets	$	1,546,860	$	484,076		$	244,827	$	(922,912	)	$	1,352,851
Liabilities and equity
Liabilities:
Notes payable	$	751,921	$	—		$	599	$	—		$	752,520
Payables to related parties		871		972			—		4,816			6,659
Accounts payable		43,058		10,555			547		(548	)		53,612
Other liabilities		149,764		34,578			73,393		(46,811	)		210,924
Intercompany		303,777		(321,440	)		21,699		(4,036	)		—
Total liabilities		1,249,391		(275,335	)		96,238		(46,579	)		1,023,715
Equity:
SHLP equity:
Owners’ equity		297,469		752,097			124,236		(876,333	)		297,469
Accumulated other comprehensive income		—		7,314			—		—			7,314
Total SHLP equity		297,469		759,411			124,236		(876,333	)		304,783
Non-controlling interests		—		—			24,353		—			24,353
Total equity		297,469		759,411			148,589		(876,333	)		329,136
Total liabilities and equity	$	1,546,860	$	484,076		$	244,827	$	(922,912	)	$	1,352,851

(a) Includes Shea Homes Funding Corp. since inception on April 26, 2011, which financial position at June 30, 2011 was not material.

F-27

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Consolidating Balance Sheet

December 31, 2010

	SHLP Corp (a)		Guarantor  Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	99,511	$	54,393		$	12,970	$	—		$	166,874
Restricted cash		11,375		—			320		—			11,695
Investments		—		11,822			—		—			11,822
Accounts and other receivables, net		79,668		27,235			47,627		(47,107	)		107,423
Receivables from related parties, net		606		2,384			24,411		177,011			204,412
Housing projects and land under development		664,403		110,426			26,840		(1,640	)		800,029
Investments in joint ventures		4,337		3,632			28,584		—			36,553
Investments in subsidiaries		691,694		88,823			91,824		(872,341	)		—
Property and equipment, net		16,780		1,589			—		—			18,369
Other assets, net		43,444		13,639			626		—			57,709
Total assets	$	1,611,818	$	313,943		$	233,202	$	(744,077	)	$	1,414,886
Liabilities and equity
Liabilities:
Notes payable	$	730,005	$	—		$	—	$	—		$	730,005
Payables to related parties		40		48			28		9,094			9,210
Accounts payable		28,989		9,012			585		(551	)		38,035
Other liabilities		141,472		39,846			72,202		(48,197	)		205,323
Intercompany		304,449		(492,384	)		20,017		167,918			—
Total liabilities		1,204,955		(443,478	)		92,832		128,264			982,573
Equity:
SHLP equity:
Owners’ equity		406,863		752,058			120,283		(872,341	)		406,863
Accumulated other comprehensive income		—		5,363			—		—			5,363
Total SHLP equity		406,863		757,421			120,283		(872,341	)		412,226
Non-controlling interests		—		—			20,087		—			20,087
Total equity		406,863		757,421			140,370		(872,341	)		432,313
Total liabilities and equity	$	1,611,818	$	313,943		$	233,202	$	(744,077	)	$	1,414,886

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

F-28

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Consolidating Statement of Operations

Three Months Ended June 30, 2011

	SHLP Corp (a)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	85,486		$	28,158		$	1,290		$	—		$	114,934
Cost of sales		(81,213	)		(22,935	)		(803	)		95			(104,856	)
Gross margin		4,273			5,223			487			95			10,078
Selling expenses		(6,945	)		(3,081	)		(1,144	)		—			(11,170	)
General and administrative expenses		(6,241	)		(1,467	)		(557	)		—			(8,265	)
Equity in (loss) income from joint ventures		(224	)		22			100			—			(102	)
Equity in (loss) income from subsidiaries		1,242			(680	)		(108	)		(454	)		—
Loss on debt extinguishment		(88,384	)		—			—			—			(88,384	)
Interest and other (expense) income, net		(4,826	)		873			459			(95	)		(3,589	)
(Loss) income before income taxes		(101,105	)		890			(763	)		(454	)		(101,432	)
Income tax benefit (expense)		—			680			(4	)		—			676
Net (loss) income		(101,105	)		1,570			(767	)		(454	)		(100,756	)
Less: Net income attributable to non-controlling interests		—			—			(349	)		—			(349	)
Net (loss) income attributable to SHLP	$	(101,105	)	$	1,570		$	(1,116	)	$	(454	)	$	(101,105	)

(a) Includes Shea Homes Funding Corp. since inception on April 26, 2011; no significant activity has occurred for the financial statement period presented above.

Consolidating Statement of Operations

Three Months Ended June 30, 2010

	SHLP Corp (a)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	187,539		$	31,669		$	1,295		$	—		$	220,503
Cost of sales		(160,345	)		(27,304	)		(617	)		127			(188,139	)
Gross margin		27,194			4,365			678			127			32,364
Selling expenses		(10,381	)		(2,580	)		(2,579	)		—			(15,540	)
General and administrative expenses		(6,245	)		(2,163	)		(805	)		—			(9,213	)
Equity in income (loss) from joint ventures		(428	)		(6	)		8,077			—			7,643
Equity in income (loss) from subsidiaries		6,275			6,302			42			(12,619	)		—
Interest and other (expense) income, net		(23,620	)		1,669			6,014			(127	)		(16,064	)
(Loss) income before income taxes		(7,205	)		7,587			11,427			(12,619	)		(810	)
Income tax expense		(4	)		(429	)		(13	)		—			(446	)
Net (loss) income		(7,209	)		7,158			11,414			(12,619	)		(1,256	)
Less: Net income attributable to non-controlling interests		—			—			(5,953	)		—			(5,953	)
Net (loss) income attributable to SHLP	$	(7,209	)	$	7,158		$	5,461		$	(12,619	)	$	(7,209	)

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

F-29

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Consolidating Statement of Operations

Six Months Ended June 30, 2011

	SHLP       Corp (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	146,273		$	38,867		$	3,853		$	—		$	188,993
Cost of sales		(133,735	)		(32,186	)		(2,524	)		143			(168,302	)
Gross margin		12,538			6,681			1,329			143			20,691
Selling expenses		(12,284	)		(4,676	)		(2,428	)		—			(19,388	)
General and administrative expenses		(12,436	)		(2,954	)		(1,098	)		—			(16,488	)
Equity in (loss) income from joint ventures		(426	)		15			(84	)		—			(495	)
Equity in (loss) income from subsidiaries		1,013			(1,412	)		(815	)		1,214			—
Loss on debt extinguishment		(88,384	)		—			—			—			(88,384	)
Interest and other (expense) income, net		(9,412	)		2,339			1,307			(143	)		(5,909	)
(Loss) income before income taxes		(109,391	)		(7	)		(1,789	)		1,214			(109,973	)
Income tax benefit (expense)		(3	)		1,034			(14	)		—			1,017
Net (loss) income		(109,394	)		1,027			(1,803	)		1,214			(108,956	)
Less: Net income attributable to non-controlling interests		—			—			(438	)		—			(438	)
Net (loss) income attributable to SHLP	$	(109,394	)	$	1,027		$	(2,241	)	$	1,214		$	(109,394	)

(a) Includes Shea Homes Funding Corp. since inception on April 26, 2011; no significant activity has occurred for the financial statement period presented above.

Consolidating Statement of Operations

Six Months Ended June 30, 2010

	SHLP       Corp (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	241,371		$	54,816		$	2,065		$	—		$	298,252
Cost of sales		(205,885	)		(46,104	)		(864	)		222			(252,631	)
Gross margin		35,486			8,712			1,201			222			45,621
Selling expenses		(14,652	)		(4,423	)		(4,227	)		—			(23,302	)
General and administrative expenses		(12,698	)		(3,703	)		(1,691	)		—			(18,092	)
Equity in income (loss) from joint ventures		(618	)		(13	)		7,700			—			7,069
Equity in income from subsidiaries		9,671			16,555			43			(26,269	)		—
Interest and other (expense) income, net		(27,861	)		(4,066	)		17,837			(222	)		(14,312	)
(Loss) income before income taxes		(10,672	)		13,062			20,863			(26,269	)		(3,016	)
Income tax expense		(6	)		(1,114	)		(377	)		—			(1,497	)
Net (loss) income		(10,678	)		11,948			20,486			(26,269	)		(4,513	)
Less: Net income attributable to non-controlling interests		—			—			(6,165	)		—			(6,165	)
Net (loss) income attributable to SHLP	$	(10,678	)	$	11,948		$	14,321		$	(26,269	)	$	(10,678	)

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

F-30

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2011

	SHLP       Corp (a)			Guarantor  Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash (used in) provided by operating activities	$	(18,295	)	$	(21,379	)	$	223		$	(5,057	)	$	(44,508	)
Investing activities
Net decrease (increase) in promissory notes from related parties		(2,026	)		(31,267	)		(453	)		135,487			101,741
Investments in joint ventures		(300	)		(86	)		(15,414	)		—			(15,800	)
Other investing activities		(72	)		2,445			5,525			—			7,898
Net cash provided by (used in) investing activities		(2,398	)		(28,908	)		(10,342	)		135,487			93,839
Financing activities
Repayments on revolving lines of credit		(80,448	)		—			—			—			(80,448	)
Borrowings from financial institutions and others		750,000			—			—			—			750,000
Principal payments to financial institutions and others		(720,835	)		—			—			—			(720,835	)
Intercompany		(5,451	)		127,993			7,888			(130,430	)		—
Other financing activities		7,366			—			3,828			—			11,194
Net cash (used in) provided by financing activities		(49,368	)		127,993			11,716			(130,430	)		(40,089	)
Net increase (decrease) in cash and cash equivalents		(70,061	)		77,706			1,597			—			9,242
Cash and cash equivalents at beginning of period		99,511			54,393			12,970			—			166,874
Cash and cash equivalents at end of period	$	29,450		$	132,099		$	14,567		$	—		$	176,116

(a) Includes Shea Homes Funding Corp. since inception on April 26, 2011; no significant activity has occurred for the financial statement period presented above.

F-31

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

June 30, 2011

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2010

	SHLP       Corp (a)			Guarantor  Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash (used in) provided by operating activities	$	6,647		$	(7,679	)		$(78,378	)		$ 5,530		$	(73,880	)
Investing activities
Proceeds from sale of available-for-sale investments		—			4,584			46,930			—			51,514
Investments in joint ventures		(13,307	)		(625	)		(2,434	)		—			(16,366	)
Other investing activities		(4,907	)		(423	)		428			(3,361	)		(8,263	)
Net cash provided by (used in) investing activities		(18,214	)		3,536			44,924			(3,361	)		26,885
Financing activities
Borrowings on revolving lines of credit		12,647			—			—			—			12,647
Contributions from owners		12,500			—			—			—			12,500
Intercompany		39,026			(38,215	)		1,358			(2,169	)		—
Other financing activities		(17	)		—			432			—			415
Net cash provided by (used in) financing activities		64,156			(38,215	)		1,790			(2,169	)		25,562
Net (decrease) increase in cash and cash equivalents		52,589			(42,358	)		(31,664	)		—			(21,433	)
Cash and cash equivalents at beginning of period		89,349			68,674			45,053			—			203,076
Cash and cash equivalents at end of period	$	141,938		$	26,316			$ 13,389			$      —		$	181,643

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

21. Subsequent Events

On August 17, 2011, JFSCI elected to make a $6.6 million prepayment on the unsecured term note receivable from JFSCI, including accrued interest, and apply the prepayment to future installments such that JFSCI would not be required to make a payment until February 2014.

In September 2011, the Company sold fixed assets, comprised of three buildings and related improvements and land, to a related party. The consideration received was $14.4 million cash and a $6.5 million note receivable at 4.20% interest, payable in equal monthly installments and maturing August 2016. The $1.5 million of consideration received in excess of net book value will be recorded as an equity contribution.

We have evaluated subsequent events and other than as disclosed, these events do not have a material effect on the consolidated financial position or results of operations.

F-32

Report of Independent Registered Public Accounting Firm

The Shareholders, Board of Directors and Partners

Shea Homes Limited Partnership

We have audited the accompanying consolidated balance sheets of Shea Homes Limited Partnership (the Company), a California limited partnership, as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Shea Homes Limited Partnership at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010 in conformity with U.S. generally accepted accounting principles.

March 28, 2011 /s/    Ernst & Young LLP

Except for Notes 18, 20, 21, and 22, as to which the date is

October 10, 2011

F-33

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Balance Sheets

(In thousands)

	December 31,
	2010		2009
Assets
Cash and cash equivalents	$	166,874	$	203,076
Restricted cash		11,695		23,500
Investments		11,822		61,413
Accounts and other receivables, net		107,423		140,156
Receivables from related parties, net		204,412		222,188
Housing projects and land under development		800,029		903,504
Investments in joint ventures		36,553		27,794
Property and equipment, net		18,369		8,854
Other assets, net		57,709		28,275
Total assets	$	1,414,886	$	1,618,760
Liabilities and equity
Liabilities:
Notes payable	$	730,005	$	745,017
Payables to related parties		9,210		7,538
Accounts payable		38,035		36,186
Other liabilities		205,323		348,813
Total liabilities		982,573		1,137,554
Equity:
SHLP equity:
Owners’ equity		406,863		454,452
Accumulated other comprehensive income		5,363		9,398
Total SHLP equity		412,226		463,850
Non-controlling interests		20,087		17,356
Total equity		432,313		481,206
Total liabilities and equity	$	1,414,886	$	1,618,760

See accompanying notes

F-34

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Statements of Operations

(In thousands)

	Years Ended December 31,
	2010			2009			2008
Revenues	$	639,566		$	611,463		$	1,078,330
Cost of sales		(609,097	)		(986,206	)		(1,317,642	)
Gross margin		30,469			(374,743	)		(239,312	)
Selling expenses		(46,665	)		(48,949	)		(98,537	)
General and administrative expenses		(32,440	)		(29,459	)		(64,832	)
Equity in income (loss) from joint ventures		8,613			(35,089	)		(43,621	)
Loss from disposition of joint ventures		—			—			(167,805	)
Other (expense) income, net		(18,759	)		19,962			(30,421	)
Loss before income taxes		(58,782	)		(468,278	)		(644,528	)
Income tax benefit		3,567			45,218			35,011
Net loss		(55,215	)		(423,060	)		(609,517	)
Less: Net (income) loss attributable to non-controlling interests		(4,874	)		30,717			14,802
Net loss attributable to SHLP	$	(60,089	)	$	(392,343	)	$	(594,715	)

See accompanying notes

F-35

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Statements of Changes in Equity

(In thousands)

	Shea Homes Limited Partnership
	Limited Partner								General Partner			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interests			Total          Equity
	Common			Preferred   Series B		Preferred    Series  D			Common
Balance, December 31, 2007	$	888,960		$	194,240	$	120,000		$	233,690			$   (973	)		$54,767		$	1,490,684
Comprehensive loss:
Net loss		(466,556	)		—		(5,926	)		(122,233	)		—			(14,802	)		(609,517	)
Change in unrealized gains, net		—			—		—			—			668			—			668
Total comprehensive loss																			(608,849	)
Consolidation of subsidiary		3,616			—		46			952			—			300			4,914
Contributions from owners		—			—		34,858			—			—			—			34,858
Distributions to owners and non-controlling interests		6			—		(34,858	)		—			—			(2,372	)		(37,224	)
Balance, December 31, 2008		426,026			194,240		114,120			112,409			(305	)		37,893			884,383
Comprehensive loss:
Net loss		(307,092	)		—		(4,128	)		(81,123	)		—			(30,717	)		(423,060	)
Change in unrealized gains, net		—			—		—			—			9,703			—			9,703
Total comprehensive loss																			(413,357	)
Contributions from non-controlling interests		—			—		—			—			—			10,605			10,605
Distributions to non-controlling interests		—			—		—			—			—			(425	)		(425	)
Balance, December 31, 2009		118,934			194,240		109,992			31,286			9,398			17,356			481,206
Comprehensive loss:
Net (loss) income		(47,104	)		—		(600	)		(12,385	)		—			4,874			(55,215	)
Change in unrealized losses, net		—			—		—			—			(4,035	)		—			(4,035	)
Total comprehensive loss																			(59,250	)
Contributions from owners and non-controlling interests		—			—		12,500			—			—			975			13,475
Distributions to non-controlling interests		—			—		—			—			—			(3,118	)		(3,118	)
Balance, December 31, 2010	$	71,830		$	194,240	$	121,892		$	18,901			$ 5,363			$20,087		$	432,313

See accompanying notes

F-36

Shea Homes Limited Partnership

(A California Limited Partnership)

Consolidated Statements of Cash Flows

(In thousands)

	Years Ended December 31,
	2010			2009			2008
Operating activities
Net loss		$  (55,215	)		$(423,060	)		$(609,517	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Equity in (income) loss from joint ventures		(9,875	)		4,629			8,698
Loss from disposition of joint ventures		—			—			167,805
Write-off of professional fees in connection with debt modification		25,747			—			—
Net gain on sale of available-for-sale investments		(4,664	)		(3,313	)		(293	)
Net loss on change in fair value of investments		—			—			2,784
Net loss on sale of property and equipment		—			3,364			1,299
Depreciation and amortization expense		11,510			10,367			23,869
Impairment of housing projects and land under development		72,629			219,846			403,278
Impairment of investments in joint ventures		1,262			30,460			35,114
Impairment of available-for-sale investments		—			504			17,391
Net interest capitalized on investments in joint ventures		(477	)		(2,249	)		(41	)
Distributions of earnings from joint ventures		400			630			937
Changes in operating assets and liabilities:
Restricted cash		11,805			(9,110	)		18,925
Receivables and other assets		(23,923	)		(87,705	)		8,214
Housing projects and land under development		24,050			446,088			125,513
Payables and other liabilities		(128,297	)		(97,157	)		(48,017	)
Net cash (used in) provided by operating activities		(75,048	)		93,294			155,959
Investing activities
Purchase of available-for-sale investments		—			(63,956	)		(37,195	)
Proceeds from sale of available-for-sale investments		53,112			59,685			36,359
Proceeds from sale of held-to-maturity investments		—			2,100			4,325
Proceeds from sale of investments in joint venture		—			—			45,144
Net decrease (increase) in promissory notes from related parties		19,251			17,446			(58,412	)
Investments in joint ventures		(18,035	)		(11,493	)		(310,683	)
Distributions from joint ventures		3,406			1,382			44,877
Cash received from consolidation of joint venture and subsidiary		—			—			3,023
Purchase of property and equipment		(11,678	)		(1,124	)		(473	)
Proceeds from sale of property and equipment		—			12,564			7,728
Net cash provided by (used in) investing activities		46,056			16,604			(265,307	)
Financing activities
Net borrowings on revolving lines of credit and promissory notes to related parties		5,448			—			223,113
Borrowings from financial institutions		—			—			12,146
Principal payments to financial institutions and others		(25,618	)		(113,521	)		(59,813	)
Accrued interest on notes payable		674			—			—
Amortization of notes payable discount		1,929			—			—
Contributions from non-controlling interests		975			1,503			—
Distributions to non-controlling interests		(3,118	)		(425	)		(2,372	)
Contributions from owners		12,500			—			34,858
Distributions to owners		—			—			(34,852	)
Net cash (used in) provided by financing activities		(7,210	)		(112,443	)		173,080
Net (decrease) increase in cash and cash equivalents		(36,202	)		(2,545	)		63,732
Cash and cash equivalents at beginning of year		203,076			205,621			141,889
Cash and cash equivalents at end of year		$ 166,874			$ 203,076			$ 205,621

See accompanying notes, including supplemental disclosure of cash flow information in Note 18

F-37

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December  31, 2010

1. Organization

Shea Homes Limited Partnership (“SHLP”), a California limited partnership, was formed on January 4, 1989, pursuant to an agreement of partnership (the “Agreement”), as most recently amended January 1, 2009, by and between J.F. Shea LP, a Delaware limited partnership, as general partner, and the Company’s limited partners who are comprised of entities and trusts, including J.F. Shea Co., Inc. (“JFSCI”), that are under the common control of Shea family members (collectively, the “Partners”). J.F. Shea LP is 96% owned by JFSCI.

Nature of Operations

Our principal business purpose is homebuilding, which includes acquiring and developing land and constructing and selling residential homes thereon. The principal markets are California, Arizona, Colorado, Washington, Nevada and Florida.

We own a captive insurance company, Partners Insurance Company (“PIC”), which provided warranty, general liability, workers’ compensation and completed operations insurance for related companies and independent third-party subcontractors. Effective for the policy years commencing in 2007, PIC ceased issuing policies for these coverages. Thereafter, tour warranty coverage became self-insured, and the general liability, workers’ compensation and completed operations (through July 31, 2009) coverages were insured by an unconsolidated, related-party carrier for primary coverage and by third-party insurance carriers for excess coverage. In February 2011, we purchased completed operations insurance from an unconsolidated, related-party carrier, retroactive to August 1, 2009 (see Note 11).

Since 2006, the homebuilding industry has been adversely impacted by depressed economic and market conditions which have affected our results of operations, most notably through inventory impairments as described in Note 7. In response to these economic conditions, we reduced selling, general and administrative expenses to better align costs and revenues, slowed land acquisition, delayed land development and construction activities, and sold developed lots and land parcels. Additional similar initiatives may be required in 2011 if the downturn continues.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of SHLP and its wholly-owned subsidiaries, including Shea Homes, Inc. (“SHI”) and its wholly owned subsidiaries, including PIC. The Company consolidates all joint ventures in which it has a controlling interest or other ventures in which it is the primary beneficiary of a variable interest entity (“VIE”). Material intercompany accounts and transactions are eliminated.

Unless the context otherwise requires, the terms “we”, “us”, “our” and “the Company” refer to SHLP and its subsidiaries.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the amounts reported in

F-38

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

the financial statements and accompanying notes. Estimates relate primarily to the valuation of certain real estate and reserves for self-insured risks. Actual results could differ significantly from those estimates.

Reclassifications

Certain reclassifications were made in the prior year’s consolidated financial statements to conform to classifications used in the current year. At December 31, 2009, deficit investment balances resulting from distributions to the Company from joint ventures in excess of the carrying amount of the investment balance were reclassified from investments in joint ventures to other liabilities. Additionally, for the year ended December 31, 2009, the corresponding changes were made to the consolidated statement of cash flows.

Cash and Cash Equivalents

All highly liquid investments (original maturities of 90 days or less) are considered to be cash equivalents. Outstanding checks on zero balance cash accounts are included in accounts payable.

Concentration of Credit Risk

Financial instruments representing concentrations of credit risk are primarily cash, cash equivalents, investments and insurance receivables.

Cash in bank exceeded the federally insured limits; cash equivalents primarily comprised of money market securities and securities backed by the U.S. government; investments were diversified throughout many industries and geographic regions; and insurance receivables were with highly rated insurers and/or collateralized. We incurred no losses on deposits of cash and cash equivalents, limited the amount of credit exposure with any one financial institution, and believed our depository institutions were financially sound and presented minimal credit risk.

Housing Projects and Land Under Development

We capitalize preacquisition, land, development and other allocated costs, including interest, during development and home construction. Applicable costs incurred after development or construction is substantially complete are charged to selling, general and administrative, and other expenses as appropriate. Preacquisition costs, including non-refundable land deposits, are expensed to interest and other (expense), net when it is determined continuation of the respective project is not probable.

Land, development and other indirect costs are typically allocated to housing projects and land under development using a methodology that approximates the relative-sales-value method. Home construction costs are recorded using the specific identification method. Cost of sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) based upon the total number of homes expected to be closed in each community. Changes to the estimated total development costs subsequent to the initial home closings in a community are generally allocated on a relative-sales-value method to the remaining homes in the community.

Housing projects and land under development are stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventories are written down to fair value. Quarterly, real estate assets at each community are reviewed for indications of impairment. If events or changes in circumstances indicate the

F-39

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

net book value may not be recoverable, real estate assets are tested for recoverability by comparing the asset’s net book value to its estimated future undiscounted net cash flows to be realized from its disposition. These evaluations for impairments require us to make estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine whether expected future undiscounted cash flows will be sufficient to recover the carrying value of the assets. If assets are considered impaired, impairment is determined by the amount the asset’s net book value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets or other valuation techniques. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when assessment is made. These factors are specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage. We generally use discount rates up to 25%, subject to perceived risks associated with the community’s cash flow streams relative to its inventory.

Completed Operations Claim Costs

We record expenses and liabilities related to the estimated costs of completed operations claims when received in the ordinary course of business. In addition, we record expenses and liabilities for estimated costs of potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported and is actuarially estimated using individual case-basis valuations and statistical analysis. Concurrently, we estimate and record insurance receivables under applicable insurance policies when recovery is probable. Expenses, liabilities and receivables related to these claims are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, claim settlement patterns and insurance industry practices (see Note 13).

Revenues

Revenues from housing and other real estate sales are recognized in accordance with Accounting Standards Codification (“ASC”) 360 when the respective units are closed. Housing and other real estate sales are closed when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured. Sales incentives are a reduction of revenues when the respective unit is closed.

Income Taxes

SHLP is treated as a partnership for income tax purposes. As a limited partnership, SHLP is subject to certain minimal state taxes and fees; however, taxes on income or losses realized by SHLP are generally the obligation of the Partners and their owners.

SHI and PIC are C corporations. Federal and state income taxes are provided for these entities in accordance with the provisions of ASC 740. The provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are evaluated to determine whether a valuation allowance should be established based on its determination of whether it is more likely than not some or all of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends primarily on the generation

F-40

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

of future taxable income during the periods in which those temporary differences become deductible. Judgment is required in determining future tax consequences of events that have been recognized in the consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the consolidated financial position or results of operations.

Effective January 1, 2009, the Company adopted accounting guidance on how uncertain tax positions should be accounted for and disclosed in the financial statements. The guidance requires the assessment of tax positions taken or expected to be taken in the tax returns and to determine whether the tax positions are “more-likely-than-not” of being sustained upon examination by the applicable tax authority. Tax positions deemed to meet the more-likely-than-not criteria would be recorded as a tax benefit or expense in the current year. We are required to assess open tax years, as defined by the statute of limitations, for all major jurisdictions, including federal and certain states. Open tax years are those that are open for examination by taxing authorities. We have examinations in progress but believe there are no uncertain tax positions that do not meet the more-likely-than-not level of authority (see Note 15).

Advertising Costs

We expense advertising costs as incurred. For the years ended December 31, 2010, 2009 and 2008, we incurred and expensed advertising costs of $6.1 million, $4.8 million and $15.7 million, respectively.

New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) revised its guidance for determining the primary beneficiary of a VIE and replaced the quantitative-based risks and rewards calculation (to determine which reporting entity has a controlling financial interest in a VIE) with an approach that identifies which reporting entity has the power to direct the activities of a VIE and has the obligation to absorb losses of the entity or the right to receive benefits from the entity. This guidance was effective January 1, 2010 and required additional disclosures about a reporting entity’s involvement with VIEs. The adoption of this guidance did not have a material impact to the Company’s consolidated financial position or results of operations.

In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Improving Disclosures About Fair Value Measurements (“ASU 2010-06”), which provides amendments to ASC Subtopic No. 820-10, Fair Value Measurements and Disclosures – Overall. ASU 2010-06 requires additional disclosures and clarifications of existing disclosures for recurring and nonrecurring fair value measurements. The revised guidance was effective January 1, 2010. The adoption of this guidance did not have a material impact to the Company’s consolidated financial position or results of operations.

3. Restricted Cash

Restricted cash related to the homebuilding operations included cash used as collateral for potential obligations paid by the Company’s bank, customer deposits temporarily restricted in accordance with regulatory requirements, and cash used in lieu of bonds. At December 31, 2010 and 2009, restricted cash related to homebuilding operations was $11.4 million and $10.7 million, respectively.

At December 31, 2010, restricted cash of PIC included cash held in escrow by PIC’s claim administrators. In addition, at December 31, 2009, restricted cash included cash used as collateral for $9.8 million of JFSCI’s outstanding letters of credit. At December 30, 2009, these letters of credit were returned to JFSCI, which were

F-41

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

delivered to the issuing banks. In January 2010, these letters of credit were formally canceled by the issuing banks and the underlying cash restrictions were released. At December 31, 2010 and 2009, restricted cash related to PIC was $0.3 million and $12.8 million, respectively.

4. Investments

At December 31, 2010 and 2009, investments consist of available-for-sale securities and are measured at fair value, which is based on quoted market prices or cash flow models. Accordingly, unrealized gains and temporary losses on investments, net of tax, are reported as accumulated other comprehensive income (loss). Realized gains and losses are determined using the specific identification method.

At December 31, 2009, investments of $54.9 million were pledged to collateralize $31.1 million of JFSCI’s outstanding letters of credit. At December 30, 2009, these letters of credit were returned to JFSCI, which were delivered to the issuing banks. In January 2010, these letters of credit were formally canceled by the issuing banks and the collateralization of the underlying investments was released.

At December 31, 2010 and 2009, investments were as follows:

	At December 31, 2010
	Net Book Value (a)		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Debt securities:
Corporate obligations	$	1,124	$	224	$	—		$	1,348
Mortgage/asset-backed securities		588		279		—			867
Private debt obligations		1,834		7,748		—			9,582
Total debt securities		3,546		8,251		—			11,797
Equity securities		25		4		(4	)		25
Total investments	$	3,571	$	8,255	$	(4	)	$	11,822
	At December 31, 2009
	Net Book Value (a)		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Debt securities:
U.S. government and agency obligations	$	1,866	$	10	$	—		$	1,876
Municipal obligations		4,963		218		—			5,181
Corporate obligations		31,877		2,607		—			34,484
Mortgage/asset-backed securities		6,301		645		—			6,946
Private debt obligations		6,746		5,840		—			12,586
Total debt securities		51,753		9,320		—			61,073
Equity securities		262		78		—			340
Total investments	$	52,015	$	9,398	$	—		$	61,413

(a) Net book value represents the cost of the security, or the amortized cost in instances which the security included a discount or premium.

F-42

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Available-for-Sale Securities

For the years ended December 31, 2010, 2009 and 2008, realized gains on sales of available-for-sale securities were $4.7 million, $3.6 million and $0.6 million, respectively, and losses of approximately $0 million, $(0.3) million and $(0.4) million, respectively, which were included in interest and other (expense) income, net.

For the year ended December 31, 2010, included in other comprehensive income (loss) were unrealized losses of $(4.7) million, reclassification adjustments for realized gains of $3.6 million and tax expense of $(2.9) million. For the year ended December 31, 2009, included in other comprehensive income (loss) were unrealized gains of $10.0 million, reclassification adjustments for realized gains of $0.1 million and tax expense of $(0.2) million. For the year ended December 31, 2008, included in other comprehensive income (loss) were unrealized gains of $1.1 million, reclassification adjustments for realized gains of $0.1 million and tax expense of $(0.3) million.

At December 31, 2010, the contractual maturities of debt securities classified as available-for-sale were as follows:

	Cost		Fair Value
	(In thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		134		152
Due after five years through ten years		1,385		1,557
Due after ten years		1,439		9,221
Mortgage-backed securities		588		867
Total	$	3,546	$	11,797

Actual maturities may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalty.

At December 31, 2010, there were equity securities with nominal fair value and unrealized losses that were in a continuous unrealized loss position for less than one year. At December 31, 2009, there were no available-for-sale securities in an unrealized loss position.

For the years ended December 31, 2009 and 2008, we determined $12.1 million and $33.2 million, respectively, of the available-for-sale securities with unrealized losses experienced an other-than-temporary impairment. As a result, the securities were written down to their fair values and impairment charges of $(0.5) million and $(17.4) million, respectively, were recorded to interest and other (expense) income, net. This conclusion was based on various factors, including the length of time the securities were in a loss position, ability and intent to hold investments until temporary losses were recovered or they mature, investee’s industry and amount of the unrealized loss. At December 31, 2010, the nominal unrealized losses were not deemed as an other-than-temporary impairment based on the ability and intent to hold these equity securities until the temporary losses were recovered and the factors noted above.

Held-to-Maturity Securities

At December 31, 2008, we had a held-to-maturity security that consisted of a structured note with a cost of $5.0 million and an embedded derivative linked to U.S. Treasury Yields that had a fair value of $(2.9) million,

F-43

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

resulting in a total fair value of $2.1 million. For the year ended December 31, 2008, the realized loss on the embedded derivative was $(2.9) million, which was included in interest and other (expense) income, net. For the year ended December 31, 2008, one held-to-maturity security matured and the realized gain of $0.1 million was included in interest and other (expense) income, net. In February 2009, the remaining held-to-maturity security matured and settled for $2.1 million.

5. Fair Value Disclosures

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:

Level 1 – Quoted prices for identical instruments in active markets

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date

Level 3 – Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date

The financial instruments measured at fair value on a recurring basis were as follows:

	At December 31, 2010
Description	Level 1		Level 2		Level 3		Total
	(In thousands)
Debt securities		$—	$	3,199	$	8,598	$	11,797
Equity securities		—		25		—		25
Total investments		$—	$	3,224	$	8,598	$	11,822

The Level 2 financial instruments are primarily debt and equity securities in which fair values were determined from quoted prices in an inactive market or for similar instruments in an active market. The Level 3 financial instruments are comprised of private debt securities where fair value was determined using a cash flow model that considered estimated interest rates, discount rates, prepayments and defaults.

At December 31, 2010, the summary of changes in fair value of the Level 3 financial instruments was as follows:

	Private Debt Obligation		Auction Rate Security			Total
	(In thousands)
Fair value at December 31, 2009	$	6,494		$350		$	6,844
Purchases and settlements, net		—		(500	)		(500	)
Unrealized gains		2,104		—			2,104
Realized gains		—		150			150
Fair value at December 31, 2010	$	8,598		$  —		$	8,598

F-44

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

At December 31, 2010, the non-financial instruments measured at fair value on a non-recurring basis were as follows:

	Year Ended December 31, 2010(a)		Fair Value Measurements Using
Description			Level 1		Level 2		Level 3		Total Losses
	(In thousands)
Housing projects and land under development		$118,172		$—	$	2,000	$	116,172		$(72,629	)
Investments in joint ventures		—		—		—		—		(1,262	)
Total		$118,172		$—	$	2,000	$	116,172		$(73,891	)

(a) Amount represents aggregate fair value for communities and joint ventures where we recorded impairments at the fair value measurement date. Net book value for these communities and joint ventures may have increased or decreased since the measurement date.

For the year ended December 31, 2010, in accordance with ASC 360, housing projects and land under development with a net book value of $190.8 million were written down to a fair value of $118.2 million, resulting in an inventory impairment charge of $(72.6) million, which was included in cost of sales. Investments in joint ventures with a net book value of $1.3 million were written off, resulting in an impairment charge of $(1.3) million, which was included in equity in income (loss) from joint ventures.

Fair values for housing projects and land under development using Level 2 inputs were primarily based on contracted amounts for the respective project in an inactive market. Fair values for housing projects and land under development, and investments in joint ventures, using Level 3 inputs were primarily based on the estimated future cash flows discounted for inherent risk associated with each asset. These discounted cash flows were impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset was located when assessment was made. These factors were specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depended on the community’s projected life and development stage. We generally use discount rates up to 25%, subject to perceived risks associated with the community’s cash flow streams relative to its inventory.

F-45

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

At December 31, 2010 and 2009, as required by ASC 825, Financial Instruments, the following presents net book values and estimated fair values of notes payable, except those which net book value approximates fair value.

	December 31, 2010				December 31, 2009
	Net Book Value		Estimated Fair Value		Net Book Value		Estimated Fair Value
	(In thousands)
$145,000 secured bank term facility	$	135,202	$	137,315	$	—	$	—
$440,000 Series A term loan	$	360,003	$	425,488	$	—	$	—
$30,000 Series A-1 term loan	$	25,008	$	30,000	$	—	$	—
$85,000 Series B term loan	$	73,284	$	82,197	$	—	$	—
$25,000 secured subordinated loan	$	31,398	$	24,784	$	—	$	—
$20,000 secured subordinated loan	$	16,888	$	19,948	$	—	$	—
$5,000 secured subordinated loan	$	3,569	$	4,240	$	—	$	—
Secured Bank Exit Fee	$	2,251	$	3,241	$	—	$	—
$303,000 unsecured revolving bank credit facility	$	—	$	—	$	220,000	$	217,825
$130,000 unsecured private placement debt	$	—	$	—	$	130,000	$	107,377
$150,000 unsecured private placement debt	$	—	$	—	$	150,000	$	117,116
$75,000 unsecured term loan	$	—	$	—	$	160,000	$	130,835
$10,000 unsecured term loan	$	—	$	—	$	75,000	$	73,767

Estimated fair values of the outstanding notes payable were based on cash flow models discounted at market interest rates that considered underlying risks of the debt.

6. Accounts and Other Receivables, Net

At December 31, 2010 and 2009, accounts and other receivables were as follows:

	2010			2009
	(In thousands)
Insurance receivables	$	102,860		$	133,000
Escrow receivables		1,774			754
Other receivables		6,382			11,786
Reserve		(3,593	)		(5,384	)
Total accounts and other receivables, net	$	107,423		$	140,156

We record insurance receivables from insurance carriers for reimbursable claims pertaining to resultant damage and injuries from construction defects on our completed homes. At December 31, 2009, as part of the PIC Transaction (see Note 13), we insured our closed homes with third-party insurance carriers for policy years August 1, 2001 to July 31, 2009.

We record a reserve for uncollectible receivables that are specifically identified or outstanding for more than 120 days.

F-46

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

7. Housing Projects and Land Under Development

At December 31, 2010 and 2009, housing projects and land under development were as follows:

	2010		2009
	(In thousands)
Model homes	$	91,267	$	106,198
Completed homes for sale		34,918		26,372
Homes under construction		92,988		117,229
Lots available for construction		294,234		382,593
Land under development		174,245		152,265
Land held for future development		104,217		110,848
Land deposits and preacquisition costs		8,160		7,999
Total housing projects and land under development	$	800,029	$	903,504

Model homes, completed homes for sale and homes under construction include all costs associated with home construction, including land, development, indirects, permits and vertical construction. Lots available for construction include costs incurred prior to home construction such as land, development, indirects and permits. Land under development includes costs incurred during site development such as land, development, indirects and permits. Land under development transfers to lots available for construction once site development is complete and is ready for vertical construction. Land is classified as held for future development if no significant development has occurred.

Impairments

Housing projects and land under development are stated at cost, unless the carrying amount is determined to be unrecoverable, in which case inventories are written down to fair value (see Note 2).

For the year ended December 31, 2010, impairment charges were $73.9 million, of which $72.6 million was included in cost of sales and $1.3 million was included in equity in income from joint ventures. Of the $72.6 million of impairment charges, $1.9 million was attributable to non-controlling interests. Additionally, the year ended December 31, 2010 included a charge of $6.5 million related to the non-realization of a non-controlling interest’s deficit capital balance. For the year ended December 31, 2009, impairment charges were $250.3 million, of which $219.8 million was included in cost of sales and $30.5 million was included in equity in loss from joint ventures. For the year ended December 31, 2008, impairment charges were $438.4 million, of which $403.3 million was included in cost of sales and $35.1 million was included in equity in loss from joint ventures. Of the $438.4 million in impairment charges, $17.9 million was attributable to non-controlling interests.

For the years ended December 31, 2010, 2009 and 2008, charges for the abandonment of projects and write-off of deposits and preacquisition costs were $3.5 million, $2.2 million and $2.7 million, respectively, which was included in interest and other (expense) income, net.

Interest Capitalization

Interest is capitalized on housing projects and land under development, and investments in joint ventures, during development and other qualifying activities. Interest capitalized as a cost of housing projects and land

F-47

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

under development is included in cost of sales as related units are closed. Interest capitalized as cost of investment in joint ventures is included in equity in income (loss) as related units in the joint venture are closed.

For the years ended December 31, 2010, 2009 and 2008, interest incurred, capitalized and expensed was as follows:

	2010			2009			2008
	(In thousands)
Total interest incurred during the year	$	62,290		$	59,512		$	58,912
Interest expensed (a)	$	8,558		$	—		$	—
Total interest capitalized as a cost of housing projects and land under development	$	53,257		$	57,263		$	54,690
Interest previously capitalized as a cost of housing projects and land under development, included in cost of sales	$	(48,323	)	$	(78,479	)	$	(38,636	)
Capitalized interest in ending inventories (b)	$	105,951		$	101,017		$	122,233
Total interest capitalized as a cost of investment in joint ventures	$	475		$	2,249		$	4,222
Interest previously capitalized as a cost of investment in joint ventures, included in equity in (loss) income from joint ventures	$	(483	)	$	(3,820	)	$	(7,592	)
Capitalized interest in ending investments in joint ventures	$	945		$	953		$	2,524

(a) For the year ended December 31, 2010, assets qualifying for interest capitalization did not exceed debt; therefore, non-qualifying interest was expensed and included in interest and other (expense) income, net.

(b) Inventory impairment charges are recorded against total inventory of a community. Capitalized interest reflects the gross amount of capitalized interest as impairment charges recognized are not generally allocated to specific components of inventory.

Model Homes Costs

Certain costs of model homes are capitalized and subsequently amortized as selling expense when the related units in the respective communities are closed. For the years ended December 31, 2010, 2009 and 2008, amortized model homes costs were $9.4 million, $9.1 million and $19.1 million, respectively.

8. Investments in Joint Ventures

Unconsolidated Joint Ventures

Unconsolidated joint ventures, which we do not control but have significant influence through ownership interests generally up to 50%, are accounted for using the equity method of accounting. These joint ventures are generally involved in real property development. Earnings and losses are allocated in accordance with terms of joint venture agreements.

F-48

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Distributions from joint ventures in excess of the carrying amount of our investment and losses in excess of our investment (“Deficit Distributions”) are included in other liabilities. We record Deficit Distributions since we are liable for this deficit to respective joint ventures. Deficit Distributions are offset by future earnings of, or future contributions to, joint ventures. At December 31, 2010 and 2009, Deficit Distributions were $0.9 million and $15.4 million, respectively, which were included in owners’ equity in the following condensed financial information of our investments in joint ventures.

For the years ended December 2009 and 2008, we incurred impairments of $3.7 million and $18.7 million, respectively, on our investment in the joint venture, Tustin Legacy Community Partners, LLC (“Tustin Legacy”), due to inherent uncertainty of project completion and reconveyance of the underlying land to the City of Tustin, California. Included in the impairment charges was our share of the underlying project loan of $12.5 million and estimated liability of certain project completion costs. At December 31, 2009, this liability of $15.4 million was included in other liabilities. In June 2010, we paid $12.5 million to the note holder in satisfaction of our complete share of the project loan and was released as a guarantor with no further liability on the unpaid principal balance of $35.4 million at December 31, 2010.

In May 2008, we signed an agreement with California Public Employees’ Retirement System (“CalPERS”) to restructure three joint ventures that each holds an ownership interest (the “CalPERS Exchange”). As a result of the CalPERS Exchange, CalPERS purchased our entire interest in two joint ventures, Shea Capital I, LLC and Shea Mountain House, LLC, and we purchased CalPERS’ entire interest in Shea Capital II, LLC. We made a net cash payment of $16.0 million, which satisfied certain conditions of the CalPERS Exchange, including the fulfillment of capital obligations, a market value adjustment for lots previously purchased and payoff of a debt obligation. We also incurred a loss of $167.6 million, which was included in loss from disposition of joint ventures. In addition, we consolidated Shea Capital II, LLC, which increased total assets and debt of the Company by $16.4 million and $1.0 million, respectively.

In December 2008, we sold our 1% interest in a homebuilding joint venture in North Carolina for $0.1 million, resulting in a loss of $0.2 million which was included in loss from disposition of joint ventures.

F-49

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

At December 31, 2010 and 2009, and for the years ended December 31, 2010, 2009 and 2008, condensed financial information of investments in unconsolidated joint ventures were as follows:

Balance Sheet Information

	2010		2009
	(In thousands)
Assets
Investments in real property	$	219,856	$	216,288
Other assets		55,243		40,730
Total assets	$	275,099	$	257,018
Liabilities and owners’ equity
Notes payable	$	126,348	$	144,246
Other liabilities		42,271		36,691
Total liabilities		168,619		180,937
Owners’ equity:
The Company		35,675		12,356
Others		70,805		63,725
Total owners’ equity		106,480		76,081
Total liabilities and owners’ equity	$	275,099	$	257,018

Income Statement Information

	2010			2009			2008
	(In thousands)
Revenues	$	54,216		$	103,484		$	336,303
Expenses		(58,563	)		(180,567	)		(453,910	)
Net loss		(4,347	)		(77,083	)		(117,607	)
The Company’s share of net income (loss) (a)	$	8,613		$	(35,089	)	$	(43,621	)

(a) For the year ended December 31, 2010, we reversed a prior accrual of $2.4 million related to one joint venture due to the release of an obligation. Also during the year ended December 31, 2010, our share of net income includes an adjustment of $6.7 million to recognize additional income to correct the cumulative allocation of income previously recognized by the partners in another joint venture under the hypothetical-liquidation-at-book-value method. Based on an evaluation of the materiality of the adjustment, we concluded that correcting this error would be immaterial to any individual prior period and the cumulative error would not be material to the 2010 results or affect the financial statement trends.

At December 31, 2010, total unconsolidated joint ventures’ notes payable were $126.3 million and included $77.4 million of bank and seller financing notes payable secured by real property and $48.9 million of notes payable with joint ventures’ partners, of which $15.4 million was secured by real property. At December 31, 2009, total unconsolidated joint ventures’ notes payable were $144.2 million and included $100.2 million of bank

F-50

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

and seller financing notes payable secured by real property and $44.0 million of notes payable with joint ventures’ partners, of which $15.4 million was secured by real property. In addition, at December 31, 2010 and 2009, we had an indirect 12.3% effective ownership in a joint venture that had bank notes payable secured by real property of $7.2 million, in which we have not provided guarantees.

At December 31, 2010 and 2009, of the $77.4 million and $100.2 million in our unconsolidated joint ventures’ outstanding bank and seller financing secured notes payable, respectively, we provided guarantees on a joint and several basis for $19.5 million and $84.6 million, respectively. These guarantees include, but are not limited to, project completion and loan-to-value maintenance guarantees. In addition, we have an indemnification agreement from a joint venture partner for 90% of a secured note payable of $19.5 million and $24.4 million, respectively. We have not provided guarantees on bank and seller financing secured notes payable of $57.9 million and $15.6 million, respectively, or on notes payable to joint ventures’ partners of $48.9 million and $44.0 million, respectively.

At December 31, 2009, of the $84.6 million of guarantees on bank and seller financing secured notes payable, we included a $12.6 million liability in other liabilities for our share of the Tustin Legacy project loan, which was subsequently paid in June 2010 and we were fully released as a guarantor of the unpaid balance with no further liability. No other liabilities were recorded for these guarantees at December 31, 2010 and 2009 as the fair value of secured real estate exceeded the outstanding notes payables.

Consolidated Joint Ventures

In August 2009, through our consolidated joint venture, Vistancia LLC, we contributed certain land under development into single member limited liability companies (“LLCs”) and sold 90% of our interest in these LLCs to an unrelated third party for $67.5 million. The cash consideration from this transaction and contributions from the partners of Vistancia LLC were used to pay down the principal loan balance that was secured by the underlying land, which outstanding balance with accrued interest was $107.9 million. The resultant unpaid principal of $33.1 million was canceled by the creditor bank. From this transaction, we incurred a pre-tax loss of $195.7 million, of which $228.8 million was recorded to cost of sales and $33.1 million to interest and other (expense) income, net from the debt cancellation, net of unamortized deferred loan fees. In addition, $32.1 million of loss was attributable to non-controlling interests.

9. Variable Interest Entities

ASC 810 requires a VIE to be consolidated in the financial statements of a company if it is the primary beneficiary of the VIE. Accordingly, the primary beneficiary absorbs a majority of the VIE’s expected losses or receives a majority of the VIE’s expected residual return, or otherwise controls the VIE, as a result of ownership, contractual or other financial interest in the VIE. All VIEs with which we were involved at December 31, 2010 and 2009 were evaluated to determine the primary beneficiary.

Joint Ventures

We routinely enter into joint ventures for homebuilding activities. Investment in these joint ventures may create a variable interest in a VIE, depending on contractual terms of the arrangement. We analyze our joint ventures in accordance with ASC 810 to determine whether they are VIEs and, if so, whether we are the primary beneficiary. At December 31, 2010 and 2009, these joint ventures were not consolidated into our consolidated financial statements since they were not VIEs, or in the event that they were VIEs, we were not the primary beneficiary.

F-51

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

At December 31, 2010 and 2009, we have a variable interest in a joint venture which we do not hold a direct, or indirect, investment, and the joint venture was determined to be a VIE. The joint venture, Shea/Baker Ranch Associates (“Baker Ranch”), is owned 50% by our affiliates and 50% by a third-party. We issued an unconditional loan-to-value maintenance guarantee on Baker Ranch’s outstanding bank notes payable which, at December 31, 2010 and 2009, was $25.4 million. We have not recorded a liability for this obligation as the fair value of the secured real estate assets exceeded the outstanding notes payable (see Note 18).

In accordance with ASC 810, we determined we were not the primary beneficiary of Baker Ranch because we did not have the power to direct activities that most significantly impact the economic performance of Baker Ranch, such as determining or limiting the scope or purpose of the entity, selling or transferring property owned or controlled by the entity, and arranging financing for the entity.

Land Option Contracts

We enter into land option contracts to procure land for home construction. Use of land option and similar contracts allows us to reduce market risks associated with direct land ownership and development, reduces capital and financial commitments, including interest and other carrying costs, and minimizes land inventory. Under these contracts, we pay a specified deposit for the right to purchase land, usually at a predetermined price. Under the requirements of ASC 810, certain contracts may create a variable interest with the land seller.

In compliance with ASC 810, we analyzed our land option and similar contracts to determine if respective land sellers are VIEs and, if so, if we are the primary beneficiary. Although we do not have legal title to the optioned land, ASC 810 requires us to consolidate a VIE if we are the primary beneficiary. At December 31, 2010 and 2009, we determined we were not the primary beneficiary of such VIEs because we did not have the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, such as selling, transferring, or developing land owned by the VIE.

At December 31, 2010, we had non-refundable cash deposits of $6.0 million associated with land option contracts with unconsolidated VIEs, having a remaining purchase price of $95.7 million and subject to a specific performance clause. We also had refundable and non-refundable cash deposits of $1.9 million associated with land option contracts that were not with VIEs, having a remaining purchase price of $36.8 million.

Our loss exposure on land option contracts consisted of non-refundable deposits, which were $7.2 million and $6.9 million at December 31, 2010 and 2009, respectively, and were included in housing projects and land under development in the consolidated balance sheets.

10. Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation. Repairs and maintenance costs are expensed as incurred. Depreciation is computed using accelerated and straight-line methods over periods ranging from three to 40 years.

F-52

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

At December 31, 2010 and 2009, property and equipment was as follows:

	2010			2009
	(In thousands)
Buildings and improvements	$	3,570		$	3,426
Machinery and equipment		270			280
Furniture and fixtures		3,624			3,921
Rental property		17,580			6,178
Golf course property		3,695			3,587
Subtotal		28,739			17,392
Less, accumulated depreciation		(10,370	)		(8,538	)
Total property and equipment, net	$	18,369		$	8,854

11. Other Assets, Net

At December 31, 2010 and 2009, other assets were as follows:

	2010		2009
	(In thousands)
Income tax receivable	$	9,376	$	1,818
Prepaid professional fees		11,295		19,513
Prepaid loan fees		13,470		4,494
Deposits in lieu of letters of credit		5,319		—
Prepaid completed operations insurance		15,613		—
Other		2,636		2,450
Total other assets, net	$	57,709	$	28,275

Prepaid Professional and Loan Fees

In accordance with ASC 470, debt issuance costs and loan modification and waiver fees are capitalized to other assets. These costs and fees are amortized as interest expense over the term of the related debt. In accordance with ASC 835, interest expense is capitalized to housing projects and land under development, and investments in joint ventures.

On November 16, 2010, as part of modifications and extensions to our Unsecured Facilities (see Note 12), in accordance with ASC 470 for debt modification, $25.7 million of professional fees related to the unsecured private placement debt and unsecured term loans were expensed to interest and other (expense) income, net.

Deposits in Lieu of Letters of Credit

In June 2010, due to the maturity of the bank revolving credit facility (see Note 12), $12.6 million of letters of credit collateralized by this facility were presented for payment and recorded as deposits in lieu of letters of credit. These deposits may be returned and replaced with new letters of credit or as the collateralization requirement decreases. For the year ended December 31, 2010, $7.3 million were returned to the Company, of which $7.2 million was paid to the lender through December 31, 2010 and $0.1 million in January 2011.

F-53

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Prepaid Completed Operations Insurance

Since August 1, 2009, we were self-insured for our completed operations coverage. In anticipation of obtaining coverage, through December 31, 2010, $15.6 million of insurance premiums were paid to JFSCI which, in February 2011, was applied to the purchase of completed operations insurance from an unconsolidated, related-party carrier, retroactive to August 1, 2009.

12. Notes Payable

At December 31, 2010 and 2009, notes payable were as follows:

	2010		2009
	(In thousands)
Senior secured notes payable
$75,000 bank revolving credit facility, due September 2015 at LIBOR plus 3% to 5% (3.32% to 5.32% at December 31, 2010)	$	75,000	$	—
$145,000 bank term facility, due September 2015 at 7.5%		135,202		—
Funded letters of credit against $83,000 revolving letter of credit facility, due September 2015 at 7.5% (see Note 11)		5,448		—
$440,000 Series A term loan, due September 2015 at 7.5%		360,003		—
$30,000 Series A-1 term loan, due September 2015 at 7.5%		25,008		—
$85,000 Series B term loan, due September 2017 at 8.34%		73,284		—
Senior secured subordinated notes payable
$25,000 term loan, due September 2018 at 15%, PIK interest through September 2015		31,398		—
$20,000 term loan, due September 2015 at 8.19% PIK interest		16,888		—
$5,000 term loan, due September 2015 at 8.19% PIK interest		3,569		—
Bank Exit Fee, due September 2015		2,251		—
Other secured notes payable
Promissory notes, interest at 1%, maturing through 2011, secured by deeds of trust on land under development		1,954		17
Unsecured notes payable
$303,000 bank revolving credit facility, due June 30, 2010 at Prime less 0.20% or LIBOR plus 1.65% at December 31, 2009 (3.05% or 1.90%, respectively)		—		220,000
$130,000 private placement, due August 2016 at 6.35%		—		130,000
$150,000 private placement, due November 2, 2017 at 6.09%		—		150,000
$160,000 private placement, due September 6, 2018 at 7.34%		—		160,000
Term loan, due March 2013 at 9.92%		—		75,000
Term loan, original maturity March 2009 at 9.22%		—		10,000
Total notes payable	$	730,005	$	745,017

The Company and JFSCI, as borrowers, were obligated for the repayment of the $303.0 million revolving bank line of credit, private placement debt, and the two unsecured term loans, whose combined outstanding balance was $745.0 million at December 31, 2009. We were also obligated for the repayment of secured notes payable issued in connection with seller financing of land acquisitions.

F-54

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

At December 31, 2009, we operated under an amended unsecured revolving bank line of credit and limited waiver/modification agreements to our unsecured private placement debt and unsecured term loans (the “Unsecured Facilities”) that waived any default resulting from noncompliance with net worth, interest coverage ratio and investment in land covenants. Under these waivers, our ability to pay principal payments was prohibited and, under the bank waiver, the maximum availability and borrowing capacity were reduced to $303.0 million and $220.0 million, respectively.

On November 16, 2010 (the “Closing”), the Company and JFSCI executed loan modifications and extensions to the Unsecured Facilities resulting in the effective exchange for senior secured notes payable and senior secured subordinated notes payable (the “Secured Facilities”). The Secured Facilities include the securitization of the notes by the Company’s assets, the release of J.F. Shea Construction, a related party, as a guarantor, and issuance of additional principal of $80.0 million.

In accordance with ASC 470, the Secured Facilities were accounted for as a debt modification, which required $80.0 million of additional principal be recorded as interest expense over the term of the notes and the Secured Facilities be recorded net of related discount or premium. The carrying value of the Secured Facilities was unchanged as a result of the modification. At December 31, 2010, the face value of the obligation under the Secured Facilities was $800.4 million.

Payment and performance under the Secured Facilities are unconditionally and irrevocably guaranteed by SHLP, JFSCI, SHI, J.F. Shea LP and Shea Homes at Montage, LLC, and their respective wholly-owned subsidiaries. J.F. Shea Construction, Inc. was released as a guarantor on February 15, 2011.

The Secured Facilities are governed by a master covenant agreement, which places certain restrictions on the amount of land acquisitions, asset sales, joint venture capital contributions, joint venture debt and guarantees for related entities and joint ventures. In addition, the Company must comply with financial covenants, such as ratios based on tangible net worth, interest coverage and inventory as a percentage of total homebuilding assets. At December 31, 2010, we were in compliance with these covenants.

Senior Secured Notes Payable

These notes replaced the original $440.0 million private placement debt, $85.0 million term loans and $220.0 million bank revolving credit facility, and the funded letters of credit, which balance was $12.6 million at Closing (see Note 11).

Senior Secured Series A

$440.0 million note, bears stated interest of 7.50% payable monthly and matures September 30, 2015. The note requires principal payments of $14.5 million at Closing, $14.5 million at December 31, 2011, $29.0 million at October 15, 2013 and $66.4 million at October 15, 2014. At December 31, 2010, the balance was $360.0 million, net of a $65.5 million discount.

Senior Secured Series A-1

$30.0 million note, bears stated interest of 7.50% payable monthly, matures September 30, 2015, and is payable to the holders of the Senior Secured Series A and Senior Secured Series B. At December 31, 2010, the balance was $25.0 million, net of a $5.0 million discount.

F-55

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Senior Secured Series B

$85.0 million note, bears stated interest of 8.34% payable monthly and matures September 30, 2017. The note requires principal payments of $2.8 million at Closing, and estimated payments of $2.2 million at December 31, 2011, $4.3 million at October 15, 2013, and $12.0 million at October 15, 2014. The principal payments are reduced by the difference in interest rates between the Senior Secured Series A and the Senior Secured Series B. At December 31, 2010, the balance was $73.3 million, net of a $8.9 million discount.

Bank Credit Facility

The loan was modified to provide a $303.0 million bank revolving credit facility, which included a $75.0 million revolver (Bank Revolver), a $145.0 million term (Bank Term) and an $83.0 million letter of credit capacity.

The Bank Revolver bears stated interest of LIBOR plus a range of 3% to 5% on borrowings (3.32% to 5.32% at December 31, 2010), and 3.5% for the unused portion, payable monthly, with $4.4 million of capacity maturing June 30, 2014 and the balance September 30, 2015. At December 31, 2010, the balance was $75.0 million. Borrowings and repayments under the Bank Revolver are subject to certain cash balances of the Company, which may limit the amount borrowed or dictate the amount repaid.

The Bank Term bears stated interest at a range of 5.50% to 7.50% payable monthly and matures September 30, 2015. The note requires principal amortization payments of $7.7 million at Closing, $7.7 million at December 31, 2011, $15.4 million at October 15, 2013, $8.5 million at June 30, 2014 and $37.3 million at October 15, 2014. At December 31, 2010, the balance was $135.2 million, net of a $2.1 million discount.

The Bank Credit Facility provides $83.0 million of letter of credit capacity, with $4.8 million maturing June 30, 2014 and the balance September 30, 2015. In June 2010, $12.6 million of letters of credit was funded against the previous revolving letter of credit facility. At Closing and through December 31, 2010, $7.2 million was returned to the Company and paid to the bank, leaving an outstanding balance of $5.4 million at December 31, 2010, bearing interest at a range of 5.5% to 7.5% payable monthly. As the cash used in lieu of letters of credit are returned to the Company, such proceeds will pay down the outstanding balance. At December 31, 2010, we had $59.1 million of availability under our letter of credit facility.

The five-year payment schedule for the Senior Secured Notes Payable, excluding the Bank Revolver, was as follows:

	(In thousands)
2011		$  24,398
2012		—
2013		48,694
2014		124,527
2015 and thereafter		482,829
Total		$680,448

Principal payments due in 2011, 2013 and 2014 are stated net of the difference in interest rates between the Senior Secured Series A and Senior Secured Series B. The amount of the reductions are payable on September 30, 2017.

F-56

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Senior Secured Subordinated Notes Payable

Principal amounts totaling $50.0 million that are secured by the Company’s assets, subordinate to the Senior Secured Notes Payable, and payable to the holders of the Senior Secured Series A and Senior Secured Series B. In most cases, these notes payable provide for interest payable to be payment-in-kind, or PIK. To the extent the interest is PIK, it is payable through the increase of the principal amount of the note by the amount of the interest due on the then outstanding principal amount of the note.

15% Subordinated Secured Note

$25.0 million note, bears stated interest of 15%, with principal and PIK interest due September 30, 2018. PIK interest accrues quarterly through September 30, 2015 and payable monthly thereafter to maturity. Under certain conditions, the PIK interest is waived if the Secured Facility is paid off by November 16, 2012. At December 31, 2010, the balance was $31.4 million, which included PIK interest of $0.5 million and a $5.9 million premium.

8.19% Subordinated Secured Note

$20.0 million note, bears stated interest of 8.19%, with principal and PIK interest due September 30, 2015. PIK interest accrues quarterly through maturity. At the Company’s option and subject to certain restrictions, the maturity can be extended three years, bearing interest at 15% payable monthly. Under certain conditions, the PIK interest is waived if the Secured Facility is paid off by November 16, 2012. At December 31, 2010, the balance was $16.9 million, which included PIK interest of $0.2 million and a $3.3 million discount.

8.19% Subordinated Secured Refinancing Note

$5.0 million note, bears stated interest of 8.19%, with principal and PIK interest due September 30, 2015. Commencing November 16, 2012, PIK interest accrues quarterly through maturity. At the Company’s option and subject to certain restrictions, the maturity can be extended three years, bearing interest at 15% payable monthly. Under certain conditions, the principal and PIK interest are waived if the Secured Facility is paid off by November 16, 2012. At December 31, 2010, the balance was $3.6 million, net of a $1.4 million discount.

Bank Exit Fee

The Bank Exit Fee is payable to the holders of the Bank Credit Facility and is calculated at 29.53% of $5.0 million plus PIK interest on interest from the 8.19% Subordinated Secured Note and 8.19% Subordinated Secured Refinancing Note, commencing November 16, 2012 and maturing September 30, 2015, at which time the total Bank Exit Fee will be $4.9 million. At the Company’s option and subject to certain conditions, the Bank Exit Fee’s maturity can be extended for three years, bearing interest at 15% payable monthly. Under certain conditions, the Bank Exit Fee is waived if the Secured Facility is paid off by November 16, 2012. At December 31, 2010, the carrying value was $2.3 million.

F-57

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

13. Other Liabilities

At December 31, 2010 and 2009, other liabilities were as follows:

	2010		2009
	(In thousands)
Completed operations	$	118,473	$	137,768
Warranty reserves		16,238		17,792
Reinsurance premiums payable		—		86,165
Deferred revenue		22,799		36,976
Provisions for closed homes/communities		13,107		12,783
Deposits		7,482		12,051
Legal reserves		6,106		5,939
Accrued interest		4,680		4,578
Accrued compensation and benefits		2,971		4,446
Deficit Distributions (see Note 8)		878		15,438
Other		12,589		14,877
Total other liabilities	$	205,323	$	348,813

Completed Operations

Reserves for completed operations primarily represent structural warranty claims outside of our one-to-two year warranty period. Specific terms and conditions of completed operations warranties vary depending on the market in which homes are closed and can range up to twelve years. Expenses and liabilities are recorded for (i) estimated costs of completed operations claims when received in the ordinary course of business, and (ii) potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported, and is actuarially estimated using individual case-basis valuations and statistical analysis. From August 1, 2001 to July 31, 2007, completed operations claims were insured through PIC. In December 2009, PIC entered into a series of novation and reinsurance transactions (the “PIC Transaction”).

First, PIC entered into a novation agreement with JFSCI to novate its deductible reimbursement obligations related to its workers’ compensation and general liability risks at September 30, 2009, and its completed operations claims from August 1, 2005 to July 31, 2007. Concurrently, JFSCI entered into insurance arrangements with unrelated third-party insurance carriers to insure these programs. As a result of this novation, PIC recorded a reinsurance premium payable to JFSCI of $36.5 million. In addition, PIC recorded a loss of $3.0 million related to the workers’ compensation and general liability risks, and a gain of $19.2 million related to the completed operations claims, which $19.2 million gain was deferred in these consolidated financial statements and will be recognized as income (expense) when the related claims are paid or actuarial estimates are adjusted. In 2010, the $36.5 million payable was paid and, for the year ended December 31, 2010, we recognized $2.6 million of this deferral as income, which was included in interest and other (expense) income, net.

Second, PIC entered into reinsurance agreements with various unrelated reinsurers for $50.5 million, of which $0.9 million was paid and $49.6 million was recorded as a reinsurance premium payable at December 31, 2009. This agreement reinsures 100% of the completed operations claims coverage from August 1, 2001 to July 31, 2005. As a result of the reinsurance, the $15.6 million gain was deferred in these consolidated financial statements and will be recognized as income (expense) when the related claims are paid or actuarial estimates are

F-58

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

adjusted. In 2010, the $49.6 million payable was paid and, for the year ended December 31, 2010, we recognized $12.4 million of this deferral as income, which was included in interest and other (expense) income, net.

At December 31, 2010 and 2009, completed operations claims reserves were $118.5 million and $137.8 million, respectively. For actual completed operations claims and estimates of completed operations claims incurred but not reported, we estimate and record insurance receivables under applicable insurance policies when recovery is probable. At December 31, 2010 and 2009, insurance receivables were $102.9 million and $133.0 million, respectively.

Expenses, liabilities and receivables related to these claims are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, claim settlement patterns and insurance industry practices. Although considerable variability is inherent in such estimates, we believe reserves for completed operations claims are adequate.

Warranty Reserves

We offer a limited one or two year warranty for our homes. The specific terms and conditions of these warranties vary depending on the market in which the homes are closed. We estimate warranty costs to be incurred and record a liability and an expense to cost of sales when home revenue is recognized. We also include in our warranty reserve the approximate 12.5% deductible related to our insured completed operations coverage. Factors affecting warranty liability include number of homes closed, historical and anticipated warranty claims, and cost per claim. We periodically assess adequacy of our warranty liabilities and adjusts the amounts as necessary.

For the years ended December 31, 2010, 2009 and 2008, changes in warranty liability were as follows:

	2010			2009			2008
	(In thousands)
Balance, beginning of the year	$	17,792		$	20,059			$22,563
Provision for warranties		7,268			6,572			10,438
Warranty costs paid		(8,822	)		(8,839	)		(12,942	)
Balance, end of the year	$	16,238		$	17,792			$20,059

14. Related Party Transactions

Related Party Receivables and Payables

At December 31, 2010 and 2009, receivables from related parties, net were as follows:

	2010			2009
	(In thousands)
Note receivables from JFSCI, net	$	177,011		$	192,335
Note receivables from unconsolidated joint ventures		24,817			24,117
Note receivables from related parties		13,100			17,394
Reserves for note receivables from related parties		(12,896	)		(12,563	)
Receivables from related parties		2,380			905
Total receivables from related parties, net	$	204,412		$	222,188

F-59

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

We participate in a centralized cash management and treasury function operated by JFSCI, whereby net cash flows from operations are transferred daily with JFSCI. JFSCI also provides corporate services to the Company, including management, legal, tax, information technology, facilities, accounting, treasury and human resources. This function and services require related party transactions and fund transfers to settle and account for amounts owed. The resultant note receivables and payables are unsecured, due on demand, and accrue interest monthly at market rates based on Prime less 2.05% (1.2% at December 31, 2010 and 2009). These notes receivables and payables have the right of offset due to common control of the Company and its subsidiaries and are therefore presented as a net note receivable from JFSCI. At December 31, 2010 and 2009, the net note receivable due from JFSCI was $177.0 million and $192.3 million, respectively.

Notes receivables from unconsolidated joint ventures at December 31, 2010 and 2009 were $24.8 million and $24.1 million, respectively, of which $7.7 million is secured by real property. These notes from unconsolidated joint ventures bear interest ranging from 4.17% to 8% and mature from 2013 through 2020. The note receivable maturing in 2020 earns additional interest to achieve a 17.5% internal rate of return, subject to available cash flows of the joint venture, and can be repaid prior to 2020.

Note receivables from other related parties at December 31, 2010 and 2009 were $0.2 million and $4.8 million, respectively, net of related reserves of $12.9 million and $12.6 million, respectively. These notes receivables are unsecured, bear interest ranging from Prime less 2.05% (1.2% at December 31, 2010 and 2009) to Prime (3.25% at December 31, 2010 and 2009), and due through 2019.

The Company, entities under common control and these unconsolidated joint ventures also engage in transactions on behalf of the other, such as payment of invoices and payroll. The amounts resulting from these transactions are recorded in receivables from related parties or payables to related parties, non-interest bearing and due on demand. At December 31, 2010 and 2009, these receivables were $2.4 million and $0.9 million, respectively, and these payables were $9.2 million and $7.5 million, respectively.

Joint Venture Transactions

In March 2009, we sold a housing project and related land in Northern California to a related party for $0.1 million. For the year ended December 31, 2008, we recorded a $72.8 million inventory impairment charge for this property. We manage this property for a fee.

On December 20, 2007, we sold land and an adjoining apartment building in Irvine, California, to a wholly-owned subsidiary of Shea Properties Management Company, Inc., a related party. In 2009, as a condition of the contract, the fair value of the building and land at completion was revalued, resulting in a purchase price true-up of $4.8 million, which is included in revenues.

At December 31, 2010 and 2009, we were the managing member for ten and nine, respectively, unconsolidated joint ventures and received a management fee from these joint ventures as reimbursement for direct and overhead costs incurred on behalf of the joint ventures. Fees from joint ventures representing reimbursement of our costs are recorded as a reduction to general and administrative expense. Fees from joint ventures representing profit are recorded to revenues. For the years ended December 31, 2010, 2009 and 2008, management fees of $4.5 million, $4.5 million and $7.7 million, respectively, were offset against general and administrative expenses, and management fees of $1.6 million, $0.5 million and $2.4 million, respectively, were included in revenues.

F-60

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

General and Administrative Related Party Transactions

For the years ended December 31, 2010, 2009 and 2008, general and administrative expenses include $14.4 million, $14.1 million and $22.3 million, respectively, for corporate services provided by JFSCI.

15. Income Taxes

For the years ended December 31, 2010, 2009 and 2008, major components of the income tax benefit were as follows:

	2010			2009			2008
	(In thousands)
Current:
Federal	$	(1,600	)	$	(2,496	)	$	500
State		(324	)		(3,115	)		(1,662	)
		(1,924	)		(5,611	)		(1,162	)
Deferred:
Federal		3,233			36,437			25,915
State		2,258			14,392			10,258
		5,491			50,829			36,173
Total income tax benefit	$	3,567		$	45,218		$	35,011

At December 31, 2010 and 2009, the tax effects of temporary differences that give rise to significant portions of deferred taxes were as follows:

	2010			2009
	(In thousands)
Deferred tax assets:
Housing and land inventory basis differences	$	3,813		$	8,528
Available loss carryforwards		13,617			16,120
Impairments of inventories and investments		9,553			15,514
Income recognition		21,738			4,501
Other		120			7,830
Total deferred tax assets		48,841			52,493
Deferred tax liabilities:
Other		—			(564	)
Total deferred tax liabilities		—			(564	)
Subtotal		48,841			51,929
Valuation allowance		(48,841	)		(51,929	)
Net deferred tax assets	$	—		$	—

F-61

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

For the years ended December 31, 2010, 2009 and 2008, the effective tax rate differed from the federal statutory rate of 35% due to the following:

	2010			2009			2008
	(Dollars in thousands)
Loss before taxes	$	(58,782	)	$	(468,278	)	$	(644,528	)
Income tax benefit computed at statutory rate	$	20,574		$	163,897		$	225,585
Increase (decrease) resulting from:
Non-taxable entities loss (a)		(28,143	)		(101,570	)		(195,950	)
State taxes, net of federal income tax benefit		1,968			11,688			3,573
Small insurance company election (831b)		4,356			5,435			739
Cancellation of debt income deferral		—			9,652			—
Write-off of deferred tax assets		—			(11,642	)		—
Valuation allowance for deferred tax assets		3,088			(32,706	)		(4,728	)
Other, net		1,724			464			5,792
Total income tax benefit	$	3,567		$	45,218		$	35,011
Effective tax rate		6.1	%		9.7	%		5.4	%

(a) Non-taxable entities represents income or loss related to non-controlling interests and consolidated limited partnerships and limited liability companies in which the taxable income or loss is reflected on the respective partners’ tax return.

We recognized an income tax benefit of $3.6 million, $45.2 million and $35.0 million for the years ended December 31, 2010, 2009 and 2008, respectively. These amounts represent effective tax rates of approximately 6.1% for 2010, 9.7% for 2009 and 5.4% for 2008. The difference in the effective tax rate for 2010 compared to 2009 was primarily due to losses from pass thru entities and the change in the deferred tax asset valuation allowance. The difference in the effective tax rate for 2009 compared to 2008 was primarily due to losses from non-taxable entities and the disallowance of tax benefits related to the 2009 loss as a result of a full valuation allowance and write-off of deferred tax assets.

In accordance with ASC 740, deferred tax assets are evaluated to determine if valuation allowances are required. ASC 740 requires companies to assess valuation allowances based on evidence using a “more-likely-than-not” standard. A valuation allowance was recorded to reflect the estimated amount of acquired deferred tax assets that may not be realized due to the inherent uncertainty of future income from the homebuilding activities of SHI and subsidiaries and the potential expiration of the net operating loss (the “NOL”) carryforwards. The amount of the deferred tax asset considered realizable may change in the future, depending on profitability.

For the year ended December 31, 2009, SHI and its subsidiaries had cumulative pretax losses. Based on tax strategies, and estimated future reversals of deferred tax assets and liabilities, it was more-likely-than-not that all of the net deferred tax asset of $51.9 million at December 31, 2009 would not be realized. Accordingly, for the year ended December 31, 2009, the deferred tax asset valuation allowance increased $32.7 million to fully reserve the net deferred tax asset. At December 31, 2010, our assessment of deferred tax assets was consistent with the prior year and the net deferred tax asset of $48.8 million remained fully reserved.

As a result of the change in ownership of SHI in 1998 and Foundation Administration Services Corp. in 2001, the amount of the NOL carryforwards that may be utilized in a given year to offset future taxable income is

F-62

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

subject to an annual limitation of approximately $8.0 million pursuant to Section 382 of the Internal Revenue Code. Accordingly, available NOL carryforwards have been reduced by the amount expected to expire as a result of this annual limitation. At December 31, 2010, SHI and subsidiaries had NOL carryforwards of approximately $38.0 million that expire by 2018 and are subject to annual limitations ranging from $4.5 million to $8.0 million.

In 2009, we filed a petition with the United States Tax Court regarding our position on the completed contract method for homebuilding activities in the tax years 2003 – 2006 for SHLP and 2004 –2005 for SHI and subsidiaries. This petition is in the preliminary stage, however, we believe our position will prevail. Accordingly, no interest or penalties are reflected in the tax provision for SHI and subsidiaries. Furthermore, as a limited partnership, any interest or penalties imposed on SHLP, if applicable, would be the responsibility of the Partners and would not be reflected in these consolidated financial statements.

16. Owners’ Equity

Owners’ equity consists of partners’ preferred and common capital. Common capital was comprised of limited partners with a collective 78.38% ownership and the general partner with a 20.62% ownership. Preferred capital was comprised of limited partners with either series B (“Series B”) or series D (“Series D”) classification. Series B had no ownership interest but earned a preferred return at Prime less 2.05% (1.2% at December 31, 2010 and 2009) per annum on unreturned capital balances. At December 31, 2010 and 2009, accumulated undistributed preferred returns for Series B were $17.0 million and $15.2 million, respectively. Series D had a 1% ownership interest and earned a preferred return at 7% per annum on unreturned preferred capital balances. At December 31, 2010 and 2009, accumulated undistributed preferred returns for Series D were $28.7 million and $18.2 million, respectively.

Net income is allocated to Partners in a priority order that considers previously allocated net losses and preferred return considerations and, thereafter, in proportion to their respective ownership interests. Net loss is allocated to the Partners generally in proportion to their ownership interests and adjusted capital account balances, and, thereafter, to the general partner.

The general partner, in its sole discretion, may make additional capital contributions or accept additional capital contributions from the limited partners. Cash distributions are made to the Partners in proportion to their unpaid preferred returns and, thereafter, in proportion to their ownership interests. Distributions to the Partners are made at the discretion of the general partner, including payment of personal income taxes related to the Company or other entities under control of Shea family members. Similarly, distributions to Partners from other entities under control of Shea family members, such as JFSCI, are used for payment of personal incomes taxes related to the Company and other uses.

17. Retirement Savings Plan

JFSCI, on behalf of the Company, maintains a 401(k) Retirement Savings Plan that includes a profit sharing component, covering all eligible employees. The plan includes employer participation in accordance with provisions of Section 401(k) of the Internal Revenue Code. The plan allows participants to make pretax contributions. On a discretionary basis, we may match employee contributions up to 5% of the employee’s salary. The profit sharing portion of the plan is discretionary and non-contributory, allowing us to make additional contributions of up to 5% of the employee’s salary. All amounts contributed to the plan are deposited into a trust fund administered by independent trustees. For the years ended December 31, 2010, 2009 and 2008, there were no matching 401(k) contributions or profit sharing contributions.

F-63

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

18. Contingencies and Commitments

At December 31, 2009, we guaranteed, on a joint and several basis, certain secured development loans of related parties in which we had no economic interest. The guarantees were partial or contingent guarantees that included, but not limited to, project completion guarantees and loan-to-value maintenance guarantees. At December 31, 2009, these loans had an aggregate outstanding balance of $62.5 million and no liability was recorded for these guarantees. At June 30, 2010, the majority of these loans were modified and we were released as a guarantor. At December 31, 2010, the remaining loan that we were a guarantor was for Baker Ranch (see Note 9), which loan had a $25.4 million outstanding principal balance. A liability was not recorded for this guarantee as the fair value of the secured real estate assets exceeded the outstanding notes payable.

At December 31, 2010 and 2009, joint and several non-recourse (“bad-boy”) guarantees were issued for secured permanent financing loans of related parties in which we have no ownership interest. The bad boy guarantee may become a liability for the Company upon a voluntary bankruptcy filing by the related party borrower or the occurrence of other “bad” acts, including fraud or a material misrepresentation by the related party borrower. At December 31, 2009, these loans had a $183.3 million outstanding principal balance. In June 2010, SHLP was released as a guarantor from two of these loans. At December 31, 2010, the remaining three loans had a $47.3 million outstanding principal balance. These loans have maturity dates between December 2011 and September 2012. A liability was not recorded for these guarantees as the probability of payment on these guarantees is remote.

At December 31, 2009, we were contingently liable under outstanding letters of credit aggregating $22.7 million. These letters of credit were collateralized against the bank revolving credit facility, which collateralization expired June 15, 2010 and certain letters of credit were presented and paid (see Note 11). On November 16, 2010, we executed an $83.0 million letter of credit facility, which was reduced by the remaining $5.4 million of funded letters of credit at December 31, 2010. In addition, JFSCI issued $18.5 million of new letters of credit that are outstanding and collateralized against the letter of credit facility at December 31, 2010, leaving $59.1 million of availability under its letter of credit facility.

We are required to provide surety bonds that guarantee completion of certain homebuilding projects. At December 31, 2010, we had a $77.5 million exposure in connection with $180.7 million of surety bonds issued for our projects. At December 31, 2009, we had a $110.4 million exposure in connection with $264.4 million of surety bonds issued for our projects.

We also provided indemnification for bonds issued by unconsolidated joint ventures and other related party projects in which we have no ownership interest. At December 31, 2010, the Company had a $44.6 million exposure in connection with $80.2 million of surety bonds issued for unconsolidated joint venture projects, and a $9.4 million exposure in connection with $14.1 million of surety bonds issued for related party projects. At December 31, 2009, we had a $53.2 million exposure in connection with $104.7 million of surety bonds issued for unconsolidated joint venture projects, and a $14.0 million exposure in connection with $23.6 million of surety bonds issued for related party projects.

Certain of our consolidated and joint ventures’ homebuilding projects utilize and may continue to utilize community facility district, metro-district and other local government bond financing programs to fund construction or acquisition of infrastructure improvements. Interest and principal on these bonds are typically paid from taxes and assessments levied on homeowners following the sale of new homes within the project. From time to time we enter into credit support arrangements where we are required to make interest and principal payments on these bonds if the taxes and assessments levied on homeowners are insufficient to cover such

F-64

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

obligations. Furthermore, reimbursement of these payments to us is dependent on the district or local government’s ability to generate sufficient tax and assessment revenues from the sale of new homes.

In certain consolidated homebuilding projects, we have contractual obligations for the right to purchase and receive water system connection rights which, at December 31, 2010 and 2009, were $39.7 million and $42.7 million, respectively. These water system connection rights are held and then transferred to homebuyers upon closing of their home or transferred upon the sale of land to the respective buyer. These water system connection rights can also be sold or leased but generally only within the local jurisdiction.

We lease certain property and equipment under noncancelable operating leases. Office leases are for terms of seven years and generally provide renewal options for terms up to an additional five years. In most cases, we expect that, in the normal course of business, leases that expire will be renewed or replaced by other leases. Equipment leases are typically for terms of three to four years.

Future minimum rental payments at December 31, 2010 under the operating leases, which primarily consisted of office leases having initial or remaining noncancelable lease terms in excess of one year, were as follows:

	(In thousands)
2011		$1,997
2012		1,785
2013		1,362
2014		533
2015 and thereafter		19
Total		$5,696

For the years ended December 31, 2010, 2009 and 2008, rental expense was $2.1 million, $3.7 million and $5.6 million, respectively.

We also lease office space from related parties under non-cancelable operating leases. The leases are for terms of five to ten years and generally provide renewal options for terms up to an additional five years.

Future minimal rental payments at December 31, 2010 under related-party operating leases were as follows:

	(In thousands)
2011		$2,461
2012		2,365
2013		1,600
2014		1,442
2015 and thereafter		1,195
Total		$9,063

F-65

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

For the years ended December 31, 2010, 2009 and 2008, related-party rental expense was $0.9 million, $0.9 million and $2.6 million, respectively.

For the year ended December 31, 2008, as part of a reduction in workforce, we vacated certain offices and reduced the vacancy of most other leased offices and recorded to interest and other (expense) income, net a $11.4 million charge for future lease obligation costs. The effect of this charge, beginning in 2009, was to better align the cost of office vacancy and actual usage.

Various lawsuits, claims, and proceedings have been or may be instituted or asserted against us. In management’s opinion, we have appropriately reserved for these matters. At December 31, 2010 and 2009, we had reserves of $6.1 million and $5.9 million, respectively, relating to these matters.

19. Supplemental Disclosure to Consolidated Statements of Cash Flows

Supplemental disclosures to the consolidated statements of cash flows were as follows:

	2010			2009			2008
	(In thousands)
Supplemental Disclosure of Cash Flow Information:
Income taxes paid (refunded)	$	6,879		$	(10,050	)	$	18,906
Interest paid, net of amounts capitalized	$	8,696		$	—		$	—
Supplemental Disclosure of Noncash Activities:
Unrealized (loss) gain on available-for-sale investments, net	$	(4,035	)	$	9,703		$	688
Reclassification of Deficit Distributions from unconsolidated joint ventures to other liabilities	$	(14,560	)	$	15,438		$	—
Purchase of land in exchange for note payable	$	2,555		$	—		$	—
Deferred income on joint venture land sale to the Company	$	—		$	(112	)	$	(2,691	)
Conversion of note payable and accrued interest to non-controlling interests	$	—		$	9,102		$	—
Transfer of income producing property from land under development to property and equipment	$	—		$	6,178		$	—
Distribution of land from joint ventures to housing projects under development	$	—		$	—		$	92,888
Purchase price adjustment to notes receivable and investment in unconsolidated joint ventures	$	—		$	—		$	8,710
Consolidation of subsidiary net assets	$	—		$	—		$	4,914
Consolidation of joint venture net assets	$	—		$	—		$	15,063

20. Segment Information

Our homebuilding business, which is responsible for nearly all of our operating results, constructs and sells single-family attached and detached homes designed to appeal to first-time, move-up and active adult homebuyers. Our homebuilding business also provides management services to joint ventures and other related parties. The homebuilding reportable segments conduct operations in the following locations:

• California South, consisting of the results of our Los Angeles, Ventura, Orange County, Inland Empire and San Diego communities;

• California North, consisting of the results of our northern and central California communities; and

• Mountain West / Other, consisting of the results of our Arizona, Colorado, Washington, Nevada and Florida communities.

F-66

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

In accordance with ASC 280, Segment Reporting, these reportable segments are based on similar economic characteristics and geography, and share other characteristics including similar product types, production processes, jurisdictional and political environment, including entitlements, land availability and values, and underlying demand and supply.

Our Corporate segment primarily provides management services to our operating segments, and includes the results of our captive insurance provider, which primarily administers claims that were reinsured to third-party carriers. Results of our insurance brokerage services business are also included in our Corporate segment. Results of our traditional escrow services business, which ceased operations in 2010, are included in the 2010 results presented herein for the Corporate segment.

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 2. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented. As a result of certain organization changes that became effective March 31, 2011, the amounts herein were reclassified to conform to the current segments of the Company.

Financial information relating to reportable segments were as follows:

	2010		2009
	(In thousands)
Total assets:
California South	$	319,692	$	398,134
California North		216,414		235,623
Mountain West/Other		469,746		482,118
Total homebuilding assets		1,005,852		1,115,875
Corporate		409,034		502,885
Total assets	$	1,414,886	$	1,618,760
	2010		2009
	(In thousands)
Housing projects and land under development:
California South	$	267,011	$	337,259
California North		197,303		209,398
Mountain West/Other		335,708		356,423
Total homebuilding housing projects and land under development		800,022		903,080
Corporate		7		424
Total housing projects and land under development	$	800,029	$	903,504

F-67

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

	2010			2009			2008
	(In thousands)
Revenues:
California South	$	270,749		$	254,604		$	437,809
California North		121,951			101,034			170,913
Mountain West/Other		245,739			254,873			476,112
Total homebuilding revenues		638,439			610,511			1,084,834
Corporate		1,127			952			(6,504	)
Total revenues	$	639,566		$	611,463		$	1,078,330
	2010			2009			2008
	(In thousands)
(Loss) income before taxes:
California South	$	(27,420	)	$	(138,363	)	$	(132,416	)
California North		2,334			(84,942	)		(405,288	)
Mountain West/Other		(28,214	)		(253,818	)		(75,241	)
Total homebuilding loss before taxes		(53,300	)		(477,123	)		(612,945	)
Corporate		(5,482	)		8,845			(31,583	)
Total loss before taxes	$	(58,782	)	$	(468,278	)	$	(644,528	)
	2010			2009			2008
	(In thousands)
Impairment charges:
California South	$	51,099		$	123,900		$	130,598
California North		81			71,281			232,103
Mountain West/Other		22,711			54,926			75,691
Total homebuilding impairment charges		73,891			250,107			438,392
Corporate		—			199			—
Total impairment charges	$	73,891		$	250,306		$	438,392

21. Supplemental Guarantor Information

On May 10, 2011, SHLP and Shea Homes Funding Corp., a wholly-owned subsidiary of SHLP (collectively “SHLP Corp”), issued 8.625% senior secured notes in the aggregate principal amount of $750.0 million (the “Secured Notes”) and the outstanding obligations of the Secured Facilities were paid (see Note 22). Certain of SHLP’s wholly-owned direct and indirect subsidiaries guarantee the Secured Notes. The guarantees are full and unconditional, and joint and several. The obligations under the Secured Notes are not guaranteed by any SHLP joint venture where SHLP Corp does not own 100% of the economic interest, including those that are consolidated for financial reporting purposes. Presented herein are the condensed consolidated financial statements for the guarantor subsidiaries and non-guarantor subsidiaries.

F-68

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Consolidating Balance Sheet

December 31, 2010

	SHLP Corp  (a)		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	99,511	$	54,393		$	12,970	$	—		$	166,874
Restricted cash		11,375		—			320		—			11,695
Investments		—		11,822			—		—			11,822
Accounts and other receivables, net		79,668		27,235			47,627		(47,107	)		107,423
Receivables from related parties, net		606		2,384			24,411		177,011			204,412
Housing projects and land under development		664,403		110,426			26,840		(1,640	)		800,029
Investments in joint ventures		4,337		3,632			28,584		—			36,553
Investments in subsidiaries		691,694		88,823			91,824		(872,341	)		—
Property and equipment, net		16,780		1,589			—		—			18,369
Other assets, net		43,444		13,639			626		—			57,709
Total assets	$	1,611,818	$	313,943		$	233,202	$	(744,077	)	$	1,414,886
Liabilities and equity
Liabilities:
Notes payable	$	730,005	$	—		$	—	$	—		$	730,005
Payables to related parties		40		48			28		9,094			9,210
Accounts payable		28,989		9,012			585		(551	)		38,035
Other liabilities		141,472		39,846			72,202		(48,197	)		205,323
Intercompany		304,449		(492,384	)		20,017		167,918			—
Total liabilities		1,204,955		(443,478	)		92,832		128,264			982,573
Equity:
SHLP equity:
Owners’ equity		406,863		752,058			120,283		(872,341	)		406,863
Accumulated other comprehensive income		—		5,363			—		—			5,363
Total SHLP equity		406,863		757,421			120,283		(872,341	)		412,226
Non-controlling interests		—		—			20,087		—			20,087
Total equity		406,863		757,421			140,370		(872,341	)		432,313
Total liabilities and equity	$	1,611,818	$	313,943		$	233,202	$	(744,077	)	$	1,414,886

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

F-69

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Consolidating Balance Sheet

December 31, 2009

	SHLP  Corp (a)			Guarantor  Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	89,349		$	68,674		$	45,053		$	—		$	203,076
Restricted cash		10,605			—			12,895			—			23,500
Investments		—			—			61,413			—			61,413
Accounts and other receivables, net		95,781			43,498			67,306			(66,429	)		140,156
Receivables from related parties, net		(352	)		1,451			28,820			192,269			222,188
Housing projects and land under development		765,716			110,456			29,464			(2,132	)		903,504
Investments in joint ventures		5,725			5,810			16,259			—			27,794
Investments in subsidiaries		676,368			151,811			92,174			(920,353	)		—
Property and equipment, net		6,701			2,150			3			—			8,854
Other assets, net		26,053			2,194			28			—			28,275
Total assets	$	1,675,946		$	386,044		$	353,415		$	(796,645	)	$	1,618,760
Liabilities and equity
Liabilities:
Notes payable	$	745,017		$	—		$	—		$	—		$	745,017
Payables to related parties		458			29			18			7,033			7,538
Accounts payable		26,898			8,669			812			(193	)		36,186
Other liabilities		164,467			53,629			198,978			(68,261	)		348,813
Intercompany		284,654			(404,054	)		(65,729	)		185,129			—
Total liabilities		1,221,494			(341,727	)		134,079			123,708			1,137,554
Equity:
SHLP equity:
Owners’ equity		454,452			727,771			192,582			(920,353	)		454,452
Accumulated other comprehensive income		—			—			9,398			—			9,398
Total SHLP equity		454,452			727,771			201,980			(920,353	)		463,850
Non-controlling interests		—			—			17,356			—			17,356
Total equity		454,452			727,771			219,336			(920,353	)		481,206
Total liabilities and equity	$	1,675,946		$	386,044		$	353,415		$	(796,645	)	$	1,618,760

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

F-70

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Consolidating Statement of Operations

Year Ended December 31, 2010

	SHLP          Corp (a)			Guarantor   Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	531,898		$	104,231		$	3,437		$	—		$	639,566
Cost of sales		(513,842	)		(89,270	)		(6,478	)		493			(609,097	)
Gross margin		18,056			14,961			(3,041	)		493			30,469
Selling expenses		(30,682	)		(8,532	)		(7,451	)		—			(46,665	)
General and administrative expenses		(24,007	)		(5,611	)		(2,822	)		—			(32,440	)
Equity in income from joint ventures		122			472			8,019			—			8,613
Equity in income (loss) from subsidiaries		17,758			24,518			(457	)		(41,819	)		—
Interest and other (expense) income, net		(41,329	)		(5,621	)		28,684			(493	)		(18,759	)
(Loss) income before income taxes		(60,082	)		20,187			22,932			(41,819	)		(58,782	)
Income tax (expense) benefit		(7	)		4,025			(451	)		—			3,567
Net loss		(60,089	)		24,212			22,481			(41,819	)		(55,215	)
Less: Net income attributable to non-controlling interests		—			—			(4,874	)		—			(4,874	)
Net (loss) income attributable to SHLP	$	(60,089	)	$	24,212		$	17,607		$	(41,819	)	$	(60,089	)

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

Consolidating Statement of Operations

Year Ended December 31, 2009

	SHLP          Corp (a)			Guarantor  Subsidiaries			Non- Guarantor   Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	490,645		$	115,335		$	5,483		$	—		$	611,463
Cost of sales		(539,499	)		(222,383	)		(224,884	)		560			(986,206	)
Gross margin		(48,854	)		(107,048	)		(219,401	)		560			(374,743	)
Selling expenses		(29,324	)		(10,785	)		(8,840	)		—			(48,949	)
General and administrative expenses		(16,607	)		(9,096	)		(3,756	)		—			(29,459	)
Equity in (loss) income from joint ventures		(32,060	)		(3,919	)		890			—			(35,089	)
Equity in loss from subsidiaries		(251,953	)		(155,122	)		(4,730	)		411,805			—
Interest and other (expense) income, net		(13,544	)		708			33,358			(560	)		19,962
Loss before income taxes		(392,342	)		(285,262	)		(202,479	)		411,805			(468,278	)
Income tax benefit (expense)		(1	)		47,764			(2,545	)		—			45,218
Net loss		(392,343	)		(237,498	)		(205,024	)		411,805			(423,060	)
Less: Net loss attributable to non-controlling interests		—			—			30,717			—			30,717
Net loss attributable to SHLP	$	(392,343	)	$	(237,498	)	$	(174,307	)	$	411,805		$	(392,343	)

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

F-71

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Consolidating Statement of Operations

Year Ended December 31, 2008

	SHLP       Corp (a)			Guarantor   Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	768,297		$	301,390		$	8,643		$	—		$	1,078,330
Cost of sales		(940,264	)		(338,797	)		(42,569	)		3,988			(1,317,642	)
Gross margin		(171,967	)		(37,407	)		(33,926	)		3,988			(239,312	)
Selling expenses		(59,985	)		(25,235	)		(13,317	)		—			(98,537	)
General and administrative expenses		(39,460	)		(17,521	)		(7,851	)		—			(64,832	)
Equity in loss from joint ventures		(24,741	)		(4,140	)		(14,740	)		—			(43,621	)
Equity in loss from subsidiaries		(106,566	)		(13,423	)		(1,271	)		121,260			—
Loss from disposition of joint ventures		(162,705	)		—			(5,100	)		—			(167,805	)
Interest and other (expense) income, net		(29,289	)		8,470			(5,614	)		(3,988	)		(30,421	)
Loss before income taxes		(594,713	)		(89,256	)		(81,819	)		121,260			(644,528	)
Income tax benefit (expense)		(2	)		36,077			(1,064	)		—			35,011
Net loss		(594,715	)		(53,179	)		(82,883	)		121,260			(609,517	)
Less: Net loss attributable to non-controlling interests		—			—			14,802			—			14,802
Net loss attributable to SHLP	$	(594,715	)	$	(53,179	)	$	(68,081	)	$	121,260		$	(594,715	)

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

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Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2010

	SHLP      Corp (a)			Guarantor  Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash (used in) provided by operating activities	$	18,198		$	(12,661	)		$(82,538	)	$	1,953		$	(75,048	)
Investing activities
Proceeds from sale of available-for-sale investments		—			6,182			46,930			—			53,112
Net decrease (increase) in promissory notes from related parties		—			(432	)		4,425			15,258			19,251
Investments in joint ventures		(13,706	)		(378	)		(3,951	)		—			(18,035	)
Purchase of property and equipment		(11,570	)		(108	)		—			—			(11,678	)
Other investing activities		80			2,567			759			—			3,406
Net cash provided by (used in) investing activities		(25,196	)		7,831			48,163			15,258			46,056
Financing activities
Principal payments to financial institutions and others		(25,618	)		—			—			—			(25,618	)
Contributions from owners		12,500			—			—			—			12,500
Intercompany		22,227			(9,451	)		4,435			(17,211	)		—
Other financing activities		8,051			—			(2,143	)		—			5,908
Net cash (used in) provided by financing activities		17,160			(9,451	)		2,292			(17,211	)		(7,210	)
Net (decrease) increase in cash and cash equivalents		10,162			(14,281	)		(32,083	)		—			(36,202	)
Cash and cash equivalents at beginning of year		89,349			68,674			45,053			—			203,076
Cash and cash equivalents at end of year	$	99,511		$	54,393			$ 12,970		$	—		$	166,874

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

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Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2009

	SHLP       Corp (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash provided by operating activities	$	39,649		$	47,887			$   78,322		$	(72,564	)	$	93,294
Investing activities
Purchase of available-for-sale investments		—			—			(63,956	)		—			(63,956	)
Proceeds from sale of available-for-sale investments		—			—			59,685			—			59,685
Net decrease in promissory notes from related parties		1,942			5,712			11,751			(1,959	)		17,446
Proceeds from sale of property and equipment		51			12,513			—			—			12,564
Other investing activities		(2,047	)		(2,447	)		(4,641	)		—			(9,135	)
Net cash provided by (used in) investing activities		(54	)		15,778			2,839			(1,959	)		16,604
Financing activities
Principal payments to financial institutions and others		(19	)		(684	)		(112,818	)		—			(113,521	)
Intercompany		(62,651	)		(42,573	)		30,701			74,523			—
Other financing activities		—			—			1,078			—			1,078
Net cash used in financing activities		(62,670	)		(43,257	)		(81,039	)		74,523			(112,443	)
Net (decrease) increase in cash and cash equivalents		(23,075	)		20,408			122			—			(2,545	)
Cash and cash equivalents at beginning of year		112,424			48,266			44,931			—			205,621
Cash and cash equivalents at end of year	$	89,349		$	68,674			$   45,053		$	—		$	203,076

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

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Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2008

	SHLP        Corp (a)			Guarantor  Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash provided by (used in) operating activities		$219,826		$	49,557			$(134,979	)	$	21,555		$	155,959
Investing activities
Purchase of available-for-sale investments		—			—			(37,195	)		—			(37,195	)
Proceeds from sale of available-for-sale investments		—			—			36,359			—			36,359
Proceeds from sale of investments in joint venture		45,144			—			—			—			45,144
Net increase in promissory notes from related parties		(97	)		(5,913	)		(8,683	)		(43,719	)		(58,412	)
Investments in joint ventures		(252,005	)		(48,682	)		(9,996	)		—			(310,683	)
Distributions from joint ventures		5,434			4,740			34,703			—			44,877
Other investing activities		(95	)		8,231			6,467			—			14,603
Net cash (used in) provided by investing activities		(201,619	)		(41,624	)		21,655			(43,719	)		(265,307	)
Financing activities
Net increase in revolving lines of credit and promissory notes to related parties		220,000			—			3,113			—			223,113
Principal payments to financial institutions and others		(27,750	)		(16,794	)		(15,269	)		—			(59,813	)
Contributions from owners		34,858			—			—			—			34,858
Distributions to owners		(34,852	)		—			—			—			(34,852	)
Intercompany		(99,850	)		57,123			20,563			22,164			—
Other investing activities		—			—			9,774			—			9,774
Net cash provided by financing activities		92,406			40,329			18,181			22,164			173,080
Net increase (decrease) in cash and cash equivalents		110,613			48,262			(95,143	)		—			63,732
Cash and cash equivalents at beginning of year		1,811			4			140,074			—			141,889
Cash and cash equivalents at end of year		$112,424		$	48,266			$   44,931		$	—		$	205,621

(a) Shea Homes Funding Corp. was formed on April 26, 2011, therefore no amounts are included for any financial statement period before this date.

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Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Consolidated Financial Statements (continued)

December 31, 2010

22. Subsequent Events

In January 2011, we made a $20.0 million prepayment on our Senior Secured Notes Payable, of which $11.4 million was applied to the Senior Secured Series A, $2.2 million to the Senior Secured Series B and $6.4 million to the Bank Term.

On May 10, 2011, we issued the Secured Notes and paid the outstanding obligations of the Secured Facilities. The Secured Notes were issued pursuant to Rule 144A and Regulation S, with registration rights. The Secured Notes bear interest at 8.625% paid semi-annually on May 15 and November 15, do not require principal payments and mature May 15, 2019.

The payoff of the Secured Facilities, including interest, was $782.1 million. In connection with the principal payment, all payable-in-kind (PIK) interest, $5.0 million of principal and certain fees were waived. In addition, of $19.1 million of the then outstanding letters of credit, $4.0 million was returned and $15.1 million was paid by the Company with $14.5 million reimbursed by JFSCI for its share of the letters of credit paid by the Company.

Concurrent with the payoff of the Secured Facilities, an $88.8 million loss on debt extinguishment was recognized for the $65.0 million write-off of the Secured Facilities discount, which increased the Secured Facilities principal to its face value, $779.6 million, and the $23.4 million write-off of prepaid professional fees and loan fees incurred in connection with the Secured Facilities.

On May 10, 2011, concurrent with issuance of the Secured Notes, through a $75.0 million cash payment and $41.5 million contribution of assets, the receivable from JFSCI was paid down by JFSCI and converted to a $38.9 million term note receivable from JFSCI, bearing 4% interest, payable in equal quarterly installments and maturing May 15, 2019. In June 2011 and August 2011, JFSCI elected to make prepayments, including interest, of $7.7 million and $6.6 million, respectively, and apply these prepayments to future installments such that JFSCI would not be required to make a payment until February 2014.

In September 2011, the Company sold fixed assets, comprised of three buildings and related improvements and land, to a related party. The consideration received was $14.4 million cash and a $6.5 million note receivable at 4.20% interest, payable in equal monthly installments and maturing August 2016. The $1.5 million of consideration received in excess of net book value will be recorded as an equity contribution.

We have evaluated subsequent events and other than as disclosed, in management’s opinion, these events do not have a material effect on our consolidated financial position or results of operations.

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No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. Investors must not rely on any unauthorized information or representations. This prospectus does not offer to sell or ask for offers to buy any securities other than those to which this prospectus relates and it does not constitute an offer to sell or ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. The information contained in this prospectus is current only as of its date.

Until                     , 2011 (90 days after the date of this prospectus), all dealers effecting transactions in the exchange notes, whether or not participating in this distribution, may be required to deliver a prospectus. This requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Prospectus

$750,000,000

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

Exchange Offer for All Outstanding

8.625% Senior Secured Notes due 2019

(CUSIP Nos. 82088K AA6 and U82091 AA4)

for new

8.625% Senior Secured Notes due 2019

that have been registered under the Securities Act of 1933

                    , 2011

PART II

Item 20. Indemnification of Directors and Officers

Shea Homes Limited Partnership

The limited partnership agreement of Shea Homes Limited Partnership (“SHLP”) provides that SHLP will indemnify and hold harmless the general partner, its affiliates, and the officers, agents, partners and employees of the general partner and its affiliates from and against any loss, expense, damage or injury suffered or sustained by them, by reason of any acts or omissions arising out of their activities on behalf of SHLP or in furtherance of the interests of SHLP, provided, that none of the general partner, or any of its affiliates, any officer, agent or employee of the general partner of any of its affiliates will be entitled to indemnification if the acts or omissions were performed or omitted fraudulently or in bad faith or constituted gross negligence or willful misconduct. The limited partnership agreement of SHLP also provides that SHLP will indemnify and hold harmless the limited partners, including, but not limited to, their trustees and beneficiaries, from and against any loss, expense, damage or injury suffered or sustained by them, by reason of any acts or omissions arising out of their activities on behalf of SHLP or in furtherance of the interests of SHLP, provided, that none of the limited partners, any of their affiliates, any officer, agent or employee of the limited partners or any of their affiliates shall be entitled to indemnification if the acts or omissions were performed or omitted fraudulently or in bad faith or constituted gross negligence or willful misconduct. Any indemnification pursuant to the limited partnership agreement of SHLP shall be only from the assets of SHLP.

SHLP also currently maintains an insurance policy which, within the limits and subject to the terms and conditions thereof, covers certain expenses and liabilities that may be incurred by directors and officers in connection with proceedings that may be brought against them as a result of an act or omission committed or suffered while acting as a director or officer of SHLP or its subsidiaries.

Shea Homes Funding Corp.

Shea Homes Funding Corp. is a Delaware corporation. Shea Homes Funding Corp.’s Certificate of Incorporation and Bylaws provide, in effect, that, to the fullest extent permitted by the Delaware General Corporation Law (“DGCL”), Shea Homes Funding Corp. will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or an officer of the corporation or while a director or officer of the corporation is or was serving at the request of the corporation as a director, officer, employee, agent or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, agent or trustee, or in any other capacity while serving as a director, officer, employee, agent or trustee, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the DGCL, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as an indemnitee may bring a proceeding against the corporation to enforce the indemnitee’s rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors.

Section 145(a) of the DGCL provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action,

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suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Section 145(b) of the DGCL provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

Further subsections of DGCL Section 145 provide that:

(1) to the extent a present or former director or officer of a corporation has been successful on the merits or otherwise in the defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145 or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses, including attorneys’ fees, actually and reasonably incurred by such person in connection therewith;

(2) the indemnification and advancement of expenses provided for pursuant to Section 145 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise; and

(3) the corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under Section 145.

Section 145 of the DGCL makes provision for the indemnification of officers and directors in terms sufficiently broad to indemnify officers and directors of Shea Homes Funding Corp. under certain circumstances from liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended.

In addition, Section 102(b)(7) of the DGCL provides that a corporation is restricted from relieving its directors from personal liability to such corporation or its stockholders for monetary damages for any breach of their fiduciary duty as directors (i) for a breach of the duty of loyalty, (ii) for acts or omissions not in good faith, or which involve intentional misconduct or a knowing violation of law, (iii) for willful or negligent violations of certain provisions in the DGCL imposing certain requirements with respect to stock repurchases, redemptions and dividends, or (iv) for any transactions from which the director derived an improper personal benefit.

Co-Registrants

Certain officers of Shea Homes Limited Partnership serve at the request of Shea Homes Limited Partnership as a director, officer, manager, employee or agent of the co-registrants, and thus may be entitled to indemnification under the provisions set forth above. In addition to potential indemnification by Shea Homes Limited Partnership, the directors, officers, managers, employees and agents of the co-registrants are also entitled

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to indemnification and exculpation for certain monetary damages to the extent provided in the applicable co-registrant’s organizational documents or under the laws under which the co-registrants are organized as described below. The following description is qualified in its entirety by reference to the co-registrant’s organizational documents, copies of which have been filed as exhibits to this registration statement and are incorporated herein by reference.

Arizona Corporations

Mountainbrook Village Company, Shea Homes Southwest, Inc. and UDC Home Construction, Inc. are incorporated under the laws of the State of Arizona. Arizona Revised Statutes (“ARS”) § 10-851 allows a corporation, in certain circumstances, to indemnify its directors against costs and expenses (including attorneys’ fees) reasonably incurred in connection with threatened, pending or completed civil, criminal, administrative or investigative actions, suits or proceedings, in which such persons were or are parties, or are threatened to be made parties, by reason of the fact that they were or are directors of the corporation, if such persons, conduct was in good faith and either (i) in a manner they reasonably believed to be in the best interests of the corporation (if acting in an official capacity), or (ii) in a manner they reasonably believed was at least not opposed to the corporation’s best interests (in all other cases). A corporation may indemnify its directors with respect to any criminal action or proceeding if, in addition to the above conditions being met, the individual had no reasonable cause to believe his or her conduct was unlawful. Directors may not be indemnified under ARS § 10-851 in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or in connection with any other proceeding charging improper financial benefit to the director in which the director was adjudged liable on the basis that financial benefit was improperly received by the director. In addition, under ARS § 10-202(B), a corporation’s articles of incorporation may indemnify a director for conduct for which broader indemnification has been made permissible or mandatory under other ARS provisions.

ARS § 10-202(B) provides that the articles of incorporation may set forth a provision eliminating or limiting the liability of a director to the corporation or its shareholders for money damages, and permitting or making obligatory indemnification of a director, for liability for any action taken or any failure to take any action as a director, except liability for any of the following: (a) the amount of a financial benefit received by a director to which the director is not entitled; (b) an intentional infliction of harm on the corporation or the shareholders; (c) unlawful distributions; and (d) an intentional violation of criminal law.

ARS § 10-852 provides for mandatory indemnification in certain situations such that, unless limited by its articles of incorporation, a corporation shall indemnify a director who was the prevailing party, on the merits or otherwise, in the defense of any proceeding to which the director was a party because the director is or was a director of the corporation against reasonable expenses incurred by the director in connection with the proceeding.

ARS § 10-856 provides that a corporation may indemnify its officers against costs and expenses (including attorneys’ fees) reasonably incurred in connection with threatened, pending or completed civil, criminal, administrative or investigative actions, suits or proceedings, in which such persons were or are parties, or are threatened to be made parties because the individual is or was an officer of the corporation to the same extent as a director. If the individual is an officer but not a director (or is both but is made a party to the proceeding solely because of an act or omission as an officer), a corporation may indemnify and advance expenses to the further extent as may be provided by the articles of incorporation, the bylaws, a resolution of the board of directors, or contract except for (i) liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses incurred in connection with the proceeding, or (ii) liability arising out of conduct that constitutes (a) receipt by the officer of a financial benefit to which the officer is not entitled, (b) an intentional infliction of harm on the corporation or the shareholders, or (c) an intentional violation of criminal law. An officer of a corporation who is not a director is entitled to mandatory indemnification as a prevailing party under ARS § 10-852.

ARS § 10-850 defines a director as including an individual who is or was a director of a corporation or an individual while a director of a corporation is or was serving at the corporation’s request as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture or other entity.

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The articles of incorporation and bylaws of Mountainbrook Village Company provide that the corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees, judgments, penalties, and amounts paid in settlement or compromise, which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them, other than an action by or in the right of the corporation, for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as director, officer, employee, or agent of the corporation, if he or she acted, or failed to act, or refused to act, in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, whether or not any action is or has been filed against them and whether or not any settlement or compromise is approved by a court. Subject to the further provisions in this paragraph below, the articles of incorporation and bylaws provide that corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees (but excluding judgments, penalties, and, except as set forth below, amounts paid in settlement or compromise), which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them by or in the right of the corporation, for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as a director, officer, employee, or agent of the corporation, if he or she acted, or failed to act, or refused to act, in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, whether or not any action is or has been filed against them and except that no indemnification shall be made under this sentence in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. In connection with any action referred to in the previous sentence, if a court shall determine that indemnity for amounts paid in settlement is proper, indemnification shall be mandatory and shall be automatically extended by the corporation for the amounts so paid in settlement and for expenses, including attorneys’ fees to the extent the court deems proper. The corporation has the right to refuse indemnification in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the corporation, at its own expense and through counsel of its own choosing, to defend him or her in the action. However, indemnification against expenses, including attorneys’ fees shall be mandatory and shall be automatically extended by the corporation whether the legal action brought or threatened is by or in the right of the corporation or by any other person to the extent the director, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above.

The articles of incorporation of Shea Homes Southwest, Inc. provide that the corporation shall indemnify, to the extent permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. For an action by or in the right of Shea Homes Southwest, Inc., the articles of incorporation provide that the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any

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threatened, pending or completed action by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect, of any claim, issue or matter as to which such person shall have been, adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. The indemnification provided by the Shea Homes Southwest, Inc. certificate of incorporation are not exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of members or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

The articles of incorporation and bylaws of UDC Homes Construction, Inc. provide that the corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees, judgments, penalties, and amounts paid in settlement or compromise, which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as director, officer, employee, or agent of the corporation, whether or not any action is or has been filed against them and whether or not any settlement or compromise is approved by a court. Indemnification shall be made by the corporation whether the legal action brought or threatened is by or in the right of the corporation or by any other person. Whenever any existing or former director, officer, employee, or agent shall report to the president of the corporation or the chairman of the corporation’s board of directors that he or she has incurred or may incur expenses, including but not limited to legal fees, judgments, penalties, and amounts paid in settlement or compromise in a legal action brought or threatened against him or her for or on account of any action or omission alleged to have been committed by him or her while acting within the scope of his or her employment or service as director, officer, employee, or agent of the corporation, the board of directors shall, at its next regular or a special meeting held within a reasonable time thereafter, determine in good faith whether, in regard to the matter involved in the action or contemplated action, such person acted, failed to act, refused to act willfully, or acted with gross negligence or with fraudulent or criminal intent. If the board of directors determines in good faith that such person did not act, fail to act, or refuse to act willfully or act with gross negligence or with fraudulent or criminal intent in regard to the matter involved in the action or contemplated action, indemnification shall be mandatory and shall be automatically extended as specified herein, provided, however, that the corporation shall have the right to refuse indemnification in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the corporation, at its own expense and through counsel of its own choosing, to defend him or her in the action.

Arizona Limited Liability Companies

Seville Golf and Country Club, LLC is a limited liability company organized under the laws of the State of Arizona. Section 29-610(A)(13) of the Arizona Limited Liability Company Act allows a limited liability company to indemnify a member, manager, employee, officer or agent or any other person. The Operating Agreement of Seville Golf and Country Club, LLC, as in effect as of the date hereof, does not provide for the indemnification of any member, manager, employee, officer or agent or any other person.

California Corporations

Shea Financial Services, Inc. and Shea Insurance Services, Inc. are incorporated under the laws of the State of California. Section 317 of the California General Corporation Law (the “CGCL”) provides that a corporation may indemnify directors and officers who are parties or are threatened to be made parties to any proceeding (except actions by or in the right of the corporation to procure a judgment in its favor) by reason of the fact that

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the person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation, and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. With respect to actions by or in the right of the corporation, indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged liable to the corporation, unless and only to the extent that the court in which the action is or was pending determines upon application that in view of all circumstances the person is fairly and reasonably entitled to indemnity for expenses. Section 317 of the CGCL provides that it is not exclusive of other indemnification that may be granted by a corporation’s charter, bylaws, disinterested director vote, stockholders vote, agreement or otherwise.

The bylaws of Shea Financial Services, Inc. and the bylaws of Shea Insurance Services, Inc. provide that each person who was or is made a party to or witness or other participant in or is threatened to be made a party to or witness or other participant in or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative, investigative or other, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of the proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the California General Corporation Law.

California Limited Liability Companies

Serenade at Natomas, LLC, Shea Homes at Montage, LLC, Shea Homes Vantis, LLC, Shea La Quinta LLC, Shea Otay Village 11, LLC, Shea Proctor Valley, LLC, Shea Rivermark Village, LLC and Trilogy Antioch, LLC Are California limited liability companies that are subject to Section 17155 of the Beverly-Killea Limited Liability Company Act, which provides that, except for a breach of certain fiduciary duties, the articles of organization or written operating agreement of a limited liability company may provide for indemnification of any person, including, without limitation, any manager, member, officer, employee or agent of the limited liability company, against judgments, settlements, penalties, fines or expenses of any kind incurred as a result of acting in that capacity. Such section also provides that the company shall have the power to purchase and maintain insurance on behalf of any manager, member, officer, employee or agent of the company against any liability asserted against or incurred by the person in that capacity or arising out of the person’s status as a manager, member, officer, employee, or agent of the company.

The limited liability company agreement of Shea Homes at Montage, LLC provides for indemnification of each member of the executive committee, each member, each officer and any members, managers, partners, stockholders, officers, directors, employees, agents, successors or assigns of any member of the executive committee against any claims, demands, damages, costs, expenses and liabilities incurred by reason of any act performed or committed in connection with the business of the company, including attorneys’ fees incurred by such indemnified person, in connection with the defense of any action based on any such act or omission, which attorney’s fees may be paid as incurred, and including all damages arising under federal and state securities laws.

Delaware Corporations

Shea Communities Marketing Company and Shea Homes, Inc. are Delaware corporations are subject to the provisions of the DGCL described above with respect to Shea Homes Funding Corp.

The bylaws of Shea Communities Marketing Company provide that the corporation shall have the power to indemnify any person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action

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by or in the right of the corporation), by reason of the fact that he is or was a director, officer, employee or agent of the corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or plea of nolo contendere or its equivalent, shall not create a presumption that the person did not act in good faith and in such a manner which he reasonable believed to be in, or not opposed to, the best interest of the corporation, and with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his conduct was unlawful. The bylaws of Shea Communities Marketing Company also provide that the corporation shall have the power to indemnify any person who was or is a party or threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or wall serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, provided, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem necessary and proper. Any decision to provide indemnification pursuant to this paragraph shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is necessary and proper in the circumstance, because he has met the applicable standard of conduct set forth above.

The bylaws of Shea Homes, Inc. provide for indemnification of past and present directors, officers, employees and agents of the company to the full extent permitted by the DGCL.

Delaware Limited Liability Companies

Monty Green Holdings, LLC, Shea Brea Development, LLC, Shea Capital II, LLC, Shea Tonner Hills, LLC, SH Jubilee, LLC, SH Jubilee Management, LLC, SHI JV Holdings, LLC, SHLP JV Holdings, LLC, Vistancia Construction, LLC, Vistancia Marketing, LLC are Delaware limited liability companies. These co-registrants are subject to Section 18-108 of the Delaware Limited Liability Company Act (“DLLCA”), which provides that, subject to such standards and restrictions, if any, as are set forth in its limited liability company agreement, a Delaware limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.

The limited liability company agreement of Shea Brea Development, LLC provides that the company shall, to the fullest and broadest extent permitted by law, indemnify and hold harmless each member, affiliate of a member, and any manager, partner, officer, director, attorney, agent, representative or employee of any member or affiliate of a member, against losses, damages, liabilities or expenses, of any kind or nature, incurred by it in connection with, or while acting (or omitting to act) on behalf of, the company. Without limiting the generality of the foregoing, the company also agrees to indemnify each indemnified person, and to save and hold him or it harmless, from and in respect of (i) all fees, costs and expenses incurred in connection with or resulting from any demand, claim, action or proceeding against such indemnified person or the company which arises out of or in any way relates to the company or its properties, business or affairs, and (ii) all such demands, claims, actions and proceedings and any losses or damages resulting therefrom, including judgments, fines and amounts paid in settlement or compromise of any such demand, claim, action or proceeding; provided, however, that this indemnity shall not extend to conduct by an indemnified person proved to constitute actual fraud or willful

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malfeasance. Unless the member otherwise determines, the company shall pay the expenses incurred by any indemnified person in connection with any proceeding in advance of the final disposition of such proceeding, upon receipt by the Company of an undertaking of such indemnified person to repay such payment if there shall be a final adjudication or determination that such indemnified person is not entitled to indemnification as provided herein. Notwithstanding any provision above or of any other document governing the formation, management or operation of the company to the contrary, any indemnification shall be fully subordinated to any obligations respecting the company’s property and shall not constitute a claim against the company in the event that cash flow is insufficient to pay such obligations.

The limited liability company agreements of SHI JV Holdings, LLC and SHLP JV Holdings, LLC entitle the member and its respective employees, agents, affiliates and assigns to indemnification, to the fullest extent permitted by law, from the company for any loss, damage or claim incurred by reason of any act or omission performed or omitted in good faith on behalf of the company and in a manner reasonably believed to be within the scope of authority conferred by the limited liability company agreement of SHI JV Holdings, LLC or SHLP JV Holdings, LLC, as applicable.

Colorado Corporations

Sand Creek Cattle Company, Highlands Ranch Development Corporation and Shea Properties of Colorado, Inc. are incorporated under the laws of the State of Colorado. The Colorado Business Corporation Act provides that a corporation may indemnify directors or officers made party to proceedings because the person is or was a director against liability incurred in the proceeding if (a) the person conducted himself or herself in good faith; (b) the person reasonably believed: (i) in the case of conduct in an official capacity with the corporation, that his or her conduct was in the corporation’s best interests; and (ii) in all other cases, that his or her conduct was at least not opposed to the corporation’s best interests; and (c) in the case of any criminal proceeding, the person had no reasonable cause to believe his or her conduct was unlawful. A Colorado corporation is not permitted to indemnify a director (a) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (b) in connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or she derived an improper personal benefit. Indemnification permitted under the Colorado Business Corporation Act in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.

The Colorado Business Corporation Act further provides that unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by the person in connection with the proceeding.

The articles of incorporation of Highlands Ranch Development Corporation and Shea Properties of Colorado, Inc. each provide that any director or officer of former director or officer of the corporation shall be indemnified by the corporation against all costs and expenses actually and reasonably incurred by him for advice or assistance concerning, or in connection with the defense of any action, suit or proceeding, civil, criminal or administrative, except in relation to the liabilities under the Securities Act of 1933, as amended, the securities laws of the State of Colorado, or other applicable securities laws, in which he is made a party by reason of being or having been a director or officer of the Corporation, whether or not he continues to be a director or officer at the time of incurring such costs or expenses, except costs and expenses incurred in relation to matters as to which such director or officer shall have been derelict in the performance of his duty as such director or officer (a) in a matter which shall have been subject of a suit or proceeding in which he shall have been finally adjudged in such suit or proceeding to have been derelict in the performance of his duty as such director or officer, or (b) in a matter not falling within (a) above, if either all disinterested directors of the corporation or a committee of disinterested stockholders of the corporation shall determine that he is derelict.

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The articles of incorporation of Sand Creek Cattle Company provide that the corporation shall indemnify any person who is or was a director, officer, employee, fiduciary, or agent of the corporation or who is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any and all expenses (including attorneys fees) actually and reasonably incurred by him in connection with any suit or proceeding or threatened suit or proceeding, whether civil, criminal, administrative or investigative, in which the indemnified person was or is a party or threatened to be made a party by reason of the fact that he is or was a director, officer, employee, fiduciary or agent of the corporation, or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, if such person acted in good faith and in a manner he reasonably believed to be in the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the indemnified person did not act in good faith and in a manner which he reasonably believed to be in the best interests of the corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding the foregoing, no indemnification shall be made in connection with a proceeding by or in the right of the corporation to procure a judgment in its favor in respect of any claim, issue or matter to which the indemnified person has been adjudged to be liable for negligence or misconduct in the performance of his duties to the corporation unless, and only to the extent that, the court In which such proceeding was brought determines, upon application, that despite the adjudication of liability, but in the view of all circumstances of the case, such indemnified person is fairly and reasonably entitled to indemnification for such expenses which the court deems proper. Indemnification under the above provisions shall be made by the corporation only as authorized in the specific case upon a determination that indemnification is proper in the circumstances.

Colorado Limited Liability Companies

Shea Ninth and Colorado, LLC, Tower 104 Gathering, LLC and Tower 104 Oil, LLC are organized under the laws of the State of Colorado. Section 7-80-104(1)(k) of the Colorado Limited Liability Company Act permits a company to indemnify a member or manager or former member or manager of the limited liability company as provided in Section 7-80-407. Under Section 7-80-407, a limited liability company shall reimburse a member or manager for payments made, and indemnify a member or manager for liabilities incurred by the member or manager, in the ordinary conduct of the business of the limited liability company or for the preservation of its business or property if such payments were made or liabilities incurred without violation of the member’s or manager’s duties to the limited liability company.

Florida Limited Liability Companies

Shea Victoria Gardens, LLC is organized under the laws of the State of Florida. Section 608.4229 of the Florida Limited Liability Company Act indemnifies members, managers, managing members, officers, employees, and agents subject to such standards and restrictions, if any, as are set forth in its articles of organization or operating agreement. A limited liability company may, and has the power to, but is not required to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. Notwithstanding the foregoing, indemnification or advancement of expenses should not be made to or on behalf of any member, manager, managing member, officer, employee, or agent if a judgment or other final adjudication establishes that the actions, or omissions to act, of such member, manager, managing member, officer, employee, or agent were material to the cause of action so adjudicated and constitute any of the following: (i) a violation of criminal law, unless the member, manager, managing member, officer, employee, or agent had no reasonable cause to believe such conduct was unlawful; (ii) a transaction from which the member, manager, managing member, officer, employee, or agent derived an improper personal benefit; (iii) in the case of a manager or managing member, a circumstance under which the liability provisions of Section 608.426 are applicable; or (iv) willful misconduct or a conscious disregard for the best interests of the limited liability company in a proceeding by or in the right of the limited liability company to procure a judgment in its favor or in a proceeding by or in the right of a member.

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Illinois Corporations

UDC Advisory Services, Inc. is organized under the laws of the State of Illinois. Section 8.75 of the Illinois Business Corporation Act of 1983, as amended (the “IBCA”), provides for a limitation of director liability. Under Section 8.75 of the IBCA, directors and officers may be indemnified by a corporation against all expenses incurred in connection with actions (including, under certain circumstances, derivative actions) brought against such director or officer by reason of his or her status as representative, or by reason of the fact that such director or officer serves or served as a representative of another entity at the corporation’s request, so long as the director or officer acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the corporation’s best interests.

The bylaws of UDC Advisory Services, Inc. provide that the corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment or settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The bylaws of UDC Advisory Services, Inc. also provide that the corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney’s fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith. Any indemnification under the above provisions shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth above.

Item 21. Exhibits and Financial Statement Schedules

(a) Exhibits

See the Exhibit Index attached to this registration statement and incorporated herein by reference.

(b) Financial Statement Schedules

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because the required information is not applicable or because the information required has been included in the financial statements or notes thereto included herein.

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Item 22. Undertakings

The undersigned registrant hereby undertakes:

To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form within one business day of the receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

To supply by means of post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

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(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, Shea Homes Limited Partnership has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA HOMES LIMITED PARTNERSHIP

By:

Shea Homes Limited Partnership,

a California limited partnership,

its Manager

By:

J.F. Shea, L.P.,

a Delaware limited partnership,

its sole General Partner

By:

JFS Management, L.P.,

a Delaware limited partnership,

its sole General Partner

By:

J.F. Shea Construction Management, Inc.,

a California corporation,

its sole General Partner

By:	/s/ Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

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Pursuant to the requirements of Securities Act of 1933, as amended, this registration statement has been signed by the following persons on October 14, 2011 in the capacities indicated below.

Signature	Title	Date
/s/ Roberto F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
Roberto (Bert) F. Selva
/s/ Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
Bruce J. Varker
/s/ Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Andrew T. Roundtree
/s/ John F. Shea	Director	October 14, 2011
John F. Shea
/s/ Peter O. Shea	Director	October 14, 2011
Peter O. Shea
/s/ Peter O. Shea, Jr.	Director	October 14, 2011
Peter O. Shea, Jr.
/s/ John C. Morrissey	Director	October 14, 2011
John C. Morrissey
/s/ James G. Shontere	Director	October 14, 2011
James G. Shontere

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SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA HOMES FUNDING CORP.
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

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SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

HIGHLANDS RANCH DEVELOPMENT CORPORATION
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-16

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

MONTY GREEN HOLDINGS, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its Manager
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Executive Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited Partnership, its Manager By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-17

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

MOUNTAINBROOK VILLAGE COMPANY
By:	/s/ Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-18

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SAND CREEK CATTLE COMPANY
By:	/s/ Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-19

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SERANADE AT NATOMAS, LLC

By:

Shea Homes, Inc.,

a Delaware corporation,

its sole Member

By:	/s/ Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes, Inc., A Delaware corporation, its sole Member
By:
/s/ Bruce J. Varker	Member	October 14, 2011
Bruce J. Varker, its Chief Financial Officer

II-20

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SEVILLE GOLF AND COUNTRY CLUB LLC

By:

Shea Homes Limited Partnership,

a California limited partnership,

its sole Member

By:	/s/ Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership a California limited partnership, its sole Member
By:	Member	October 14, 2011
/s/ Bruce J. Varker
Bruce J. Varker, its Chief Financial Officer

II-21

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA BREA DEVELOPMENT, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its sole Member
By:	/s/  Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Roberto F. Selva         Roberto (Bert) F. Selva	Chief Executive Officer of Member (Principal Executive Officer)	October 14, 2011
/s/  Bruce J. Varker         Bruce J. Varker	Chief Financial Officer of Member (Principal Financial Officer)	October 14, 2011
/s/  Andrew T. Roundtree         Andrew T. Roundtree	Controller of Member (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership its sole Member By:
/s/  Bruce J. Varker         Bruce J. Varker, its Chief Financial Officer	Member	October 14, 2011

II-22

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA CAPITAL II, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its Manager
By:	/s/  Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Roberto F. Selva         Roberto (Bert) F. Selva	Chief Executive Officer of Manager (Principal Executive Officer)	October 14, 2011
/s/  Bruce J. Varker         Bruce J. Varker	Chief Financial Officer of Manager (Principal Financial Officer)	October 14, 2011
/s/  Andrew T. Roundtree         Andrew T. Roundtree	Controller of Manager (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership its Manager By:
/s/  Bruce J. Varker         Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-23

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA COMMUNITIES MARKETING COMPANY
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-24

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA FINANCIAL SERVICES, INC.
By:	/s/ Joel VanRyckeghen
	Name:  Joel VanRyckeghen Title:  Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below on this Registration Statement constitutes and appoints Bruce J. Varker, Andy T. Roundtree, James G. Shontere and Paul E. Mosley, each of whom may act without joinder of the other, as their true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Joel VanRyckeghen Joel VanRyckeghen	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ David Hada David Hada	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Cherie Edborg Cherie Edborg	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-25

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA HOMES, INC.
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-26

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA HOMES AT MONTAGE, LLC
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Executive Committee Member	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Executive Committee Member	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Executive Committee Member	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Executive Committee Member	October 14, 2011
/s/ James G. Shontere James G. Shontere	Executive Committee Member	October 14, 2011

II-27

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA HOMES SOUTHWEST, INC.
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-28

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA HOMES VANTIS, LLC
By:
Shea Homes, Inc. a Delaware corporation,
its sole Member
By:	/s/   Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Robert F. Selva Robert (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes, Inc. a Delaware corporation, its sole Member
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Member	October 14, 2011

II-29

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA INSURANCE SERVICES, INC.
By:	/s/ Joel VanRyckeghen
	Name:  Joel VanRyckeghen Title:  Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below on this Registration Statement constitutes and appoints Bruce J. Varker, Andy T. Roundtree, James G. Shontere and Paul E. Mosley, each of whom may act without joinder of the other, as their true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Joel VanRyckeghen Joel VanRyckeghen	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ David Hada David Hada	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Cherie Edborg Cherie Edborg	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-30

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA LA QUINTA LLC
By:
Shea Homes, Inc., a Delaware corporation, its sole Member
By:	/s/  Bruce J. Varker
	Name: Chief Financial Officer
	Title: Bruce J. Varker

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer of Member (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer of Member (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller of Member (Principal Accounting Officer)	October 14, 2011
Shea Homes, Inc., a Delaware corporation, its sole Member By: /s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Member	October 14, 2011

II-31

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA NINTH AND COLORADO, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its Manager
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer of Manager (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer of Manager (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller of Manager (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership, its Manager By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-32

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA OTAY VILLAGE 11, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its sole Member
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer of Member (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer of Member (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller of Member (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership, its sole Member By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Member	October 14, 2011

II-33

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA PROCTOR VALLEY, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its sole Member
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership, its sole Member
By: /s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Member	October 14, 2011

II-34

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA PROPERTIES OF COLORADO, INC.
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-35

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA RIVERMARK VILLAGE, LLC

By:

Shea Homes Limited Partnership,

a California limited partnership,

its sole Member

By:	/s/ Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership, its sole Member
By: /s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Member	October 14, 2011

II-36

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA TONNER HILLS, LLC

By:

Shea Homes Limited Partnership,

a California limited partnership,

its sole Member

By:	/s/ Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership, its sole Member By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Member	October 14, 2011

II-37

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHEA VICTORIA GARDENS, LLC
By:	/s/  Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Roberto F. Selva         Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/  Bruce J. Varker         Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/  Andrew T. Roundtree         Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/  John F. Shea         John F. Shea	Executive Committee Member	October 14, 2011
/s/  Peter O. Shea         Peter O. Shea	Executive Committee Member	October 14, 2011
/s/  Peter O. Shea, Jr.         Peter O. Shea, Jr.	Executive Committee Member	October 14, 2011
/s/  John C. Morrissey         John C. Morrissey	Executive Committee Member	October 14, 2011
/s/  James G. Shontere         James G. Shontere	Executive Committee Member	October 14, 2011

II-38

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SH JUBILEE, LLC
By:	/s/  Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Roberto F. Selva         Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/  Bruce J. Varker         Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/  Andrew T. Roundtree         Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/  John F. Shea         John F. Shea	Executive Committee Member	October 14, 2011
/s/  Peter O. Shea         Peter O. Shea	Executive Committee Member	October 14, 2011
/s/  Peter O. Shea, Jr.         Peter O. Shea, Jr.	Executive Committee Member	October 14, 2011
/s/  John C. Morrissey         John C. Morrissey	Executive Committee Member	October 14, 2011
/s/  James G. Shontere         James G. Shontere	Executive Committee Member	October 14, 2011

II-39

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SH JUBILEE MANAGEMENT, LLC
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Executive Committee Member	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Executive Committee Member	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Executive Committee Member	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Executive Committee Member	October 14, 2011
/s/ James G. Shontere James G. Shontere	Executive Committee Member	October 14, 2011

II-40

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHI JV HOLDINGS, LLC
Shea Homes, Inc., a Delaware corporation, its Manager
By:	/s/ Bruce J. Varker
	Name:   Bruce J. Varker
	Title:   Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes, Inc., a Delaware corporation, its Manager By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-41

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

SHLP JV HOLDINGS, LLC
Shea Homes Limited Partnership, a California limited partnership, its Manager
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership, its Manager By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-42

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

TOWER 104 GATHERING, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its Manager
By:	/s/  Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Roberto F. Selva         Roberto (Bert) F. Selva	Chief Executive Officer of Manager (Principal Executive Officer)	October 14, 2011
/s/  Bruce J. Varker         Bruce J. Varker	Chief Financial Officer of Manager (Principal Financial Officer)	October 14, 2011
/s/  Andrew T. Roundtree         Andrew T. Roundtree	Controller of Manager (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership its Manager By:
/s/  Bruce J. Varker         Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-43

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

TOWER 104 OIL, LLC
By:
Shea Homes Limited Partnership, a California limited partnership, its Manager
By:	/s/  Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Roberto F. Selva         Roberto (Bert) F. Selva	Chief Executive Officer of Manager (Principal Executive Officer)	October 14, 2011
/s/  Bruce J. Varker         Bruce J. Varker	Chief Financial Officer of Manager (Principal Financial Officer)	October 14, 2011
/s/  Andrew T. Roundtree         Andrew T. Roundtree	Controller of Manager (Principal Accounting Officer)	October 14, 2011
Shea Homes Limited Partnership, a California limited partnership its Manager By:
/s/  Bruce J. Varker         Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-44

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

TRILOGY ANTIOCH, LLC
By:
Shea Capital II, LLC, a Delaware limited liability company, its Manager
By:
Shea Homes Limited Partnership, a California limited partnership, its Manager
By:	/s/ Bruce J. Varker
	Name:	Bruce J. Varker
	Title:	Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Capital II, LLC, a Delaware limited liability company its Manager
By:
Shea Homes Limited Partnership, a California limited partnership, its Manager /s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-45

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

UDC ADVISORY SERVICES, INC.
By:	/s/  Bruce J. Varker
	Name: Bruce J. Varker
	Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Roberto F. Selva         Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/  Bruce J. Varker         Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/  Andrew T. Roundtree         Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/  John F. Shea         John F. Shea	Director	October 14, 2011
/s/  Peter O. Shea         Peter O. Shea	Director	October 14, 2011
/s/  Peter O. Shea, Jr.         Peter O. Shea, Jr.	Director	October 14, 2011
/s/  John C. Morrissey         John C. Morrissey	Director	October 14, 2011
/s/  James G. Shontere         James G. Shontere	Director	October 14, 2011

II-46

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

UDC HOMES CONSTRUCTION, INC.
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
/s/ John F. Shea John F. Shea	Director	October 14, 2011
/s/ Peter O. Shea Peter O. Shea	Director	October 14, 2011
/s/ Peter O. Shea, Jr. Peter O. Shea, Jr.	Director	October 14, 2011
/s/ John C. Morrissey John C. Morrissey	Director	October 14, 2011
/s/ James G. Shontere James G. Shontere	Director	October 14, 2011

II-47

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

VISTANCIA CONSTRUCTION, LLC
By:
Shea Homes Southwest, Inc., an Arizona corporation, its Manager
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes Southwest, Inc. an Arizona corporation, its Manager By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-48

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, as amended, each of the co-registrants named below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Walnut, State of California, as of October 14, 2011.

VISTANCIA MARKETING, LLC
By:
Shea Homes Southwest, Inc., an Arizona corporation, its Manager
By:	/s/ Bruce J. Varker
	Name:  Bruce J. Varker Title:  Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roberto F. Selva Roberto (Bert) F. Selva	Chief Executive Officer (Principal Executive Officer)	October 14, 2011
/s/ Bruce J. Varker Bruce J. Varker	Chief Financial Officer (Principal Financial Officer)	October 14, 2011
/s/ Andrew T. Roundtree Andrew T. Roundtree	Controller (Principal Accounting Officer)	October 14, 2011
Shea Homes Southwest, Inc. an Arizona corporation, its Manager By:
/s/ Bruce J. Varker Bruce J. Varker, its Chief Financial Officer	Manager	October 14, 2011

II-49

EXHIBIT INDEX

Exhibit No.	Description
3.1	Certificate of Limited Partnership of Shea Homes Limited Partnership
3.2	Agreement of Limited Partnership of Shea Homes Limited Partnership
3.3	Certificate of Incorporation of Shea Homes Funding Corp.
3.4	Bylaws of Shea Homes Funding Corp.
3.5	Articles of Incorporation of Highlands Ranch Development Corporation
3.6	Bylaws of Highlands Ranch Development Corporation
3.7	Certificate of Formation of Monty Green Holdings, LLC
3.8	Limited Liability Company Agreement of Monty Green Holdings, LLC
3.9	Articles of Incorporation of Mountainbrook Village Company
3.10	Bylaws of Mountainbrook Village Company
3.11	Articles of Incorporation of Sand Creek Cattle Company
3.12	Bylaws of Sand Creek Cattle Company
3.13	Limited Liability Company Articles of Organization of Serenade at Natomas, LLC
3.14	Operating Agreement of Serenade at Natomas, LLC
3.15	Articles of Organization of Seville Golf and Country Club LLC
3.16	Operating Agreement of Seville Golf and Country Club LLC
3.17	Certificate of Formation of Shea Brea Development, LLC
3.18	Limited Liability Company Agreement of Shea Brea Development, LLC
3.19	Certificate of Formation of Shea Capital II, LLC
3.20	Operating Agreement of Shea Capital II, LLC
3.21	Certificate of Incorporation of Shea Communities Marketing Company
3.22	Bylaws of Shea Communities Marketing Company
3.23	Articles of Incorporation of Shea Financial Services, Inc.
3.24	Bylaws of Shea Financial Services, Inc.
3.25	Certificate of Incorporation of Shea Homes, Inc.
3.26	Bylaws of Shea Homes, Inc.
3.27	Limited Liability Company Articles of Organization of Shea Homes at Montage, LLC
3.28	Operating Agreement of Shea Homes at Montage, LLC
3.29	Articles of Incorporation of Shea Homes Southwest, Inc.
3.30	Bylaws of Shea Homes Southwest, Inc.
3.31	Articles of Organization of Shea Homes Vantis, LLC
3.32	Operating Agreement of Shea Homes Vantis, LLC
3.33	Articles of Incorporation of Shea Insurance Services, Inc.

Exhibit Index - 1

Exhibit No.	Description
3.34	Bylaws of Shea Insurance Services, Inc.
3.35	Articles of Organization of Shea La Quinta LLC
3.36	Operating Agreement of Shea La Quinta LLC
3.37	Articles of Organization of Shea Ninth and Colorado, LLC
3.38	Limited Liability Company Agreement of Shea Ninth and Colorado, LLC
3.39	Articles of Organization of Shea Otay Village 11, LLC
3.40	Operating Agreement of Shea Otay Village 11, LLC
3.41	Articles of Organization of Shea Proctor Valley, LLC
3.42	Limited Liability Company Agreement of Shea Proctor Valley, LLC
3.43	Articles of Incorporation of Shea Proporties of Colorado, Inc.
3.44	Bylaws of Shea Properties of Colorado, Inc.
3.45	Articles of Organization of Shea Rivermark Village, LLC
3.46	Operating Agreement of Shea Rivermark Village, LLC
3.47	Certificate of Formation of Shea Tonner Hills, LLC
3.48	Limited Liability Company Agreement of Shea Tonner Hills, LLC
3.49	Articles of Organization of Shea Victoria Gardens, LLC
3.50	Limited Liability Company Agreement of Shea Victoria Gardens, LLC
3.51	Certificate of Formation of SH Jubilee, LLC
3.52	Limited Liability Company Agreement of SH Jubilee, LLC
3.53	Certificate of Formation of SH Jubilee Management, LLC
3.54	Limited Liability Company Agreement of SH Jubilee Management, LLC
3.55	Certificate of Formation of SHI JV Holdings, LLC
3.56	Limited Liability Company Agreement of SHI JV Holdings, LLC
3.57	Certificate of Formation of SHLP JV Holdings, LLC
3.58	Limited Liability Company Agreement of SHLP JV Holdings, LLC
3.59	Articles of Organization of Tower 104 Gathering, LLC
3.60	Operating Agreement of Tower 104 Gathering, LLC
3.61	Articles of Organization of Tower 104 Oil, LLC
3.62	Operating Agreement of Tower 104 Oil, LLC
3.63	Articles of Organization of Trilogy Antioch, LLC
3.64	Operating Agreement of Trilogy Antioch, LLC
3.65	Articles of Incorporation of UDC Advisory Services, Inc.
3.66	Bylaws of UDC Advisory Services, Inc.
3.67	Articles of Incorporation of UDC Homes Construction, Inc.

Exhibit Index - 2

Exhibit No.	Description
3.68	Bylaws of UDC Homes Construction, Inc.
3.69	Certificate of Formation of Vistancia Construction, LLC
3.70	Limited Liability Company Agreement of Vistancia Construction, LLC
3.71	Certificate of Formation of Vistancia Marketing, LLC
3.72	Limited Liability Company Agreement of Vistancia Marketing, LLC
4.1	Indenture, dated May 10, 2011, between and among Shea Homes Limited Partnership, Shea Homes Funding Corp., the guarantors party thereto, and Wells Fargo Bank, National Association, as Trustee
4.2	Registration Rights Agreement, dated May 10, 2011 between and among Shea Homes Limited Partnership, Shea Homes Funding Corp., the guarantors party thereto, and Credit Suisse Securities (USA) LLC, as Initial Purchaser
5.1	Opinion of Gibson, Dunn & Crutcher LLP
5.2	Opinion of Greenberg Traurig, LLP as to matters of Arizona law
5.3	Opinion of Greenberg Traurig, LLP as to matters of Florida law
5.4	Opinion of Greenberg Traurig, LLP as to matters of Illinois law
10.1	Letter of Credit Facility, dated as of May 10, 2011, among Shea Homes Limited Partnership, Shea Homes Funding Corp., the subsidiary guarantors party thereto, the participants party thereto and Credit Suisse AG
10.2	Security Agreement, dated as of May 10, 2011, between and among Shea Homes Limited Partnership, Shea Homes Funding Corp., the guarantors identified therein, Credit Suisse AG, as Administrative Agent and Wells Fargo Bank, National Association, as Collateral Agent
10.3	Tax Distribution Agreement, dated as of May 10, 2011
12.1	Statement of Computation of Ratio of Earnings to Fixed Charges
23.1	Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1)
23.2	Consent of Greenberg Traurig, LLP as to matters of Arizona law (included in Exhibit 5.2)
23.3	Consent of Greenberg Traurig, LLP as to matters of Florida law (included in Exhibit 5.3)
23.4	Consent of Greenberg Traurig, LLP as to matters of Illinois law (included in Exhibit 5.4)
23.5	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm of Shea Homes Limited Partnership
25.1	Statement of Eligibility of Trustee, Wells Fargo Bank, National Association, on Form T-1
99.1	Form of Letter of Transmittal
99.2	Substitute Form W-9 and Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
99.3	Form of Notice of Guaranteed Delivery
99.4	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99.5	Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees

Exhibit Index - 3

EX-3.1

Exhibit 3.1

STATE OF CALIFORNIA

CERTICATE OF LIMITED PARTNERSHIP—RM LP.1

IMPORTANT- Read Instructions on back before completing this form

This Certificate is presented for filing pursuant to Chapter 3, Article 2, Section 15621, California Corporations Code,

1.     NAME OF LIMITED PARTNERSHIP Shea Homes Limited Partnership, A California Limited Partnership
2.     STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE	3.     CITY AND STATE		4.     ZIP CODE
655 Brea Canyon Road	Walnut, CA		91789
5.     STREET ADDRESS OF CALIFORNlA OFFICE IF EXECUTIVE OFFICE IN ANOTHER STATE	6.     CITY CALIF.		7.     ZIP CODE
8.     COMPLETE IF LIMITED PARTNERSHIP WAS FORMED PRIOR TO JULY 1, 1984 AND IS IN EXISTENCE ON DATE THIS CERTIFICATE IS EXECUTED
THE ORIGINAL LIMITED PARTNERSHIP CERTIFICATE WAS RECORDED ON                                          19                      WITH THE RECORDER OF                                                               COUNTY,             FILE OR RECORDATION NUMBER
9.     NAMES AND ADDRESSES OF ALL GENERAL PARTNERS (CONTINUE ON SECOND PAGE IF NECESSARY)
NAME:                J.F. Shea Co., Inc ADDRESS:         655 Bfea Canyon Road CITY:                    Walnut	STATE	California	ZIP CODE	91789
9A. NAME: ADDRESS: CITY:	STATE		ZIP CODE
9B. NAME: ADDRESS: CITY:	STATE		ZIP CODE
10.   NAME AND ADDRESS OF AGENT FOR SERVICE OF PROCESS
ROY HUMPHREYS, PRESIDENT NAME:                J.F. Shea Co., Inc. ADDRESS:         655 Brea Canyon Road CITY:                    Walnut	STATE	California	ZIP CODE	91789
11.   TERM FOR WHICH THIS PARTNERSHIP IS TO EXIST
25 Years From January 4, 1989
12.   FOR THE PURPOSE OF FILING AMENDMENTS, DISSOLUTION AND CANCELLATION CERTIFICATES PERTAINING TO THIS CERTIFICATE, THE ACKNOWLEDGMENT OF 1 GENERAL PARTNERS IS REQUIRED
13.   ANY OTHER MATTERS THE GENERAL PARTNERS DESIRE TO INCLUDE IN THIS CERTIFICATE MAY BE NOTED ON SEPARATE PAGES AND REFERENCE HEREIN IS A PART OF THIS CERTIFICATE, NUMBER OF PAGES ATTACHED ¨
14.   IT IS HEREBY DECLARED THAT I AM (WE ARE) THE PERSON(S) WHO EXECUTED THIS CERTIFICATE OF LIMITED PARTNERSHIP, WHICH ECUTION IS MY (OUR ACT AND DEED (SEE INSTRUCTIONS)

	9/18/89			15.   THIS SPACE FOR FILING OFFICE USE (FILE NUMBER, DATE OF FILING)
SIGNATURE OF GENERAL PARTNER	DATE	SIGNATURE OF GENERAL PARTNER	DATE	8926100012
Vice President J.F. Shea Co., Inc.
SIGNATURE OF GENERAL PARTNER	DATE	SIGNATURE OF GENERAL PARTNER	DATE
SIGNATURE OR OTHER THAN GENERAL PARTNER		TITLE OR DESIGNATOR	DATE
16.   RETURN ACKNOWLEDGMENT TO:
NAME                Ronald L. Lakey ADDRESS         J.F. Shea Co., Inc. CITY AND        655 Brea Canyon Road STATE               Walnut, CA 91789 ZIP CODE

State of California   Secretary of State CERTIFICATE OF MERGER Form LP-9

IMPORTANT—Read instructions on back before completing this form

This Certificate is presented for filing pursuant to Section 15678.4 and 1113(g), California Corporations Code.

1.         NAME OF SURVIVING  x  LIMITED PARTNERSHIP  ¨  CORPORATION  ¨  OTHER                          SHEA HOMES LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP			2.     FILE NO.         8926100012
3.         ADDRESS: 655 BREA CANYON ROAD			4.     STATE/COUNTRY OF FORMATION
CITY: WALNUT	STATE: CA                     ZIP CODE: 91789		CALIFORNIA
5.         NAME OF DISAPPEARING  ¨  LIMITED PARTNERSHIP  x  CORPORATION  ¨  OTHER                                                       MISSION VIEJO COMPANY			6.     FILE NO.                 460523	7.     STATE/COUNTRY         OF FORMATION         CALIFORNIA
8.         THIS MERGER IS EFFECTIVE: (NOT TO EXCEED 90 DAYS FROM DATE OF FILING) (IF NO DATE IS INDICATED, THIS MERGER WILL BE EFFECTIVE UPON FILING WITH THIS OFFICE.)
		MONTH	DAY	YEAR
9.         IF A VOTE OF THE BUSINESS ENTITIES IS REQUIRED UNDER SECTION 15678.4(a)(2) AND/OR SECTION 1113(g). COMPLETE THE FOLLOWING:
NAME(S)	PERCENTAGE OF VOTE REQUIRED	NO. SHARES EACH CLASS ENTITLED TO VOTE
SHEA HOMES LIMITED PARTNERSHIP             MISSION VIEJO COMPANY	MORE THAN 50% MORE THAN 50%	100% 10

SECTION APPLICABLE ONLY IF SURVIVING ENTITY IS A LIMITED PARTNERSHIP
ENTER CHANGES ONLY IN ITEM 10
10.        CHANGES TO THE SURVIVING LIMITED PARTNERSHIP RECORD RESULTING FROM THIS MERGER ARE AS FOLLOWS:             (COMPLETE APPROPRIATE SUB-SECTIONS. CONTINUE ON SECOND PAGE IF NECESSARY).
A.    THE LIMITED PARTNERSHIP NAME IS CHANGED TO:
B.    PRINCIPAL EXECUTIVE OFFICE ADDRESS CHANGE:           ADDRESS:           CITY:                                      STATE:                                     ZIP CODE:	C.    CALIFORNIA OFFICE ADDRESS CHANGE:         (FOR FOREIGN LIMITED PARTNERSHIPS ONLY)         ADDRESS:         CITY:                                     STATE:                                      ZIP CODE:
D.    GENERAL PARTNER(S) WITHDRAWN:           NAME:           NAME:	E.    GENERAL PARTNER ADDED:         NAME:         ADDRESS:
F.    GENERAL PARTNER ADDRESS CHANGE:	CITY:                                     STATE:                                     ZIP CODE:
NAME:           ADDRESS:           CITY:                                     STATE:                                     ZIP CODE:	G.    INFORMATION CONCERNING THE AGENT FOR SERVICE OF         PROCESS HAS BEEN CHANGED: TO:         NAME:         ADDRESS:
H.    THE NUMBER OF GENERAL PARTNERS REQUIRED TO ACKNOWLEDGE AND FILE CERTIFICATES IS CHANGED: TO:	CITY:                                     STATE: CA                             ZIP CODE:
(PLEASE INDICATE NUMBER ONLY)  ¨

11.       NUMBER OF PAGES ATTACHED, IF ANY:  1
12.       IT IS HEREBY DECLARED THAT WE ARE THE PERSONS WHO EXECUTED THIS CERTIFICATE OF MERGER WHICH EXECUTION IS OUR ACT AND DEED. (SEE INSTRUCTIONS)			THIS SPACE FOR FILING OFFICER USE 8926100012
SHEA HOMES LIMITED PARTNERSHIP A CALIFORNIA LIMITED PARTNERSHIP		MISSION VIEJO COMPANY
NAME OF SURVIVING BUSINESS/ENTITY		NAME OF DISAPPEARING/BUSINESS EN1TY
SIGNATURE		SIGNATURE
VICE PRESIDENT, J.F. SHEA CO., INC. GENERAL PARTNER		Vice President
POSITION		POSITION OR TITLE
SECOND SIGNATURE (IF REQUIRED)		SECOND SIGNATURE (IF REQUIRED)
Assistant Secretary		Assistant Secretary
POSITION OR TITLE		POSITION OR TITLE
13.       RETURN ACKNOWLEDGMENT TO:
NAME                 RONALD L. LAKEY ADDRESS           J. F. SHEA CO., INC. CITY                    655 BREA CANYON ROAD STATE                 WALNUT, CA 91789
ZIP CODE
SEC/STATE REV. 1/94	FORM LP-9 — FILING FEE: SEE INSTRUCTION Approved by Secretary of State

	Secretary of State Bill Jones	This Space For Filling Use Only
LIMITED PARTNERSHIP CERTIFICATE OF MERGER FILING FEE PLEASE SEE INSTRUCTIONS IMPORTANT— Road Instructions before completing this form.

1.	NAME OF SURVIVING PARTNERSHIP OR ENTITY   Shea Homes Limited Partnership	2.	TYPE OF ENTITY L.P.	3.	SECRETARY OF STATE FILE NUMBER, IF ANY 8926100012		4.	JURISDICTION CA
5.	NAME OF DISAPPEARING PARTNERSHIP/ENTITY   Shea Land Holdings, LLC	6.	TYPE OF ENTITY L.L.C.	7.	SECRETARY OF STATE FILE NUMBER, IF ANY 101997070042		8.	JURISDICTION AZ
9.	FUTURE EFFECTIVE DATE, IF ANY		MONTH		DAY	YEAR
10.	STATE MANNER OF CONVERTING PARTNERSHIP INTERESTS DENOTING EQUAL TREATMENT OF ALL INTERESTS OF SAME CLASS OR STATE THAT ALL INTERESTS ARE CANCELLED WITHOUT CONSIDERATION. (SEE INSTRUCTIONS)  All interests are cancelled without consideration

11.	IF A VOTE WAS REQUIRED PURSUANT TO SECTION 15678.2 OR SECTION 1113, ENTER THE OUTSTANDING INTERESTS OF EACH CLASS ENTITLED TO VOTE ON THE MERGER AND THE PERCENTAGE OF VOTE REQUIRED:
	SURVIVING PARTNERSHIP/ENTITY		DISAPPEARING PARTNERSHIP/ENTITY
	EACH CLASS ENTITLED TO VOTE ON THE MERGER	PERCENTAGE OF VOTE REQUIRED	EACH CLASS ENTITLED TO VOTE ON THE MERGER	PERCENTAGE OF VOTE REQUIRED
	limited partners	majority	members-(sole member) all must approve
12.	THE PRINCIPAL TERMS OF THE AGREEMENT OF MERGER WERE APPROVED BY A VOTE OF THE NUMBER OF INTERESTS OR SHARES OF EACH CLASS THAT EQUALED OR EXCEEDED THE VOTE REQUIRED
	SECTION 13 APPLICABLE ONLY IF SURVIVING ENTITY IS A CALIFORNIA LIMITED PARTNERSHIP
13.	COMPLETE ONLY THE BOXES WHERE INFORMATION IN THE CERTIFICATE OF LIMITED PARTNERSHIP IS BEING CHANGED. ADDITIONAL PAGES MAY BE ATTACHED, IF NECESSARY, CONSULT THE INSTRUCTIONS BEFORE COMPLETING THIS FORM.
	A. LIMITED PARTNERSHIP NAME
	B. THE STREET ADDRESS OF THE PRINCIPAL EXECUTIVE OFFICE
	ADDRESS      CITY		STATE	ZIP CODE
	C. THE STREET ADDRESS IN CALIFORNIA WHERE RECORDS ARE KEPT
	ADDRESS      CITY		STATE    CA	ZIP CODE
	D. THE ADDRESS OF GENERAL PARTNER(S)
	NAME      ADDRESS      CITY		STATE	ZIP CODE
	E. NAME CHANGE OF GENERAL PARTNER(S)                 FROM:			TO:
	F. GENERAL PARTNER(S) WITHDRAWN      NAME      NAME
	G. GENERAL PARTNER(S) ADDED
	NAME      ADDRESS      CITY		STATE	ZIP CODE
	H. THE NAME OF THE AGENT FOR SERVICE OF PROCESS
	I. THE ADDRESS OF THE AGENT FOR SERVICE OF PROCESS. COMPLETE ONLY IF AN INDIVIDUAL.
	STREET ADDRESS      CITY		STATE    CA	ZIP CODE
	J.   THE NUMBER OF GENERAL PARTNERS SIGNATURES REQUIRED FOR FILING CERTIFICATES OF AMENDMENT, RESTATEMENT, MERGER, DISSOLUTION, CONTINUATION AND CANCELLATION.
	K. ANY OTHER MATTERS THE PERSON FILING DETERMINES TO INCLUDE
SECTIONS 14 AND 15 ARE APPLICABLE ONLY IF THE SURVIVING ENTITY IS A FOREIGN LIMITED PARTNERSHIP OR OTHER BUSINESS ENTITY.
14.	ADDRESS OF THE SURVIVING FOREIGN LIMITED PARTNERSHIP OR OTHER BUSINESS ENTITY
	ADDRESS      CITY		STATE	ZIP CODE
15.	INFORMATION REQUIRED TO BE STATED IN THE CERTIFICATE OF MERGER PURSUANT TO THE LAWS UNDER WHICH EACH CONSTITUENT OTHER BUSINESS ENTITY WAS FORMED INCLUDING ANYTHING UNDER CALIFORNIA CORPORATIONS CODE SECTION 15876.2 OR 1113
16.	TOTAL NUMBER OF PAGES ATTACHED (IF ANY)
17.	I CERTIFY THAT THE STATEMENTS CONTAINED IN THIS DOCUMENT ARE TRUE AND CORRECT TO MY OWN KNOWLEDGE. I DECLARE THAT I AM THE PERSON WHO IS EXECUTING THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
	Shea Homes Limited Partnership, by J.F. Shea Co., Inc., Its General Partner		Shea Land Holdings, LLC, by Shea Homes Limited Partnership, by J.F. Shea Co., Inc., Its General Partner
	NAME OF SURVIVING PARTNERSHIP/ENTITY		NAME OF DISAPPEARING PARTNERSHIP ENTITY
	SIGNATURE		SIGNATURE
	Secretary		Secretary
	POSITION OR TITLE	DATE	POSITION OR TITLE	DATE
	SECOND SIGNATURE (IF REQUIRED)		SECOND SIGNATURE (IF REQUIRED)
	VP	10/19/98	VP	10/19/98
	POSITION OR TITLE	DATE	POSITION OR TITLE	DATE
	SEC/STATE (REV. 7/98)		FORM LP-9-FILING FEE: SEE INSTRUCTIONS     Approved by Secretary of State

	State of California Secretary of State Bill Jones
AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
A $30.00 filing fee must accompany this form.
IMPORTANT—Read Instructions before completing this form.		This Space For Filing Use Only

1.	SECRETARY OF STATE FILE NUMBER		2.	NAME OF LIMITED PARTNERSHIP
	198926100012			Shea Homes Limited Partnership, a CA limited partnership
3	COMPLETE ONLY THE BOXES WHERE INFORMATION IS BEING CHANGED, ADDITIONAL PAGES MAY BE ATTACHED, IF NECESSARY.
	A. LIMITED PARTNERSHIP NAME (END THE NAME WITH THE WORDS “LIMITED PARTNERSHIP” OR THE ABBREVIATION “LP.”)
	B. THE STREET ADDRESS OF THE PRINCIPAL OFFICE
	ADDRESS      CITY			STATE	ZIP CODE
	C. THE STREET ADDRESS IN CALIFORNIA WHERE RECORDS ARE KEPT
	STREET ADDRESS      CITY			STATE    CA	ZIP CODE
	D. THE ADDRESS OF GENERAL PARTNER(S)
	NAME      ADDRESS      CITY			STATE	ZIP CODE
	E. NAME CHANGE OF A GENERAL PARTNER                 FROM:				TO:
	F. GENERAL PARTNER(S) CESSATION
	G. GENERAL PARTNER ADDED
	NAME      ADDRESS      CITY			STATE	ZIP CODE
	H. THE PERSON(S) AUTHORIZED TO WIND UP AFFAIRS OF THE LIMITED PARTNERSHIP
	NAME      ADDRESS      CITY			STATE	ZIP CODE
	I. THE NAME OF THE AGENT FOR SERVICE OF PROCESS
	Max B. Johnson
	J. IF AN INDIVIDUAL, CALIFORNIA ADDRESS OF THE AGENT FOR SERVICE OF PROCESS
	ADDRESS    655 Brea Canyon Road      CITY              Walnut,			STATE    CA	ZIP CODE    91789
	K. NUMBER OF GENERAL PARTNERS’ SIGNATURES REQUIRED FOR FILING CERTIFICATES OF AMENDMENT, RESTATEMENT, MERGER, DISSOLUTION, CONTINUATION AND CANCELLATION. ¨
	L. OTHER MATTERS (ATTACH ADDITIONAL PAGES, IF NECESSARY).
4.	TOTAL NUMBER OF PAGES ATTACHED (IF ANY)
5.	I CERTIFY THAT THE STATEMENTS CONTAINED IN THIS DOCUMENT ARE TRUE AND CORRECT TO MY OWN KNOWLEDGE. I DECLARE THAT I AM THE PERSON WHO IS EXECUTING THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
	J.F. Shea Co., Inc., General Partner
		VP		Max B. Johnson	2/11/02
	SIGNATURE	POSITION OR TITLE		PRINT NAME	DATE
	SIGNATURE	POSITION OR TITLE		PRINT NAME	DATE
	SEC/STATE (rev. 10/96)				FORM LP-2-FILING FEE: $30.00 Approved by Secretary of State

	State of California Secretary of State Bill Jones
AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
A $30.00 filing fee must accompany this form.
IMPORTANT—Read Instructions before completing this form.
		This Space For Filing Use Only

1.	SECRETARY OF STATE FILE NUMBER		2.	NAME OF LIMITED PARTNERSHIP
	198926100012			Shea Homes Limited Partnership, a California Limited Partnership
3.	COMPLETE ONLY THE BOXES WHERE INFORMATION IS BEING CHANGED. ADDITIONAL PAGES MAY BE ATTACHED, IF NECESSARY.
	A. LIMITED PARTNERSHIP NAME (END THE NAME WITH THE WORDS “LIMITED PARTNERSHIP” OR THE ABBREVIATION “LP.”)
	B. THE STREET ADDRESS OF THE PRINCIPAL OFFICE
	ADDRESS      CITY			STATE	ZIP CODE
	C. THE STREET ADDRESS IN CALIFORNIA WHERE RECORDS ARE KEPT
	STREET ADDRESS      CITY			STATE    CA	ZIP CODE
	D. THE ADDRESS OF GENERAL PARTNER(S)
	NAME      ADDRESS      CITY			STATE	ZIP CODE
	E. NAME CHANGE OF A GENERAL PARTNER                 FROM:				TO:
	F. GENERAL PARTNER(S) CESSATION    J.F. Shea Co., Inc.
	G. GENERAL PARTNER ADDED
	NAME    J.F. Shea LLC      ADDRESS    655 Brea Canyon Road      CITY    Walnut			STATE    CA	ZIP CODE    91789
	H. THE PERSON(S) AUTHORIZED TO WIND UP AFFAIRS OF THE LIMITED PARTNERSHIP
	NAME      ADDRESS      CITY			STATE	ZIP CODE
	I. THE NAME OF THE AGENT FOR SERVICE OF PROCESS
	J. IF AN INDIVIDUAL, CALIFORNIA ADDRESS OF THE AGENT FOR SERVICE OF PROCESS
	ADDRESS      CITY			STATE    CA	ZIP CODE
	K. NUMBER OF GENERAL PARTNERS’ SIGNATURES REQUIRED FOR FILING CERTIFICATES OF AMENDMENT, RESTATEMENT, MERGER, DISSOLUTION, CONTINUATION AND CANCELLATION.
	L. OTHER MATTERS (ATTACH ADDITIONAL PAGES, IF NECESSARY)
4.	NUMBER OF PAGES ATTACHED (IF ANY)                                                                                   0
5.	I CERTIFY THAT THE STATEMENTS CONTAINED IN THIS DOCUMENT ARE TRUE AND CORRECT TO MY OWN KNOWLEDGE. I DECLARE THAT I AM THE PERSON WHO IS EXECUTING THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
		Robert R. O’Dell, Treasurer		J.F. Shea LLC, General Partner	12/5/02
	SIGNATURE	POSITION OR TITLE		PRINT NAME	DATE
		Peter C. Shea, Jr. Executive Committee Member
	SIGNATURE	POSITION OR TITLE
	SEC/STATE (REV. 08/02)				FORM LP-2-FILING FEE: $30.00 Approved by Secretary of State

	State of California Kevin Shelley Secretary of State
AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
A $30.00 filing fee must accompany this form.
IMPORTANT—Read Instructions before completing this form		This Space For Filing Use Only

1.	SECRETARY OF STATE FILE NUMBER		2.	NAME OF LIMITED PARTNERSHIP
	198926100012			Shea Homes Limited Partnership, a California limited partnership
3.	COMPLETE ONLY THE BOXES WHERE INFORMATION IS BEING CHANGED. ADDITIONAL PAGES MAY BE ATTACHED, IF NECESSARY:
	A. LIMITED PARTNERSHIP NAME (END THE NAME WITH THE WORDS “LIMITED PARTNERSHIP” OR THE ABBREVIATION “LP.”)
	B. THE STREET ADDRESS OF THE PRINCIPAL EXECUTIVE OFFICE			CITY AND STATE	ZIP CODE
	C. THE STREET ADDRESS IN CALIFORNIA WHERE RECORDS ARE KEPT			CITY                                     STATE                                                  CA	ZIP CODE
	D. THE ADDRESS OF THE GENERAL PARTNER(S)
	NAME	ADDRESS		CITY AND STATE	ZIP CODE
	E. NAME CHANGE OF A GENERAL PARTNER(S)
	FROM:			TO:
	F. GENERAL PARTNER(S) CESSATION  J.F. Shea LLC
	G. NAME OF GENERAL PARTNER(S) ADDED	ADDRESS		CITY AND STATE	ZIP CODE
	J.F. Shea Co., Inc.	655 Brea             Canyon Road		Walnut, CA	91789
	H. THE PERSON(S) AUTHORIZED TO WIND UP THE AFFAIRS OF THE LIMITED PARTNERSHIP
	NAME	ADDRESS		CITY AND STATE	ZIP CODE
	I. THE NAME OF THE AGENT FOR SERVICE OF PROCESS
	J. ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL			CITY                                     STATE                                                  CA	ZIP CODE
	K. NUMBER OF GENERAL PARTNERS’ SIGNATURES REQUIRED FOR FILING CERTIFICATES OF AMENDMENT, RESTATEMENT, MERGER, DISSOLUTION, CONTINUATION AND CANCELLATION:
	L. OTHER MATTERS (ATTACH ADDITIONAL PAGES, IF NECESSARY):
4.	I DECLARE THAT I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
BY:	J.F. Shea Co., Inc.

		Vice President
	SIGNATURE OF AUTHORIZED PERSON	POSITION OR TITLE OF AUTHORIZED PERSON
BY:	Ronald L. Lakey	5/7/04
	TYPE OR PRINT NAME OF AUTHORIZED PERSON	DATE
	SIGNATURE OF AUTHORIZED PERSON	POSITION OR TITLE OF AUTHORIZED PERSON
	TYPE OR PRINT NAME OF AUTHORIZED PERSON	DATE
	LP-2(REV.12/2003)	APPROVED BY SECRETARY OF STATE

	State of California Kevin Shelley Secretary of State
AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
A $30.00 filing fee must accompany this form.
IMPORTANT—Read instructions before completing this form		This Space For Filing Use Only

1.	SECRETARY OF STATE FILE NUMBER		2.	NAME OF LIMITED PARTNERSHIP
	198926100012			Shea Homes Limited Partnership, a California limited partnership
3.	COMPLETE ONLY THE BOXES WHERE INFORMATION IS BEING CHANGED. ADDITIONAL PAGES MAY BE ATTACHED, IF NECESSARY:
	A. LIMITED PARTNERSHIP NAME (END THE NAME WITH THE WORDS “LIMITED PARTNERSHIP” OR THE ABBREVIATION “LP.”)
	B. THE STREET ADDRESS OF THE PRINCIPAL EXECUTIVE OFFICE			CITY AND STATE	ZIP CODE
	C. THE STREET ADDRESS IN CALIFORNIA WHERE RECORDS ARE KEPT			CITY                                         STATE                                                      CA	ZIP CODE
	D. THE ADDRESS OF GENERAL PARTNER(S)
	NAME	ADDRESS		CITY AND STATE	ZIP CODE
	E. NAME CHANGE OF A GENERAL PARTNER(S)
	FROM:			TO:
	F. GENERAL PARTNER(S) CESSATION  J.F. Shea Co., Inc.
	G. NAME OF GENERAL PARTNER(S) ADDED	ADDRESS		CITY AND STATE	ZIP CODE
	J.F. Shea Co., LLC	655 Brea Canyon Road		Walnut, CA 91789
	H. THE PERSON(S) AUTHORIZED TO WIND UP AFFAIRS OF THE LIMITED PARTNERSHIP
	NAME	ADDRESS		CITY AND STATE	ZIPCODE
	I. THE NAME OF THE AGENT FOR SERVICE OF PROCESS
	J. ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL			CITY                                         STATE                                                      CA	ZIP CODE
	K. NUMBER OF GENERAL PARTNERS’ SIGNATURES REQUIRED FOR FILING CERTIFICATES OF AMENDMENT, RESTATEMENT, MERGER, DISSOLUTION, CONTINUATION AND CANCELLATION:
	L. OTHER MATTERS (ATTACH ADDITIONAL PAGES, IF NECESSARY):
4.	I DECLARE THAT I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.

SEE ATTACHMENT FOR SIGNATURES
SIGNATURE OF AUTHORIZED PERSON	POSITION OR TITLE OF AUTHORIZED PERSON
TYPE OR PRINT NAME OF AUTHORIZED PERSON	DATE
SIGNATURE OF AUTHORIZED PERSON	POSITION OR TITLE OF AUTHORIZED PERSON
TYPE OR PRINT NAME OF AUTHORIZED PERSON	DATE
LP-2(REV.12/2003)	APPROVED BY SECRETARY OF STATE

ATTACHMENT TO

AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP OF

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership

Dated: April 1, 2005	J.F. Shea, L.P.,
		a Delaware limited partnership,
		Its General Partner
	By:		JFS Management, L.P.,
				a Delaware limited partnership,
				Its General Partner
			By:		J.F. Shea Construction Management, Inc.,
						a California corporation,
						Its General Partner
					By:
							Ronald L. Lakey, Vice President

EX-3.2

Exhibit 3.2

SIXTH AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

SHEA HOMES LIMITED PARTNERSHIP,

A CALIFORNIA LIMITED PARTNERSHIP

SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Shea Homes Limited Partnership, a California Limited Partnership dated as of April 1, 2005, among J.F. Shea, L.P., a Delaware limited partnership, as general partner (the “General Partner”), and the Persons whose names are ascribed hereto, as Limited Partners (the “Sixth Amended Agreement”). Capitalized terms not otherwise defined herein shall have the meanings set forth in Article II below.

WHEREAS, J.F. Shea Co., Inc., as the General Partner, and Peter O. Shea, Balboa Partnership, Tahoe Partnership I, Shea Investments, Edmund and Mary Shea Real Property Trust and John F. Shea Family Trust, as Limited Partners, entered into a Partnership Agreement as of January 4, 1989 (the “Original Agreement”);

WHEREAS, the Original Agreement was most recently amended and restated on May 10, 2004, to convert the limited partnership of J.F. Shea Co., Inc. to that of General Partner and to convert the general partnership interest of J.F. Shea LLC to that of a Limited Partner (as so amended, the “Fifth Amended Agreement”);

WHEREAS, in April 1, 2005, a Certificate of Conversion was filed with the Delaware Secretary of State that converted J.F. Shea LLC, a Delaware limited liability company, into J.F. Shea, L.P., a Delaware limited partnership that continued to be a limited partner in Shea Homes Limited Partnership;

WHEREAS, the parties wish to amend and restate the Fifth Amended Agreement to convert the general partnership interest of J. F. Shea Co., Inc. to that of a Limited Partner and to convert the limited partnership interest of J.F. Shea, L.P. (formerly J.F. Shea LLC) to that of a General Partner;

WHEREAS, the economic interests of J.F. Shea Co., Inc. and IF. Shea, L.P. in the partnership shall be unchanged;

WHEREAS, by execution of this Agreement, each Partner consents to the foregoing conversion of partner status as reflected in this Sixth Amended Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained in this Sixth Amended Agreement, the undersigned parties hereby agree that the Fifth Amended Agreement shall be superseded and replaced in its entirety by this Sixth Amended Agreement, and the parties to this Sixth Amended Agreement further agree as follows:

ARTICLE I

FORMATION AND CONTINUATION OF THE PARTNERSHIP

Section 1.1. Formation and Continuation of the Partnership. The Partnership was formed as a limited partnership under the Act by the filing of the Certificate of Limited

Partnership of the Partnership with the Office of the Secretary of State of California on September 19, 1989. The parties hereto agree to continue the Partnership. The General Partner, for itself and as agent for the Limited Partners, shall make every reasonable effort to assure that an amendment to the Certificate, reflecting this Agreement, if necessary, and all other appropriate certificates and documents, are properly executed, and shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all the requirements for the continuation of the Partnership as a limited partnership under the Act and under all other laws of the State of California or such other jurisdictions in which the General Partner determines that the Partnership may conduct business. The Limited Partners shall promptly execute all relevant certificates and other documents as the General Partner shall request. The rights and duties of the Partners shall be as provided in the Act except as modified by this Agreement.

Section 1.2. Name. The name of the Partnership is “Shea Homes Limited Partnership, a California Limited Partnership”, as such name may be modified from time to time by the General Partner following written notice to the Limited Partners.

Section 1.3. Location of Principal Place of Business. The location of the principal place of business of the Partnership is 655 Brea Canyon Road, Walnut, California 91789. The General Partner may change the location of the principal place of business of the Partnership by notice in writing to the Limited Partners. In addition, the Partnership may maintain such other offices as the General Partner may deem advisable at any other place or places within or outside the United States.

Section 1.4. Name and Business Address of the General Partner. The name, business address and telecopy number of the General Partner is as follows:

J.F. Shea, L.P.

655 Brea Canyon Road

Walnut, CA 91789

Telecopy No.: (909) 839-1512

The General Partner may, from time to time, upon prior notice to the Limited Partners, change its name, business address or telecopy number.

Section 1.5. Purpose. The business purpose and character of business of the Partnership shall be (a) to engage in the construction business generally and (b) to (i) purchase, lease or otherwise acquire; (ii) hold, improve, develop, manage or otherwise deal with; (iii) lease, license, assign, sell, exchange, conveyor otherwise transfer; (iv) mortgage, hypothecate or otherwise encumber; and (v) construct, manage, operate, rent, lease, maintain, and otherwise deal with real property purchased by or contributed to the Partnership, along with all personal property associated therewith. The Partnership shall have the power to do and perform all things necessary for, incident to and connected with or arising out of such activities and shall take such actions as may be conducive to the accomplishment of such purposes.

Section 1.6. Agent for Service of Process. The agent for service of process for the Partnership shall be Max B. Johnson, c/o J.F. Shea, L.P., 655 Brea Canyon Road, Walnut, CA 91789, or such other agent for service of process as the General Partner may designate from time to time.

2

ARTICLE II

DEFINITIONS

“Act” means the California Revised Limited Partnership Act, California Corporations Code § 15611 et seq.

“Additional Limited Partner” means any Limited Partner admitted to the Partnership as an additional Limited Partner pursuant to Section 7.4.

“Adjusted Capital Account,” means, with respect to each Partner, such Partner’s Capital Account, as increased by the sum of (a) such Partner’s share of partnership minimum gain (within the meaning of Treasury Regulations §§ 1.704-2(g)(1) and (3)) and (b) its share of partner nonrecourse debt minimum gain (within the meaning of Treasury Regulations § 1.704-2(i)(5)), and as decreased by the adjustments referred to in Treasury Regulations § 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

“Agreement” means this Sixth Amended and Restated Agreement of Limited Partnership, as amended, modified or supplemented from time to time.

“Assignees” has the meaning set forth in Section 9.1.

“Capital Account” means, with respect to each Partner, the account established and maintained for the Partner on the books of the Partnership in compliance with Treasury Regulation §§ 1.704-1(b)(2)(iv) and 1.704-2, as amended. Subject to the preceding sentence, as of the date of this Agreement each Partner’s Capital Account shall equal the aggregate amounts set forth under “Restated Class B Amount” and “Restated Class C Amount” opposite such Partner’s name on Exhibit A and throughout the term of the Partnership will be (i) increased by the amount of (A) income and gains allocated to such Partner pursuant to Article IV, and (B) the amount of any cash or the Contribution Value of any property subsequently contributed by such Partner to the Partnership, and (ii) decreased by the amount of (A) losses and deductions allocated to such Partner pursuant to Article IV, and (B) the amount of distributions in cash and the value (as determined by the General Partner) of property (net of liabilities secured by the property that such Partner is treated as assuming or taking subject to pursuant to the provisions of Section 752 of the Code) distributed to such Partner.

“Capital Contribution” means the amount of cash or the Contribution Value of property contributed or deemed to be contributed to the Partnership by a Partner pursuant to Sections 3.1 and 3.2.

“Certificate” means the Certificate of Limited Partnership of the Partnership, as amended from time to time.

“Class B Amount” means at any time, with respect to any Partner, the excess of (a) the aggregate amount of Class B Capital Contributions made by such Partner prior to such time over (b) the aggregate amounts withdrawn from the Partnership after October 31, 2002 which represent a return of such Partner’s Class B Capital Contributions.

“Class B Capital Contributions” means, with respect to any Partner, the sum of (a) such Partner’s Restated Class B Amount and (b) the aggregate amount of Capital Contributions made by or on behalf of such Partner that the General Partner and the contributing Partner agree shall be deemed Class B Capital Contributions pursuant to Section 3.2 hereof.

3

“Class B Interest” means, with respect to any Partner, the interest in the Partnership which is reflected by that Partner’s Class B Amount, Restated Class B Amount, Class B Capital Contributions, Class B Liquidation Amount and Class B Preferred Return, plus any voting and other rights related to these interests.

“Class B Liquidation Amount” means, with respect to any Partner, at the time of liquidation, the excess of (a) the sum of (i) such Partner’s Unpaid Class B Preferred Returns at such time and (ii) the aggregate amount of Class B Capital Contributions made by such Partner prior to such time, over (b) the aggregate amounts withdrawn by such Partner after October 31, 2002 that represent a return of Class B Capital Contributions.

“Class B Preferred Return” means, with respect to any Partner, for any Fiscal Year (or portion thereof), a return equal to the Wells Fargo Bank Rate for such Fiscal Year (or portion thereof) calculated on the Class B Amount as of the first day of such Fiscal Year; provided, however, that the Class B Preferred Returns for all periods ending prior to October 31, 2002 shall be deemed to be zero as such Class B Preferred Returns are taken into account in the Restated Class B Amount.

“Class C Capital Contributions” means, with respect to any Partner, the sum of (a) such Partner’s Restated Class C Amount and (b) the aggregate amount of Capital Contributions made by or on behalf of such Partner that the General Partner and the contributing Partner agree shall be deemed Class C Capital Contributions pursuant to Section 3.2.

“Class C Interest” means, with respect to any Partner, the interest in the Partnership which is reflected by that Partner’s Class C Amount, Restated Class C Amount, Class C Capital Contributions and its right to all residual Net Income, Net Loss and distributions not otherwise allocated to the Class B interests, plus any voting or other rights related to these interests.

“Code” means the Internal Revenue Code of 1986, as amended from time to time (or any succeeding law).

“Contribution Value” means the fair market value as reasonably determined by the General Partner of property (other than cash) contributed by a Partner to the Partnership (net of liabilities secured by such contributed property that the Partnership is treated as assuming or taking subject to pursuant to the provisions of Section 752 of the Code).

“Fiscal Year” means the calendar year; provided, however, that the last Fiscal Year of the Partnership shall end on the date on which the Partnership is terminated.

“General Partner” means J.F. Shea, L.P., a Delaware limited partnership.

“Indemnified Party” has the meaning set forth in Section 8.9.

“Interest”, when used in reference to an interest in the Partnership, means the entire ownership interest of a Partner in the Partnership at any particular time.

“Limited Partner” means each Person named as a limited partner on Exhibit A hereto and each Person admitted as a Substituted Limited Partner or an Additional Limited Partner pursuant to

4

the terms of this Agreement, and, with respect to those provisions of this Agreement concerning a Limited Partner’s rights to receive a share of profits or other distributions or the return of a Limited Partner’s contribution, any Transferee of a Limited Partner’s Interest in the Partnership (except that a Transferee who is not admitted as a Limited Partner shall have only those rights specified by the Act and which are consistent with the terms of this Agreement).

“Liquidator” has the meaning set forth in Section 10.2(b).

“Majority-in-Interest of the Limited Partners”, at any time, means Limited Partners whose aggregate Percentage Interests at such time exceed 60% of all Limited Partners’ Percentage Interests at such time.

“Net Income” and “Net Loss”, respectively, mean the income or loss of the Partnership as determined in accordance with the method of accounting followed by the Partnership for Federal income tax purposes, including, for all purposes, any income exempt from tax and any expenditures of the Partnership which are described in section 705(a)(2)(B) of the Code; provided, however, that if any property is carried on the books of the Partnership at a value that differs from that property’s adjusted basis for tax purposes, gain, Loss, depreciation and amortization with respect to such property shall be computed with reference to the book basis of such property, consistently with the requirement of Treasury Regulation § 1.704-1(b)(2)(iv)(g); and provided, further, that any item allocated under Section 4.2 hereof shall be excluded from the computation of Net Income and Net Loss.

“Net Operating Cash Flow” means, with respect to any period, total cash receipts of the Partnership from the operations of the Partnership’s business (excluding loans and receipts from capital contributions to the Partnership) during such period plus any reductions in reserves during such period, from which there shall be deducted:

(a) all operating expenses of the Partnership (excluding any expense not involving a cash expenditure, such as any amount charged for depreciation) during such period,

(b) all payments made on account of any loans to the Partnership during such period,

(c) any sums expended by the Partnership during such period for capital expenditures which sums are not provided by capital contributions or loans, and

(d) a reasonable reserve for future working capital needs, the amount of which shall be determined by the General Partner.

“Partners” means the General Partner and all Limited Partners, collectively, where no distinction is required by the context in which the term is used.

“Partnership” means the limited partnership continued pursuant to this Agreement under the name “Shea Homes Limited Partnership, a California Limited Partnership.”

“Percentage Interests” means, with respect to any Partner, the percentage determined by dividing the aggregate amount of such Partner’s Adjusted Capital Account balance less such Partner’s Class B Amount by the aggregate amount of all Partners’ Adjusted Capital Account

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balances less all Partners’ Class B Amounts. The Percentage Interest of each Partner as of the date of this Agreement is set forth opposite such Partner’s name in Exhibit A. If any of the Partners’ Adjusted Capital Account balances are zero or negative, Percentage Interests shall equal the Partners’ Percentage Interests at the last time all Partners’ Adjusted Capital Account balances were positive.

“Permitted Transferee” means John F. Shea, Edmund H. Shea, Jr. and Peter O. Shea, their respective spouses or lineal descendants, or a trust for the benefit of any of the foregoing (each a “Shea Family Member”), or any corporation, partnership, limited liability company or other entity which is majority owned and controlled by one or more Shea Family Members.

“Person” means any individual, partnership, limited liability company, corporation, trust or other entity.

“Restated Class B Amount” means, with respect to any Partner, the amount set forth on Exhibit A opposite such Partner’s name in the column headed “Restated Class B Amounts.”

“Restated Class C Amount” means, with respect to any Partner, the amount set forth on Exhibit A opposite such Partner’s name in the column headed “Restated Class C Amounts.”

“Substituted Limited Partner” means any Person admitted to the Partnership as a substituted Limited Partner pursuant to Section 9.1(b).

“Tax Matters Partner” has the meaning set forth in Section 8.10.

“Treasury Regulations” means regulations promulgated under the Code by the Department of the Treasury of the United States of America.

“Unpaid Class B Preferred Return” means, as of any date for any Partner, the aggregate Class B Preferred Returns with respect to such Partner for all periods ending prior to such date, less all distributions made to such Partner after October 31,2002 pursuant to Section 5.1(a).

“Wells Fargo Bank Rate” means, with respect to any Fiscal Year, the lowest rate at which the General Partner can borrow from the Wells Fargo Bank on the first day of each month of such Fiscal Year.

“Withdrawing Partner” has the meaning set forth in Section 9.1.

ARTICLE III

CAPITAL CONTRIBUTIONS

Section 3.1. Capital Contributions. The General Partner and each Limited Partner as of the date hereof have made Capital Contributions to the Partnership and have received distributions from the Partnership prior to the date hereof in the aggregate amounts set forth on the books and records of the Partnership. For purposes of this Agreement, each Partner agrees that its Restated Class B Amount and Restated Class C Amount equal the respective amounts set forth opposite its name on Exhibit A hereto in the columns of the same headings.

Section 3.2. Additional Capital Contributions. The General Partner may from time to time, in its sole discretion, make additional Capital Contributions or accept additional Capital

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Contributions from Limited Partners. Following any such additional Capital Contribution which is deemed to be a Class C Capital Contribution, the Percentage Interest of each Partner shall be adjusted in the manner provided in Section 4.5(b).

Section 3.3. Interest on Capital Contributions. No Partner shall be entitled to interest on or with respect to any Capital Contribution. Notwithstanding the foregoing, a Partner may make loans to the Partnership on such terms (including rate of interest) as shall be determined by the General Partner.

Section 3.4. Withdrawal and Return of Capital Contributions. No Partner shall be entitled to withdraw any part of that Partner’s Capital Contribution or to receive any distributions from the Partnership except as expressly provided in this Agreement.

Section 3.5. Form of Contribution. Unless otherwise approved by the General Partner, all Capital Contributions shall be in cash.

ARTICLE IV

ALLOCATION OF INCOME AND LOSSES

Section 4.1. Allocation of Net Income and Net Loss. Except as provided in Section 4.2, the Partnership’s Net Income or Net Loss, as the case may be, and each item of income, loss and deduction entering into the computation thereof, for each Fiscal Year (or portion thereof) shall be allocated as follows:

(a) Net Income for such Fiscal Year (or portion thereof) shall be allocated as follows:

(i) first, an amount of such Net Income to the Partners in proportion to their Class B Amounts until each Partner has been allocated an amount equal to the excess of (x) the aggregate Class B Preferred Returns with respect to such Partner for such Fiscal Year (or portion thereof) and for all prior Fiscal Years over (y) the aggregate amount previously allocated to such Partner pursuant to this Section 4.l(a)(i);

(ii) second, an amount of such Net Income equal to the excess of (x) all Net Loss previously allocated to the General Partner pursuant to Section 4.1(b)(iii) over (y) all Net Income previously allocated to the General Partner pursuant to this Section 4.1(a)(ii) shall be allocated to the General Partner;

(iii) third, an amount of such Net Income equal to the excess of (x) all Net Loss previously allocated to the Partners pursuant to Section 4.1(b)(ii) over (y) all Net Income previously allocated to the Partners pursuant to this Section 4.1(a)(iii) shall be allocated to the Partners in proportion to each Partner’s share (based on Net Loss previously allocated to such Partner pursuant to Section 4.1(b)(ii) and Net Income previously allocated to such Partner pursuant to this Section 4.1(a)(iii)) of such excess of (x) over (y);

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(iv) fourth, an amount of such Net Income equal to the excess of (x) all Net Loss previously allocated to the Partners pursuant to Section 4.1(b)(i) over (y) all Net Income previously allocated to the Partners pursuant to this Section 4.1(a)(iv) shall be allocated to the Partners in proportion to each Partner’s share (based on Net Loss previously allocated to such Partner pursuant to Section 4.1(b)(i) and Net Income previously allocated to such Partner pursuant to this Section 4.1(a)(iv)) of such excess of (x) over (y); and

(v) the remaining amount of such Net Income, to the Partners in proportion to their Percentage Interests.

(b) Net Loss for such Fiscal Year (or portion thereof) shall be allocated as follows:

(i) first, to the Partners that have made Class C Capital Contributions, in proportion to their Percentage Interests, until the Adjusted Capital Account balance of each Partner equals the sum of such Partner’s Class B Liquidation Amount;

(ii) second, to the Partners that have made Class B Capital Contributions, in proportion to their Adjusted Capital Account balances, until each Partner’s Adjusted Capital Account balance is equal to zero; and

(iii) the remaining amount of such Net Loss (other than any partnership nonrecourse deductions (within the meaning of Treasury Regulations § 1.704-2(c)) and any partner nonrecourse deductions (within the meaning of Treasury Regulations § 1.704-2(i)(2)) to the General Partner.

Section 4.2. Regulatory Provisions.

(a) The General Partner shall modify the allocations provided for in Section 4.1 as it deems appropriate to comply with Treasury Regulations §§ 1.704-1(b) and 1.704-2. Without limiting the generality of the foregoing, the General Partner shall, prior to making any allocations required by Section 4.1, make any allocations required by the “minimum gain chargeback” provision of Treasury Regulations § 1.704-2(f), the “chargeback of partner nonrecourse debt minimum gain” provision of Treasury Regulations § 1.704-2(i)(4) and the “qualified income offset provision of Treasury Regulations § 1.704-1(b)(2)(ii)(d); in addition, (i) partnership nonrecourse deductions (within the meaning of Treasury Regulations § 1.704-2(b)) shall be allocated to the Partners in proportion to their Percentage Interests and (ii) partner nonrecourse deductions (within the meaning of Treasury Regulations § 1.704-2(i)(2)) shall be allocated to the Partner that bears the economic risk of loss for the liability in accordance with Treasury Regulations § 1.704-2(i).

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(b) The General Partner shall limit allocations of Net Losses to any Partner if such allocation would cause such Partners’ Adjusted Capital Account balance, to be negative while any other Partner’s Adjusted Capital Account balance is positive. The General Partner may also make allocations reasonably designed to offset allocations provided for in this Section 4.2 to the extent such allocations shall not be offset by other allocations provided for in this Section 4.2.

(c) Solely for purposes of adjusting Capital Accounts (and not for tax purposes), if any property is distributed in kind, the difference between the fair market value of the property and its book value at the time of distribution shall be treated as gain or loss recognized by the Partnership and allocated pursuant to Section 4.1.

(d) Except to the extent otherwise required by the Code and Treasury Regulations, if an Interest or part thereof is transferred in any Fiscal Year, the items of income, gain, loss, deduction and credit allocable to the Interest for such Fiscal Year shall be apportioned between the transferor and the transferee in proportion to the number of days in such Fiscal Year the Interest is held by each of them, except that, if they agree between themselves and so notify the Partnership within 30 days after the transfer, then at their option and expense, (i) all items or (ii) extraordinary items, including capital gains and losses, may be allocated to the Person who held the Interest on the date such items were realized or incurred by the Partnership.

Section 4.3. Allocations for Income Tax Purposes. The income, gains, losses, deductions and credits of the Partnership for Federal, state and local income tax purposes shall be allocated in the same manner as the corresponding items entering into the computation of Net Income and Net Losses were allocated pursuant to Sections 4.1 and 4.2, provided that solely for Federal, state and local income and franchise tax purposes and not for book or Capital Account purposes, income, gain, loss and deduction with respect to property properly carried on the Partnership’s books at a value other than its tax basis shall be allocated in accordance with the requirements of Code Section 704 (c) and Treasury Regulations § 1.704-3, using any method permitted by the Treasury Regulations that the General Partner deems to be appropriate.

Section 4.4. Withholding. The Partnership shall comply with withholding requirements under Federal, state and local law and shall remit amounts withheld to and file required forms with the applicable jurisdictions. To the extent the Partnership is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Partner, the amount withheld shall be treated as a distribution in the amount of the withholding to that Partner. In the event of any claimed over-withholding, Partners shall be limited to an action against the applicable jurisdiction. If the amount withheld was not withheld from actual distributions, the Partnership may, at its option, (i) require the Partner to reimburse the Partnership for such withholding or (ii) reduce any subsequent distributions by the amount of such withholding. Each Partner agrees to furnish the Partnership with any representations and forms as shall reasonably be requested by the Partnership to assist it in determining the extent of, and in fulfilling, its withholding obligations.

Section 4.5. Revaluation of Property. (a) The assets of the Partnership may be revalued on the books of the Partnership to equal their fair market values in accordance with Treasury Regulations § 1.704-1(b)(2)(iv)(f) at the following times: (A) immediately prior to the acquisition of an additional Interest in the Partnership by any existing or new Partner in exchange for more than a de minimis Class C Capital Contribution to the capital of the Partnership pursuant to Sections 3.2, and 7.4; (B) immediately prior to any in-kind distribution pursuant to Section 5.2 (other

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than a de minimis amount) before taking into account such distribution; (C) immediately prior to any withdrawal of more than a de minimis portion of the Capital Account pursuant to Section 5.3 before taking into account such withdrawal; and (D) the occurrence of any other event upon which the General Partner believes such revaluation is appropriate. Upon revaluation of the Partnership’s assets pursuant to this Section 4.5(a), (i) the fair market value of the assets shall be determined by the Partners and (ii) each Partner’s Capital Account shall be adjusted as if such assets were sold for their fair market values and the Net Income and Net Losses recognized on such sale were allocated to the Partners in accordance with Section 4.1.

(b) Immediately following the occurrence of any event which has caused the revaluation of the assets of the Partnership pursuant to Section 4.5(a), each Partner’s Percentage Interest shall be adjusted to equal the percentage determined by dividing the balance in each Partner’s Capital Account less such Partner’s Class B Amount immediately after such revaluation by the aggregate balance of all Partners’ Capital Accounts less all Partners’ Class B Amounts immediately after such revaluation.

(c) For purposes of Section 4.1, the Fiscal Year in which the assets of the Partnership are revalued pursuant to Section 4.5(a) shall be treated as two separate portions of a Fiscal Year, one beginning on the first day of the Fiscal Year and ending on the day of the revaluation and the other beginning on the day immediately following the revaluation and ending on the last day of the Fiscal Year, and Net Income and Net Loss shall be allocated to the Partners separately for each portion of the Fiscal Year based on operations for such portion of the year as reflected by a closing of the Partnership’s books. Analogous divisions of the Fiscal Year into multiple portions of a Fiscal Year will be made if there is more than one revaluation of assets in any Fiscal Year.

ARTICLE V

DISTRIBUTIONS AND WITHDRAWALS

Section 5.1. Distributions of Net Operating Cash Flow. Subject to Section 5.4, the Partnership shall from time to time, at the discretion of the General Partner, make distributions of Net Operating Cash Flow with respect to the period from the date of the immediately preceding distribution under this Section 5.1 to the date of such distribution to the Partners as follows (unless a different order of priority is authorized by the unanimous consent of all the Partners):

(a) first, an amount equal to the aggregate Unpaid Class B Preferred Returns of all Partners as of the date of such distribution shall be distributed to the Partners in proportion to their Unpaid Class B Preferred Returns as of the date of such distribution; and

(b) any remaining amount of such Net Operating Cash Flow shall be distributed to the Partners in proportion to their Percentage Interests.

Section 5.2. In-Kind Distributions of Assets. Subject to Section 5.4, the Partnership may, from time to time, at the discretion of the General Partner, make in-kind distributions of assets to the Partners. Prior to making any in-kind distribution under this Section 5.2 (other than a de minimis distribution), the General Partner shall determine the fair market value of the assets of the Partnership and shall adjust the Partners’ Capital Accounts in accordance with Section 4.5(a). Assets distributed under this Section 5.2 shall be distributed to the Partners in

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proportion to their adjusted Capital Account balances. If the General Partner determines that an in-kind distribution to any Partner will result in adverse legal or tax consequences to that Partner or to any other Partner, the General Partner may make a cash distribution in lieu of the in-kind distribution. Following any distribution under this Section 5.2, the General Partner may revise Exhibit A to reflect changes in the Partners’ Class B Amounts and Class C Amounts.

Section 5.3. Withdrawals of Capital Account Balance. Subject to Section 10.4, a Partner may withdraw all or any portion of its Capital Account balance only at such time or times and in such manner as shall be approved by unanimous consent of Partners, which consent may be granted or withheld in each Partner’s sole discretion. Any Partner withdrawing the entire balance of its Capital Account shall, upon the completion of the withdrawal, be deemed to have withdrawn from the Partnership pursuant to Section 10.1.

Section 5.4. Limitations on Distributions. Notwithstanding anything herein contained to the contrary:

(a) no distribution under this Agreement shall be made if such distribution would violate the Act; and

(b) no distribution shall be made to any Limited Partner if, after giving effect to such distribution, such Partner’s Adjusted Capital Account shall have a negative balance.

ARTICLE VI

BOOKS OF ACCOUNT

Section 6.1. Books and Records. Proper and complete records and books of account shall be kept by the General Partner in accordance with the Act in which shall be entered fully and accurately all transactions and other matters relative to the Partnership’s business as are usually entered into records and books of account maintained by Persons engaged in businesses of a like character, including a Capital Account for each Partner. Appropriate supporting documentation shall be maintained, so that all of the elements of cost entering into each of these accounts shall be determined in connection with the terms of this Agreement. The Partnership books and records shall be kept in accordance with the manner of accounting determined by the General Partner. The determinations of the General Partner with respect to the treatment of any item or its allocation for Federal, state or local tax purposes shall be binding upon all Partners so long as that determination is not inconsistent with any express term of this Agreement. The books and records shall at all times be maintained at the principal office of the Partnership and shall be open to the examination and inspection of the Partners or their duly authorized representative for a proper purpose during reasonable business hours in accordance with the Act. The Partnership shall maintain at its office and make available to each Partner or any designated representative of a Partner a list of names and addresses of, and Interests owned by, all Partners.

Section 6.2. Partnership Tax Returns. The Partnership shall file a Federal income tax return and all other tax returns required to be filed by the Partnership for each Fiscal Year or part thereof, and shall provide a copy of the Partnership’s Federal, state and local income tax or information returns at least 30 days prior to the due date (taking into account any extensions) of such return, to each Person who at any time during such Fiscal Year was a Partner.

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Section 6.3. Valuation Adjustments. The economic provisions of this Agreement are predicated upon estimates of the fair market value of various assets, properties and interests as of the date of the contributions or distributions, which in turn were based upon estimates, studies and reports prepared prior to the closing date of the applicable transaction. To the extent it is determined that the actual fair market value of those assets, properties and interests as of the closing date is materially different from the pre-closing estimates, the parties agree to make post-closing adjustments by applying the revised fair market values as of the closing date to the economic provisions of this Agreement in order to achieve as closely as possible the intended relative economic balance between the interests of the parties. The parties agree to fully cooperate and to execute any and all documents and, if required, transfer funds, assets or property to achieve this result. The parties intend for all such adjustments to be effective as if they had taken place at the original closing date.

ARTICLE VII

POWERS, RIGHTS AND DUTIES OF THE LIMITED PARTNERS

Section 7.1. Rights and Powers. Except as otherwise expressly set forth in this Agreement, the Limited Partners shall have all of the rights and powers of a limited partner under the Act. It is expressly understood and agreed that any Limited Partner may engage in or possess any interests in business ventures and may engage in other activities of every kind and description independently or with others in addition to those relating to the Partnership. Neither the Partnership nor any Partner shall have any right by virtue of this Agreement or the partnership relationship created hereby in or to other ventures or activities of any Limited Partner or any affiliate of such Limited Partner or to the income or proceeds derived therefrom.

Section 7.2. Limitations. Except as otherwise specifically provided herein, the Limited Partners shall not participate in the management or control of the Partnership’s business nor shall they transact any business for the Partnership, nor shall they have the power to act for or bind the Partnership, these powers being vested solely and exclusively in the General Partner. The Limited Partners shall have no interest in the properties or assets of the General Partner, or any equity therein, or in any proceeds of any sales thereof (which sales shall not be restricted in any respect except as set forth in this Agreement) by virtue of acquiring or owning an Interest in the Partnership.

Section 7.3. Liability. Except as may be required by the Act, the Limited Partners shall be liable for the repayment and discharge of debts and obligations of the Partnership only to the extent of amounts contributed by the Limited Partners pursuant to the provisions of Article III. The Limited Partners shall not otherwise have any liability whatsoever with respect to the debts and obligations of the Partnership and shall not be obligated to make additional contributions to the Partnership, except as required by California law.

Section 7.4. Admission of Additional Limited Partners. Any Person may be admitted to the Partnership as an Additional Limited Partner at any time with the consent of the General Partner. Such Person shall make such Capital Contribution as the General Partner shall determine. Upon admission of an Additional Limited Partner for a Class C Capital Contribution, the Percentage Interest of each Partner shall be adjusted in accordance with Section 4.5(b).

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ARTICLE VIII

POWERS, RIGHTS AND DUTIES OF GENERAL PARTNER

Section 8.1. Authority. The General Partner shall have exclusive and complete authority and discretion to manage the operations and affairs of the Partnership and to make all decisions regarding the business of the Partnership. Any such action shall constitute the act of and serve to bind the Partnership, the Partners and their respective successors, assigns and personal representatives. Persons dealing with the Partnership are entitled to rely conclusively on the power and authority of the General Partner as set forth in this Agreement.

Section 8.2. Powers and Duties of General Partner. Except as otherwise specifically provided herein, the General Partner shall have all rights and powers of general partners under the Act, and shall have all authority, rights and powers in the management of the Partnership business to do any and all other acts and things necessary, proper, convenient or advisable to effectuate the purposes of this Agreement, including by way of illustration but not by way of limitation, the following:

(a) to prepare and complete any applications, maps, utility easements and other documents, and liaison with governmental agencies and public service corporations, as necessary, to proceed with and complete the development of property held by the Partnership and to comply with all applicable laws, ordinances, and regulations;

(b) to enter into, execute, acknowledge or deliver contracts, orders, subdivision plans, bonds to governmental units to insure undertakings of the Partnership, or other undertakings for the construction of property held by the Partnership, and related facilities, and other improvements and for surveying, architectural, engineering, legal and other professional services;

(c) to manage and maintain property held by the Partnership and administration of leases relating thereto;

(d) to direct and supervise any construction activities;

(e) to acquire, hold, sell, transfer, exchange, pledge, dispose of and otherwise deal with all or any part of the Partnership assets, and incident thereto, to liquidate Partnership assets at any time during the term of the Partnership and to reinvest the proceeds thereof and to administer purchasing, contracting, and accounting, including approval for payment of any proper invoices received for goods delivered and services rendered to the Partnership with respect to the Partnership’s business activities;

(f) to maintain such insurance coverage as it may deem necessary;

(g) to do such other acts as the General Partner may deem necessary or advisable, or as may be incidental to or necessary for the conduct of the business of the Partnership, including, without limitation, to enter into, make and perform restrictive agreements, including waivers and approvals thereunder, instruments

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conveying rights-of-way for public or private use, or other easements, leases, options, and any contracts or agreements calling for the same, and escrow agreements, instruments, and deposits;

(h) to consult with legal counsel, independent public accountants and other experts selected by the General Partner on behalf of the Partnership;

(i) to establish such reserves from Partnership funds as the General Partner, in its sole discretion, may deem necessary or advisable for Partnership operations and for the payment of Partnership obligations;

(j) to make unsecured loans or to become a surety, guarantor, endorser or accommodation endorser for any other firm or person in the name of the Partnership;

(k) to open, maintain and close bank accounts and draw checks or other orders for the payment of money and to negotiate, enter into, and execute on behalf of the Partnership nonrecourse mortgage indebtedness secured solely by the real property of the Partnership;

(1) to employ or retain and dismiss accountants, consultants, attorneys, and such other agents and employees for the Partnership as it may deem necessary or advisable, and authorize any such agent or employee to act for and on behalf of the Partnership;

(m) to take all action which may be necessary or appropriate for the continuation of the Partnership’s valid existence as a limited partnership under the laws of the State of California and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Limited Partners or to enable the Partnership to conduct the business in which it is engaged;

(n) to borrow money in the name of the Partnership or utilize collateral owned by the Partnership as security;

(o) to prepare or cause to be prepared all Partnership tax returns and to make routine tax elections, including but not limited to those allowed under Code Section 754;

(p) to purchase, acquire, hold, sell, or dispose of interests in entities that may engage in any activities in which the Partnership may engage; and

(q) to execute and deliver any and all agreements, instruments or other documents as are necessary or desirable to carry out the intentions and purposes of the above duties and powers.

Section 8.3. Partnership Funds; Title to Property. Partnership funds shall be held in the name of the Partnership and shall not be commingled with those of any other Person. Partnership funds shall be used by the General Partner only for the business of the Partnership. All real and personal property of the Partnership, including but not limited to its interest in the Property, shall be held in the name of “Shea Homes Limited Partnership, a California Limited Partnership.”

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Section 8.4. Transactions with Affiliates.

(a) Nothing in this Agreement shall preclude the General Partner from causing or permitting the Partnership to contract for the performance of services by or purchase or lease any property from the General Partner or any of its affiliates, provided that the compensation, price or rental therefor is competitive with the compensation, price or rental paid to other Persons in the area engaged in the business of rendering comparable services or selling or leasing comparable property which could reasonably be made available to the Partnership. Nothing herein shall be construed as a guarantee by the General Partner of the performance by any affiliate, designee or nominee of its obligations under any contract between any such affiliate and the Partnership.

(b) Except as otherwise provided in this Agreement or consented to by all of the Limited Partners and except for the General Partner’s interest in distributions, capital, profits, income, gain, loss, deduction and credit of the Partnership, neither the General Partner nor any affiliate of the General Partner shall receive compensation from the Partnership.

Section 8.5. Other Activities and Competition; Additional Investments by the General Partner and Affiliates. The General Partner shall devote such time to the Partnership as is reasonably necessary to carry out its duties as General Partner. The General Partner shall not be required to manage the Partnership as its sole and exclusive function. The General Partner, its affiliates and agents, officers, directors, partners and employees of the General Partner and their affiliates may enter into transactions with the Partnership and may engage in or possess any interests in business ventures and may engage in other activities of every kind and description independently or with others in addition to those relating to the Partnership. The Limited Partners authorize, consent to and approve such present and future activities by such Persons, whether or not such activities may conflict with any interest of the Partnership or any of the Partners or be competitive with the business of the Partnership or represent an opportunity that the Partnership might wish to engage in. Without limiting the generality of the foregoing, the General Partner shall not have any obligation or responsibility to disclose or refer any such investments or other activities to the Partnership or any Partner. Neither the Partnership nor any Partner shall have any right by virtue of this Agreement or the partnership relationship created hereby in or to other ventures or activities of the General Partners or their affiliates or to the income or proceeds derived therefrom.

Section 8.6. Nature and Validity of Transactions with General Partner and Affiliates. Subject to Sections 8.4 and 8.8, the General Partner or any affiliate of the General Partner may be employed or retained by the Partnership in any capacity. Except as provided in Section 8.4 or 8.8, the validity of any transaction, agreement or payment involving the Partnership and the General Partner or any of its affiliates otherwise permitted by this Agreement shall not be affected by reason of the relationship between the General Partner and such affiliate or the approval of such transaction, agreement or payment by the General Partner.

Section 8.7. Liability. Neither the General Partner nor any of its affiliates, nor any officer, agent, partner or employee of the General Partner or any of its affiliates shall be personally liable for the return of any portion of the Capital Contributions of the Limited Partners; the return of these Capital Contributions shall be made solely from assets of the Partnership. Neither the General Partner nor any of its affiliates nor any officer, agent, partner or employee of the General Partner or any of its affiliates shall be required to pay to the Partnership or the Limited Partners any deficit in a Limited Partner’s Capital Account upon dissolution or otherwise. The Limited Partners shall not have the right to demand or receive property other than cash for their Interest. Neither the General

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Partner nor any of its affiliates nor any officer, agent, partner or employee of the General Partner or any of its affiliates shall be liable, responsible or accountable to the Partnership or the Limited Partners for (a) any act or omission performed or omitted by them, including without limitation, those acts performed or omitted on advice of legal counsel, accountants, brokers or consultants of the Partnership, or for any costs, damages or liabilities arising therefrom, or by law, unless that act or omission was performed or omitted fraudulently or in bad faith or constituted gross negligence or willful misconduct, (b) any tax liability imposed on the Partnership or the Limited Partners or (c) any loss due to the negligence, dishonesty or bad faith of any employee, officer, broker, consultant or other agent of the Partnership selected, engaged or retained in good faith by the General Partner or any officer or partner in the General Partner.

Section 8.8. Limits on General Partner’s Powers. Notwithstanding anything in this Agreement to the contrary, the General Partner shall not:

(a) without the prior consent of the specific act by all the Limited Partners given in this Agreement or by other written instrument executed and delivered by all the Limited Partners subsequent to the date of this Agreement, cause or permit the Partnership to knowingly perform any act that would subject any Limited Partner to liability as a general partner in any jurisdiction.

(b) without the prior consent of the specific act by a Majority-in-Interest of the Limited Partners, cause or permit the Partnership to:

(i) merge, sell, exchange, lease, mortgage, pledge or otherwise transfer all or a substantial part of the assets of the Partnership other than in the ordinary course of the business of the Partnership;

(ii) transfer or assign rights in the Partnership’s property for other than a Partnership purpose;

(iii) incur indebtedness other than in the ordinary course of the business of the Partnership;

(iv) change the nature of the business of the Partnership;

(v) commit any voluntary act of bankruptcy;

(vi) engage in transactions in which the General Partner has an actual or potential conflict of interest with the Limited Partners in the Partnership

(vii) merge or consolidate with any other entity;

(viii) admit new Partners except as specifically provided for in this Agreement;

(ix) adopt or change a significant tax or accounting practice or principle of the Partnership, any significant tax or accounting election, or the adoption of any position for purposes of

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any tax return that will have a Material Adverse Effect on any Partner (unless the making of such election is expressly contemplated by this Agreement); or

(x) change the fiscal year or change the independent accountants of the Partnership.

Section 8.9. Indemnification.

(a) The Partnership shall indemnify and hold harmless the General Partner, its affiliates and the officers, agents, partners and employees of the General Partner and its affiliates of the General Partner (each an “Indemnified Party”), from and against any loss, expense, damage or injury suffered or sustained by them, by reason of any acts, omissions or alleged acts or omissions arising out of their activities on behalf of the Partnership or in furtherance of the interests of the Partnership, including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim and including any payments made by the General Partner to any affiliate, or any of their respective officers, agents or employees pursuant to an indemnification agreement no broader than this Section 8.9, provided, that none of the General Partner, any of its affiliates, any officer, agent or employee of the General Partner or any of its affiliates shall be entitled to indemnification under this Section 8.9(a) if the acts, omissions or alleged acts or omissions upon which such actual or threatened action, proceeding or claims are based were performed or omitted fraudulently or in bad faith or constituted gross negligence or willful misconduct.

(b) The Partnership shall indemnify and hold harmless the Limited Partners, including, but not limited to, their trustees and beneficiaries, (each an “Indemnified Party”), from and against any loss, expense, damage or injury suffered or sustained by them, by reason of any acts, omissions or alleged acts or omissions arising out of their activities on behalf of the Partnership or in furtherance of the interests of the Partnership, including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim and including any payments made by the Limited Partners to any trustee or beneficiary pursuant to an indemnification agreement no broader than this Section 8.9, provided, that none of the Limited Partners, any of their affiliates, any officer, agent or employee of the Limited Partners or any of their affiliates shall be entitled to indemnification under this Section 8.9(b) if the acts, omissions or alleged acts or omissions upon which such actual or threatened action, proceeding or claims are based were performed or omitted fraudulently or in bad faith or constituted gross negligence or willful misconduct.

(c) Any indemnification pursuant to this Section 8.9 shall be only from the assets of the Partnership.

Section 8.10. Tax Matters Partner. For purposes of Code section 6231(a)(7), the “Tax Matters Partner” shall be the General Partner as long as it remains the General Partner of the Partnership. The Tax Matters Partner shall keep the Limited Partners fully informed of any inquiry, examination or proceeding. The Tax Matters Partner shall promptly notify Partners who do not qualify as “notice partners” within the meaning of Code section 6231(a)(i) of the beginning and completion of an administrative proceeding at the Partnership level promptly upon such notice being received by the Tax Matters Partner.

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Section 8.11. Expenses of the Partnership. The Partnership shall pay, and the General Partner shall not be obligated to pay, all expenses incurred by or on behalf of the Partnership, including without limitation the general and administrative expenses incurred by the General Partner on behalf of the Partnership. The General Partner may, in its discretion, advance funds to the Partnership for the payment of these expenses and shall be entitled to the reimbursement of any funds so advanced.

ARTICLE IX

TRANSFERS OF INTERESTS BY PARTNERS

Section 9.1. General.

(a) No Partner may sell, assign, pledge, or in any manner dispose of, or create, or suffer the creation of, a security interest in or any encumbrance on all or a portion of its Interest in the Partnership (the commission of any such act being referred to as a “Transfer”, any person who effects a Transfer being referred to as a “Transferor” and any person to whom a Transfer is effected being referred to as a “Transferee”), except as otherwise provided in Section 9.1(d), unless such Transfer is made in accordance with the provisions of this Article IX. No Transfer of an Interest in the Partnership shall be effective until such date as all requirements of this Article IX in respect thereof have been satisfied and, if consents, approvals or waivers are required by the General Partner, all of same shall have been confirmed in writing by the General Partner. Any Transfer or purported Transfer of an Interest in the Partnership not made in accordance with this Agreement (a “Void Transfer”) shall be null and void and of no force or effect whatsoever. Any amounts otherwise distributable to a Limited Partner pursuant to Article V, in respect of a direct or indirect interest in the Partnership that has been Transferred in violation of this Section 9.1, may be withheld by the General Partner following the occurrence of a Void Transfer until the Void Transfer has been rescinded, whereupon the amount withheld shall be distributed without interest.

(b) The Transferee of a Limited Partner’s Interest in the Partnership may be admitted to the Partnership as a Substituted Limited Partner only upon the receipt of the prior written consent of the General Partner, which consent may be given or withheld in the General Partner’s sole discretion. Unless a Transferee of a Limited Partner’s Interest in the Partnership is admitted as a Substituted Limited Partner under this Section 9.l(b), it shall have none of the powers of a Limited Partner hereunder and shall only have such rights of an assignee under the Act as are consistent with the other terms and provisions of this Agreement. No Transferee of a Limited Partner’s Interest shall become a Substituted Limited Partner unless such Transfer shall be made in compliance with Section 9.1(a) and Section 9.3. No Transferee of the General Partner’s Interest in the Partnership shall be admitted to the Partnership as a General Partner without the prior consent of a Majority-in-Interest of the Limited Partners, which consent may be given or withheld in the sole discretion of each Limited Partner. Unless a Transferee of the General Partner’s Interest in the Partnership is admitted as a General Partner under this Section 9.l(b), it shall have none of the powers of a General Partner hereunder and shall have only the rights of an assignee of a limited partnership interest under the Act as are consistent with the other terms and provisions of this Agreement.

(c) Upon the Transfer of the entire Interest in the Partnership of a Partner and effective upon the admission of such Partner’s Transferee pursuant to Section 9.l(b) above, the transferring Partner shall be deemed to have withdrawn from the Partnership as a Partner, provided that in the case of a Transfer by the General Partner, the Transferee must be admitted as a General Partner.

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(d) Upon the death, disability, winding-up and termination (in the case of a Partner that is a partnership), dissolution and termination (in the case of a Partner that is a corporation), termination (in the case of a Partner that is a trust), withdrawal in contravention of Section 10.1 or occurrence of an event described in Section 15642 of the Act with regard to a General Partner, or an event described in Section 15663 or Section 15675 of the Act with regard to a Limited Partner (whether a Limited Partner or a General Partner, the “Withdrawing Partner”), the General Partner shall have the right to treat any successor(s)-in-interest to the Withdrawing Limited Partner as assignees of the Interest in the Partnership of the Withdrawing Limited Partner, with only such rights of an assignee of a partnership interest under the Act as are consistent with the other terms and provisions of this Agreement and with no other rights under this Agreement. Without limiting the generality of the foregoing, the successor(s)-in-interest of the Withdrawing Limited Partner shall only have the rights to allocations and distributions provided in Articles IV, V and X, unless otherwise waived by the General Partner in its sole discretion. For purposes of this Section 9.l(d), if the Withdrawing Limited Partner’s Interest in the Partnership is held by more than one person (for purposes of this subsection, the “Assignees”), the Assignees shall appoint one person with full authority to accept notices and distributions with respect to such Interest in the Partnership on behalf of the Assignees and to bind them with respect to all matters in connection with the Partnership or this Agreement.

(e) The General Partner shall reflect each Transfer and admission authorized under this Article IX (including the terms and conditions imposed thereon by the General Partner) by preparing an amendment to this Agreement, dated as of the date of such Transfer, including without limitation an amendment of Exhibit A attached hereto to reflect such Transfer or admission. The form and content of all documentation delivered to the General Partner pursuant to this Section 9.1 shall be subject to the approval of the General Partner, which approval may be granted or withheld in the General Partner’s sole discretion.

Section 9.2. Consequences of Transfers Generally.

(a) In the event of any Transfer or Transfers permitted under this Article IX, the Transferor and the Interest in the Partnership that is the subject of such Transfer shall remain subject to all terms and provisions of this Agreement and the Transferee shall hold such Interest in the Partnership subject to all unperformed obligations of the Transferor and shall agree in writing to the foregoing if requested by the General Partner. Any successor or Transferee hereunder or any successor general partner shall be subject to and bound by all the provisions of this Agreement as if originally a party to this Agreement.

(b) Unless a Transferee of a Limited Partner’s Interest becomes a Substituted Limited Partner, such Transferee shall have no right to obtain or require any information or account of Partnership transactions, or to inspect the Partnership’s books, or to vote on Partnership matters. Such a Transfer shall, subject to the last sentence of Section 9 .1 (a), merely entitle the Transferee to receive the share of distributions, income and losses to which the transferring Limited Partner otherwise would be entitled. Each Limited Partner agrees that such Limited Partner will, upon request of the General Partner, execute such certificates or other documents and perform such acts as the General Partner deems appropriate after a Transfer of that Limited Partner’s Interest in the Partnership (whether or not the Transferee becomes a Substituted Limited Partner) to preserve the limited liability of the Limited Partners under the laws of the jurisdictions in which the Partnership is doing business.

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(c) The Transfer of a Limited Partner’s Interest in the Partnership and the admission of a Substituted Limited Partner shall not be cause for dissolution of the Partnership.

Section 9.3. Right of First Offer. Each Partner agrees that, except for a Transfer to a Permitted Transferee, the Partner will not sell, transfer, pledge, hypothecate, divide, assign or otherwise alienate any of the Partner’s Interest in the Partnership or any right, title or interest therein, without the prior written consent of the Partnership and of the other Partners, unless the Partner shall have first made the offer to sell hereinafter set forth:

(a) The offering Partner shall deliver a written offer to the Partnership and to the other Partners specifying the Interest in the Partnership (the “Offered Interest”), the name and address of the prospective transferee, the proposed price, and the other terms of the transfer.

(b) For a period of 60 days following receipt of the offer, the Partnership shall have the option to purchase all or any portion of the Offered Interest. If the Partnership exercises the option, the Partnership shall give written notice of the exercise to the offering Partner. The terms and conditions of the purchase shall be as specified in the offer; provided, however, that the price to be paid shall be the lesser of the price set forth in the offer, or the price determined in Section 9.4 below. The Partnership shall pay the purchase price in accordance with Section 9.4(b) below.

(c) If the Partnership does not purchase all or any portion of the Offered Interest within the 60 days after receipt of the offer, each non-offering Partner shall have for the ensuing 60-day period the option to purchase that portion of the Offered Interest not purchased by the Partnership as the size of the Interest in the Partnership owned by the non-offering Partner at the date the Partnership’s option expired shall bear to the size of the Interest in the Partnership owned by all non-offering Partners at that date; provided, however, that if any non-offering Partner does not purchase his full proportionate share of the remaining Offered Interest, the unaccepted Interest may be purchased by the other non-offering Partners within an additional 10-day period. If a non-offering Partner exercises the option within the aforementioned period, such Partner shall give written notice of that fact to the offering Partner. The terms and conditions of the purchase referred to herein shall be as specified in the offer; provided, however, that the price to be paid shall be the lesser of the price set forth in the offer, or the price determined in Section 9.4 below. The purchase price shall be paid in accordance with Section 9.4(b) below.

(d) All Offered Interest not purchased by the Partnership or by the non-offering Partners within 130 days after receipt of the offer shall be free of the terms of this Agreement for the period of the ensuing 30 days, and the offering Partner may make a bona fide transfer to the prospective transferee named in the offer according to its terms and conditions. If the offering Partner fails to make a transfer of the Offered Interest to the prospective transferee within said 30-day period, all such untransferred Interests shall again become subject to the terms and restrictions of this Agreement.

Section 9.4. Prices, Payment of Price.

(a) Price of Interest. The price of the Interest in the Partnership to be purchased and sold under this Agreement shall be fixed by a certificate setting forth such fixed price, which certificate shall be attached hereto and dated and executed by persons owning in the aggregate not less than sixty-six and two-third percent (66-2/3%) of the outstanding Class C Interests. The fixed price set forth in the certificate attached hereto shall be binding on the Partners and all persons becoming

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parties to this Agreement for a period of 18 months after the date said price is fixed. If no price has been fixed for more than 18 months prior to the event giving rise to a purchase of the Interest in the Partnership pursuant to this Agreement, the fair market value of each share to be sold shall, if possible be determined by mutual agreement between the selling Partner and any purchaser. Within 60 days after the exercise of a right to purchase, the selling Partner and the purchaser shall each set the fair market value of the Interest to be sold. Within 30 days thereafter, the parties shall endeavor to agree mutually on a single fair market value. If they cannot agree, the fair market value shall be established by an appraisal. Should an appraisal be necessary, either the selling Partner or the purchaser may ask the American Arbitration Society to appoint an arbitrator who shall within 30 days after appointment select one or the other of the two fair market values established by the selling Partner or the purchaser as set forth above. The determination of the arbitrator shall be binding upon all of the Partners and shall be the purchase price for the Interest in the Partnership.

(b) Payment of Price. In the event of the proper and timely exercise by any purchaser of any option arising hereunder to purchase all or any part of the Interest of a Partner, the price with respect to the Interest may be paid at purchaser’s election either: (i) in total, in cash or in kind, or partly in each, delivered to the seller on or before the 60th day after the period within which the option must be exercised; or (ii) in installments, in cash or in kind, or partly in each, as follows: twenty-five (25%) on or before the 60th day after the period within which the option must be exercised and the balance in 10 equal semi-annual installments thereafter including interest at the rate required by section 1274 of the Internal Revenue Code to avoid unstated interest. Any property of the Partnership which is proposed to be used for in kind payment for interest in the Partnership shall be so used only by agreement between the Partnership and the Partner (or estate) whose Interest in the Partnership is being purchased and the value thereof shall be in accordance with the agreement between the seller and the purchaser at the time of such payment in kind.

Section 9.5. Capital Account. Any Transferee of a Partner admitted as a Partner pursuant to the provisions of this Article IX shall succeed to the Capital Account so Transferred to such Person.

Section 9.6. Additional Filings. Upon the admission of a Substituted Limited Partner under Section 9.1(b), the General Partner shall cause to be executed, filed and recorded with the appropriate governmental agencies such documents (including amendments to this Agreement) as are required to accomplish such substitution.

ARTICLE X

WITHDRAWAL OF PARTNERS; DISSOLUTION OF PARTNERSHIP; LIQUIDATION

AND DISTRIBUTION OF ASSETS

Section 10.1. Withdrawal of Partners. Except as otherwise provided in Section 5.3, no Partner may withdraw from the Partnership. Any Partner withdrawing in contravention of this Section 10.1 shall indemnity, defend and hold harmless the Partnership and all other Partners from and against any losses, expenses, judgments, fines, settlements or damages suffered or incurred by the Partnership or any other Partner arising out of or resulting from such retirement or withdrawal.

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Section 10.2. Dissolution of Partnership.

(a) The Partnership shall be dissolved, wound up and terminated as provided herein upon the occurrence of earliest of the following events:

(i) the unanimous decision of all Partners to dissolve the Partnership;

(ii) a General Partner is dissolved, becomes bankrupt or otherwise ceases to be a general partner under Section 15642 of the Act, unless (x) at the time there is at least one other General Partner and the remaining General Partner or General Partners carry on the business of the Partnership or (y) if at the time there is no remaining General Partner, all of the Limited Partners agree in writing to continue the business of the Partnership and, within six months after the General Partner has ceased to be a general partner under Section 15642 of the Act, admit one or more General Partners; or

(iii) the entry of a decree of judicial dissolution under Section 15682 of the Act; or

(iv) any event which would make it unlawful for the business of the Partnership to be carried on; or

(v) the sale or other distribution of all of the assets of the Partnership.

(b) In the event of the dissolution of the Partnership for any reason, the General Partner remaining in the Partnership, or, if the General Partner is not remaining, then a liquidating agent or committee appointed by a Majority-in-Interest of the Limited Partners (the General Partner or such Person or committee so designated hereinafter referred to as the “Liquidator”), shall begin to wind up the affairs of the Partnership and to liquidate the Partnership’s assets. The Partners shall continue to share all income, losses and distributions during the period of liquidation in accordance with Articles IV and V. The Liquidator shall have full right and unlimited discretion to determine the time, manner and terms of any sale or sales of Partnership property pursuant to such liquidation, giving due regard to the activity and condition of the relevant market and general financial and economic conditions.

(c) The Liquidator shall have all of the rights and powers with respect to the assets and liabilities of the Partnership in connection with the liquidation and termination of the Partnership that the General Partner would have with respect to the assets and liabilities of the Partnership during the term of the Partnership, and the Liquidator is hereby expressly authorized and empowered to execute and file any and all documents (including a certificate of dissolution) necessary or desirable to effectuate the liquidation and termination of the Partnership and the transfer of any assets.

(d) Notwithstanding the foregoing, a Liquidator which is not the General Partner shall not be deemed a Partner in this Partnership and shall not have any of the economic interests in the Partnership of a Partner; and such Liquidator shall be compensated for its services to the Partnership at normal, customary and competitive rates for its services to the Partnership as reasonably determined by all of the Limited Partners.

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Section 10.3. Distribution in Liquidation. The Liquidator shall, as soon as practicable, wind up the affairs of the Partnership and sell and/or distribute the assets of the Partnership. The assets of the Partnership shall be applied in the following order of priority:

(a) First, secured debts to third parties and Partners, unless such secured indebtedness is assumed by a purchaser of the encumbered property or the conveyance of such encumbered property to such purchaser is made subject to such indebtedness;

(b) Second, unsecured debts of the Partnership other than to Partners;

(c) Third, unsecured debts of the Partnership owed to Partners;

(d) fourth, to the Partners an amount equal to the aggregate Class B Liquidation Amounts of all Partners on the date of such liquidation in proportion to their Class B Liquidation Amounts;

(e) fifth, to the Partners to the extent necessary to bring their Capital Accounts into the same ratio as their Percentage Interests; and

(f) sixth, to the Partners in proportion to their Percentage Interests.

If the Liquidator, in its sole discretion, determines that assets other than cash are to be distributed, then the Liquidator shall cause the fair market value of the assets not so liquidated to be determined. Such assets shall be retained or distributed by the Liquidator as follows:

(i) The Liquidator shall retain assets having an appraised value, net of any liability related thereto, equal to the amount by which the net proceeds of liquidated assets are insufficient to satisfy the requirements of paragraphs (a) and (b) of this Section 10.3; and

(ii) The remaining assets shale be distributed to the Partners in the same proportion as cash would be distributed to the Partners pursuant to paragraphs (c) through (f), inclusive, of this Section 10.3.

If the Liquidator, in its sole discretion, deems it not feasible or desirable to distribute to each Partner its allocable share of each asset, the Liquidator may allocate and distribute specific assets to one or more Partners, individually or as tenants-in-common, as the Liquidator shall in good faith determine to be fair and equitable, taking into consideration, inter alia, the fair market value of the assets, the liens, if any, to which such property may be subject and the tax consequences of the proposed distribution to each of the Partners (including both distributees and others if any). Any distributions in kind shall be subject to such conditions relating to the disposition and management thereof as the Liquidator deems reasonable and equitable.

Section 10.4. Rights of the Limited Partners. Each of the Limited Partners shall look solely to the assets of the Partnership for all distributions with respect to the Partnership and

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such Partner’s Capital Contribution (including return thereof), and such Partner’s share of profits or losses thereof, and shall have no recourse therefor (upon dissolution or otherwise) against the General Partner or any other Limited Partner. No Partner shall have any right to demand or receive property other than cash upon dissolution and termination of the Partnership.

Section 10.5. Termination. The Partnership shall terminate when all property owned by the Partnership shall have been disposed of and the assets shall have been distributed as provided in Section 10.3. The Liquidator shall then execute and cause to be filed a Certificate of Cancellation of the Partnership.

ARTICLE XI

AMENDMENT OF PARTNERSHIP AGREEMENT AND POWER OF ATTORNEY

Section 11.1. Amendments. Amendments to this Agreement which do not adversely affect the right of any Limited Partner in any material respect may be made by the General Partner without the consent of any Limited Partner through use of the power of attorney if those amendments are for the purpose of admitting Additional Limited Partners or Substituted Limited Partners as permitted by this Agreement, including, without limitation, amendments to Exhibit A hereto to reflect the admission of such Additional and Substituted Limited Partners and to reflect changes in the Capital Contributions of the Partners. Amendments to this Agreement other than those described in the foregoing sentence may be made only if embodied in an instrument signed by the General Partner and a Majority-in-Interest of the Limited Partners; provided, however, that, unless otherwise specifically contemplated by this Agreement, no amendment to this Agreement shall (i) without the prior consent of all Partners, change or alter this Section 11.1 or any provision requiring unanimous consent of Partners, or (ii) without the prior consent of each of the Partners adversely affected thereby, increase the liability of any Limited Partner, decrease any Limited Partner’s interest in profits and distributions or increase any Limited Partner’s interest in losses. The General Partner shall send to each Limited Partner a copy of any amendment to this Agreement.

Section 11.2. Amendment of Certificate. In the event this Agreement shall be amended under Article XI, the General Partner shall amend the Certificate to reflect such change if it deems such amendment of the Certificate to be necessary or appropriate.

Section 11.3. Power of Attorney. Each Limited Partner hereby irrevocably constitutes and appoints the General Partner as its true and lawful attorney-in-fact, with full power of substitution, in its name, place and stead to make, execute, sign, acknowledge (including swearing to), verify, deliver, record and file, on its behalf, the following: (i) any amendment to this Agreement which complies with the provisions of this Agreement; and (ii) the Certificate and any amendment thereof required because this Agreement is amended, including, without limitation, an amendment to effectuate any change in the membership of the Partnership or in the Capital Contributions of the Partners. This power-of-attorney is a special power-of-attorney and is coupled with an interest in favor of the General Partner and as such (i) shall be irrevocable and continue in full force and effect notwithstanding the subsequent death or incapacity of any party granting this power-of-attorney, regardless of whether the Partnership or the General Partner shall have had notice thereof; (ii) may be exercised for a Partner by a facsimile signature of the General Partner or, after listing all of the Limited Partners, including such Partner, by a single signature of the General Partner acting as attorney-in-fact for all of them; and (iii) shall survive the delivery of an assignment by a Limited Partner of the whole or any portion of his or its Interest in the Partnership, except that where the

24

assignee thereof has been approved by the General Partner for admission to the Partnership as a Substitute Limited Partner, this power-of-attorney given by the assignor shall survive the delivery of such assignment for the sole purpose of enabling the General Partner to execute, acknowledge, and file any instrument necessary to effect such substitution.

ARTICLE XII

MISCELLANEOUS

Section 12.1. Notices. All notices, demands, consents or requests required or permitted under this Agreement must be in writing, and shall be made by hand delivery, certified mail, overnight courier service or telecopier: (i) if to a Partner other than the General Partner, to the address or telecopy number set forth below such Partner’s name on Exhibit A attached hereto; and (ii) if to the General Partner or the Partnership, to the address, telecopy number set forth in Section 1.4; but any party may designate a different address by a notice similarly given to the Partnership. Any such notice or communication shall be deemed given when delivered by hand on a business day, the next business day after delivery by hand on a day that is not a business day; four business days after being deposited in the United States mail, postage prepaid, return receipt requested; on the next business day after being deposited for next day delivery with Federal Express or a similar overnight courier; when receipt is acknowledged, if telecopied on a business day; and the next business day following the day on which receipt is acknowledged if telecopied on a day that is not a business day.

Section 12.2. Entire Agreement. This Agreement constitutes the entire agreement among the parties. It supersedes any prior agreement or understandings among them, and may be modified or amended only in writing as set forth herein.

Section 12.3. Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and interpreted in accordance with the law of the State of California.

Section 12.4. Effect. Except as otherwise provided in this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties and their legal representatives, successors and assigns.

Section 12.5. Pronouns and Number. Wherever it appears appropriate from the context, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, feminine or neuter shall include the masculine, feminine and neuter.

Section 12.6. Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof

Section 12.7. Partial Enforceability. If any provision of this Agreement, or the application of that provision to any Person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of that provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

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Section 12.8. Successors and Assigns. Subject to the foregoing provisions, this Agreement shall be binding upon and inure to the benefit of the Partners and their respective heirs, personal representatives, successors and assigns.

Section 12.9. Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original of the same document. Counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which facsimile copies or counterparts shall the equivalent of originals signed in ink and shall be binding upon the parties.

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date first written above.

GENERAL PARTNER:
J.F. SHEA, L.P.
By
	Name:	Max B. Johnson
	Title:	Vice President
By
	Name:	James G. Shontere
	Title:	Secretary
LIMITED PARTNERS:
J.F. SHEA CO., INC.
By
	Name:	Max B. Johnson
	Title:	Vice President
By
	Name:	James G. Shontere
	Title:	Secretary
	John F. Shea, as Trustee of the
	JOHN F. SHEA FAMILY TRUST, and not
	in his individual capacity

(Signatures continued on next page)

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ORLANDO ROAD LLC
By:
	Name:	John F. Shea
	Title:	Manager
VIRGINIA ROAD LLC
By:
	Name:	Edmund H. Shea, Jr.
	Title:	Manager
BAY FRONT DRIVE LLC
By:
	Name:	Peter O. Shea
	Title:	Manager
SHEA INVESTMENTS
By:
	Carrie Shea Tilton, Trustee of
	Carrie Shea Tilton Revocable Trust,
TAHOE PARTNERSHIP I
By:
	Name:	Peter O. Shea
	Title:	Managing Partner
BALBOA PARTNERSHIP
a California general partnership
Ronald L. Lakey, Trustee Catherine Shea Johnson Trust - 1984
Ronald L. Lakey, Trustee
Peter O. Shea, Jr., Trust - 1985
Ronald L. Lakey, Trustee Sarah H. Shea Trust - 1987
Ronald L. Lakey, as Trustee of THE 1996 CLAIRE SHEA TRUST NO. 1, and not in his individual capacity

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Exhibit A (As of December 1, 2003)

	Restated Class B Amount		Restated Class C Amount		Percentage Interest
General Partner
J.F. Shea, L.P. 655 Brea Canyon Road Walnut, CA 91789			$	214,931,335		20.8332002	%
Limited Partners
J.F. Shea Co., Inc. 655 Brea Canyon Road Walnut, CA 91789	$	189,128,870
John F. Shea, Trustee John F. Shea Family Trust 655 Brea Canyon Road Walnut, CA 91789			$	32,269,410		3.1278598	%
Orlando Road LLC 655 Brea Canyon Road Walnut, CA 91789			$	345,778,421		33.5161510	%
Virginia Road LLC 655 Brea Canyon Road Walnut, CA 91789			$	209,404,800		20.2975156	%
Bay Front Drive LLC 655 Brea Canyon Road Walnut, CA 91789			$	133,507,914		12.9408637	%
Shea Investments 655 Brea Canyon Road Walnut, CA 91789			$	31,752,344		3.0777408	%
Tahoe Partnership I 655 Brea Canyon Road Walnut, CA 91789			$	35,331,703		3.4246865	%
Balboa Partnership 655 Brea Canyon Road Walnut, CA 91789			$	28,694,471		2.7813425	%
Ronald L. Lakey, Trustee The 1996 Claire Shea Trust No.1 655 Brea Canyon Road Walnut, CA 91789			$	6,602		0.0006399	%
Totals	$	189,128,870	$	1,031,677,000		100.00	%

FIRST AMENDMENT TO SIXTH AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

SHEA HOMES LIMITED PARTNERSHIP

THIS FIRST AMENDMENT TO SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF SHEA HOMES LIMITED PARTNERSHIP (this “Amendment”) is entered into as of December 27,2007, by and among J. F. SHEA L.P., a Delaware limited partnership, as general partner (the “General Partner”), and the Persons whose names are ascribed hereto, as limited partners (the “Limited Partners”), Capitalized Terms not otherwise defined herein shall have the meanings set forth in the Sixth Amended Agreement (as defined below).

R E C I T A L S

A. J.F. Shea, L.P., as the General Partner, and J. F. Shea Co., Inc., The John F. Shea Family Trust, Orlando Road LLC, Virginia Road LLC, Bay Front Drive LLC, Shea Investments, Tahoe Partnership I, Balboa Partnership and The 1996 Claire Shea Trust No. 1, as Limited Partners, entered into that certain Sixth Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership dated as of April 1, 2005 (the “Sixth Amended Agreement” or “Partnership Agreement”).

B. The General Partner and the Limited Partners desire to amend the Sixth Amended Agreement in order to provide for a preferred class of limited partnership interests that earn a return that is senior and preferred to all other classes of partnership interests.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the General Partner and the Limited Partners do hereby amend the Sixth Amended Agreement in the following particulars only:

1. Admission of New Limited Partners. The General Partner and the Limited Partners each hereby consent to the admission of the E & M RP Trust and the Peter and Carolyn Shea Revocable Trust as Limited Partners to the Partnership and each of such parties is hereby admitted as a Limited Partner to the Partnership. The trustee of the E & M RP Trust and the Peter and Carolyn Shea Revocable Trust join in and execute this Amendment to acknowledge their acquisition of a Class D Interest (as defined below) and to agree to the terms of the Partnership Agreement, as amended by this Amendment, as new Limited Partners.

2. Class D Interest. The Partnership Agreement is hereby amended to add a new interest in the Partnership known as a “Class D Interest.” The amount of capital

1

contributed in exchange for a Class D Interest shall be known as the “Class D Amount,” which Class D Amounts shall earn a return known as the “Class D Preferred Return.” For purposes of this Amendment and the Partnership Agreement, the Class D Preferred Return shall mean an annual rate of return equal to seven percent (7%), which return shall be senior to the Class B Preferred.

3. Class D Capital Contributions. Contributions of capital made in exchange for a Class D Interest shall be known as “Class D Capital Contributions.” The initial Class D Capital Contributions from the Limited Partners acquiring a Class D Interest are made concurrently with this Amendment by the Limited Partners and in the Class D Amounts set forth on Exhibit A attached hereto.

4. Percentage Interest. In addition to the Class D Preferred Return, the Limited Partners receiving a Class D Interest shall also receive a collective Percentage Interest in the Partnership of one percent (1%), which Percentage Interest shall be allocated among the Limited Partners holding a Class D Interest in proportion to the amount of their respective Class D Capital Contributions. The Percentage Interest of the remaining Limited Partners shall be proportionately reduced in the aggregate by one percent (1%).

5. Distribution of Cash Flow. Distributions of Net Operating Cash Flow under Section 5.1 of the Partnership Agreement is amended such that the first amount distributed shall be to pay the Class D Preferred Return. Only after the Class D Preferred Return is paid in full shall Net Operating Cash Flow be distributed in the manner contemplated in Section 5.1

6. Allocation of Income and Losses.

a. Notwithstanding Section 5.1(a) of the Partnership Agreement, Net Income for each Fiscal Year (or portion thereof) shall be allocated first in an amount of such Net Income to the Partners in proportion to their Class D Amounts until each Partner has been allocated an amount equal to the excess of (i) the aggregate Class D Preferred Returns with respect to such partner for such Fiscal Year (or portion thereof) and for all prior Fiscal Years over (y) the aggregate amount previously allocated to such Partner under this provision. Thereafter Net Income for each Fiscal Year (or portion thereof) shall be allocated in accordance with the provisions of Section 5.1(a) .

b. Notwithstanding Section 5.1(b) of the Partnership Agreement, Net Loss for each Fiscal Year (or portion thereof) shall be allocated first to the partners that have made Class D Capital Contributions, in proportion to their prior allocation of Net Income until such Partners have received Net Loss equal to the Net Income allocated to such Partners for such Fiscal Year (or portion thereof). Thereafter Net Loss for each Fiscal Year (or portion thereof) shall be allocated in accordance with the provisions of Section 5.1(b).

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7. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Partnership Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Partnership Agreement shall remain in full force and effect without modification.

b. Counterparts; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic facsimile copies of the signed counterparts, which facsimile counterparts shall be binding upon the parties.

c. Authorization. By his or her signature, each person executing this Amendment on behalf of a party hereto represents and warrants to the other party hereto that he or she is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings, representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date and year first above written.

GENERAL PARTNER
J.F. SHEA, L.P.
By:

Name: Ronald L. Lakey

Title: Vice President

By:   

Name: Paul Mosley

Title: VP

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LIMITED PARTNERS
J.F. SHEA CO. INC., a Nevada corporation
By:

Name: Ronald L. Lakey

Title: Vice President

By:     

Name: Paul Mosley

Title: VP

John F. Shea, as Trustee

THE JOHN F. SHEA FAMILY TRUST DATED

NOVEMBER 5, 1986, AS AMENDED

ORLANDO ROAD LLC

By:

Name: John F. Shea

Title: Manager

VIRGINIA ROAD LLC

By:

Name: Edmund H. Shea, Jr.

Title: Manager

BAY FRONT DRIVE LLC

By:         

Name: Peter O. Shea

Title: Manager

4

SECOND AMENDMENT TO SIXTH AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

SHEA HOMES LIMITED PARTNERSHIP

THIS SECOND AMENDMENT TO SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF SHEA HOMES LIMITED PARTNERSHIP (this “Amendment”) is entered into as of August 8, 2008, by and among J. F. SHEA L.P., a Delaware limited partnership, as general partner (the “General Partner”), and the Persons whose names are ascribed hereto, as limited partners (the “Limited Partners”). Capitalized Terms not otherwise defined herein shall have the meanings set forth in the Sixth Amended Agreement (as defined below).

R E C I T A L S

A. J.F. Shea, L.P., as the General Partner, and J. F. Shea Co., Inc., The John F. Shea Family Trust, Orlando Road LLC, Virginia Road LLC, Bay Front Drive LLC, Shea Investments, Tahoe Partnership I, Balboa Partnership and The 1996 Claire Shea Trust No. 1, as Limited Partners, entered into that certain Sixth Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership dated as of April 1,2005, as amended by that certain First Amendment dated December 27,2007 (as amended, the “Sixth Amended Agreement” or “Partnership Agreement”).

B. The General Partner and the Limited Partners desire to further amend the Partnership Agreement in order to modify the Class D Interests held by the various Limited Partners.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the General Partner and the Limited Partners do hereby amend the Partnership Agreement in the following particulars only:

1. Class D Capital Contributions. Effective as of the date of this Amendment, the following Limited Partners have made the following Class D Capital Contributions to the Partnership in exchange for Class D Interests:

Shea Investments	$	4,676,313
E & M RP Trust	$	729,024
Tahoe Partnership I	$	237,801
Balboa Partnership	$	4,214,607

2. Class D Capital Distributions. Effective as of the date of this Amendment, the following Limited Partners received the following distributions of cash from the Partnership reducing their Class D Interests:

The John F. Shea Family Trust	$	3,509,907
Peter and Carolyn Shea Revocable Trust	$	6,347,838

3. Percentage Interest. Taking into account the contributions and distributions outlined in Paragraphs 1 and 2 above, effective as of the date of this Amendment, the Class D Amount of each Limited Partner holding a Class D Interest is as set forth on Exhibit A attached hereto.

4. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Partnership Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Partnership Agreement shall remain in full force and effect without modification.

b. Counterparts; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic facsimile copies of the signed counterparts, which facsimile counterparts shall be binding upon the parties.

c. Authorization. By his or her signature, each person executing this Amendment on behalf of a party hereto represents and warrants to the other party hereto that he or she is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings, representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date and year first above written.

GENERAL PARTNER
J.F. SHEA, L.P.
By:

Name: James G. Shontere

Title: Authorized Agent

By:     

Name: Paul E. Mosley

Title: Authorized Agent

LIMITED PARTNERS
J.F. SHEA CO. INC.,
a Nevada corporation
By:

Name: James G. Shontere

Title: Secretary

By:     

Name: Paul E. Mosley

Title: Vice President

John F. Shea, as Trustee
THE JOHN F. SHEA FAMILY TRUST DATED NOVEMBER 5, 1986, AS AMENDED
ORLANDO ROAD LLC
By:

Name: Ronald L. Lakey

Title: Vice President

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VIRGINIA ROAD LLC
By:

Name: Ronald L. Lakey

Title: Vice President

BAY FRONT DRIVE LLC
By:

Name: Ronald L. Lakey

Title: Vice President

SHEA INVESTMENTS
By:

Name: James Shea

Title:	President, REED LLC
	As Trustee of The James William Shea Trust, General Partner

TAHOE PARTNERSHIP
By:

Name: Peter O. Shea By Ronald L. Lakey,

Title: Managing Partner

BALBOA PARTNERSHIP
By:

Name: Ronald L. Lakey

Title: As Trustee for Sara H. Shea Trust, Partner

  

Ronald L. Lakey, as Trustee

THE 1996 CLAIRE SHEA TRUST NO. 1

4

            

Edmund H. Shea, Jr., as Trustee

THE E & M RP TRUST DATED OCTOBER 3, 1985 AS AMENDED

Peter O. Shea, as Trustee

THE PETER O. AND CAROLYN H. SHEA REVOCABLE TRUST DATED JANUARY 11, 1995, AS AMENDED

5

EXHIBIT A

Limited Partner	Class D Amount
The John F. Shea Family Trust	$	55,490,093
Shea Investments	$	4,676,313
E & M RP Trust	$	30,729,024
Tahoe Partnership I	$	5,237,801
Peter and Carolyn Shea Revocable Trust	$	19,652,162
Balboa Partnership	$	4,214,607

THIRD AMENDMENT TO SIXTH AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

SHEA HOMES LIMITED PARTNERSHIP

THIS THIRD AMENDMENT TO SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF SHEA HOMES LIMITED PARTNERSHIP (this “Amendment”) is entered into as of January 1, 2009, by and among J. F. SHEA L.P., a Delaware limited partnership, as general partner (the “General Partner”), and the Persons whose names are ascribed hereto, as limited partners (the “Limited Partners”). Capitalized Terms not otherwise defined herein shall have the meanings set forth in the Sixth Amended Agreement (as defined below).

R E C I T A L S

A. J.F. Shea, L.P., as the General Partner, and J. F. Shea Co., Inc., The John F. Shea Family Trust, Orlando Road LLC, Virginia Road LLC, Bay Front Drive LLC, Shea Investments, Tahoe Partnership I, Balboa Partnership and The 1996 Claire Shea Trust No. 1, as Limited Partners, entered into that certain Sixth Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership dated as of April 1, 2005, as amended by that certain First Amendment dated December 27, 2007 and by that certain Second Amendment dated August 8, 2008 (as amended, the “Sixth Amended Agreement” or “Partnership Agreement”).

B. The General Partner and the Limited Partners desire to further amend the Partnership Agreement in the manner set forth herein.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the General Partner and the Limited Partners do hereby amend the Partnership Agreement in the following particulars only:

l. Allocation of Net Income and Net Loss. Effective as of the date of this Amendment, notwithstanding Section 4.1 of the Partnership Agreement and Section 6 of the First Amendment, and except as provided in Section 4.2 of the Partnership. Agreement, the Partnership’s Net Income or Net Loss for each Fiscal Year (or portion thereof) shall be allocated as follows:

a. Net Income for such Fiscal Year (or portion thereof) shall be allocated as follows:

i. first, an amount of such Net Income to the General Partner until the General Partner has been allocated an amount equal to the

excess of (x) all Net Loss previously allocated to the General Partner pursuant to Section 4.1(b)(v) over (y) all Net Income previously allocated to the General Partner pursuant to this Section 4.1(a)(i);

ii. second, an amount of such Net Income equal to the excess of (x) all Net Loss previously allocated to the Class D Partners pursuant to Section 4.1(b)(iv) over (y) all Net Income previously allocated to the Class D Partners pursuant to this Section 4.1(a)(ii), allocated to the Class D Partners in proportion to the Net Loss allocated to the Class D Partners pursuant to Section 4.1(b)(iv)

iii. third, an amount of such Net Income equal to the excess of (x) all Net Loss previously allocated to the Class C Partners pursuant to Section 4.1(b)(iii) over (y) all Net Income previously allocated to the Class C Partners pursuant to this Section 4.1(a)(iii), allocated to the Class C Partners in proportion to the Net Loss allocated to the Class C Partners pursuant to Section 4.1(b)(iii);

iv. fourth, an amount of such Net Income equal to the excess of (x) all Net Loss previously allocated to the Class B Partners pursuant to Section 4.1(b)(ii) over (y) all Net Income previously allocated to the Class B Partners pursuant to this Section 4.1(a)(iv), allocated to the Class B Partners in proportion to the Net Loss allocated to the Class B Partners pursuant to Section 4.1(b)(ii);

v. fifth, an amount of such Net Income equal to the excess of (x) all Net Loss previously allocated to the Class C and D Partners pursuant to Section 4.1(b)(i) over (y) all Net Income previously allocated to the Class C and D Partners pursuant to this Section 4.1(a)(v), allocated to the Class C and D Partners in proportion to their Percentage Interests;

vi. sixth, an amount of such Net Income to the Class D Partners until the Class D Partners have received an amount equal to the excess of (x) the aggregate amount of the Class D Preferred Return over (y) all Net Income previously allocated to the Class D Partners pursuant to this Section 4.1(a)(vi), allocated to the Class D Partners in proportion to the amount of Class D Preferred Return allocated to each Class D Partner for which Net Income has not been allocated;

vii. seventh, an amount of such Net Income to the Class B Partners until the Class B Partners have received an amount equal to the excess of (x) the aggregate amount of the amount of the Class B Preferred Return over (y) all Net Income previously allocated to

2

the Class B Partners pursuant to this Section 4.1(a)(vi), allocated to the Class B Partners in proportion to the amount of Class B Preferred Return allocated to each Class B Partner for which Net Income has not been allocated; and

viii. the remaining amount of such Net Income, to the Partners in proportion to their Percentage Interests.

b. Net Loss for such Fiscal Year (or portion thereof) shall be allocated as follows:

i. first, to the Class C and Class D Partners, in proportion to their Percentage Interests, until the Adjusted Capital Account balance of at least two Class C Partners is reduced to zero (provided that if a Partner’s Adjusted Capital Account balance is reduced to zero prior to the completion of the allocation of Net Loss under this Section, then the amount that would be allocated thereafter to such Partner shall be allocated prorata among the remaining Class C and D Partners, such that no Partners Adjusted Capital Account balance shall be reduced below zero) ;

ii. second, to the Class B Partners, in proportion to their Class B Adjusted Capital Account balances, until the Class B Adjusted Capital Account balance of each of the Class B Partners is reduced to zero;

iii. third, to the Class C Partners in proportion to their Class C Adjusted Capital Account balances, until the Class C Adjusted Capital Account balance of each of the Class C Partners is reduced to zero;

iv. fourth, to the Class D Partners in proportion to their Class D Adjusted Capital Account balances, until the Class D Adjusted Capital Account balance of each of the Class D Partners is reduced to zero; and

v. the remaining amount of such Net Loss, other than any partnership nonrecourse deductions (within the meaning of Treasury Regulation Section 1.704-2(c)) and any partner nonrecourse deductions (within the meaning of Treasury Regulations Section 1.704-2(i)(2)), to the General Partner.

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2. Distributions of Net Operating Cash Flow. Effective as of the date of this Amendment and subject to Section 5.4 of the Partnership Agreement, the Partnership shall from time to time, at the discretion of the General Partner, make distributions of Net Operating Cash Flow with respect to the period from the date of the immediately preceding distribution to the date of such distribution to the Partners as follows (unless a different order of priority is authorized by the unanimous consent of all the Partners):

a. first, to the Class D Partners, an amount equal to the unpaid Class D Preferred Return, in proportion to such Class D Partners’ unpaid Class D Preferred Return;

b. second, to the Class B Partners, an amount equal to the Unpaid Class B Preferred Return, in proportion to such Class B Partners’ Unpaid Class B Preferred Return;

c. third, to the Class D Partners, an amount equal to the aggregate amount of Class D Capital Contributions that has not yet been returned to the Class D Partners, in proportion to such Class D Partners unreturned Class D Capital Contributions;

d. fourth, to the Class C Partners, an amount equal to the aggregate amount of Class C Capital Contributions that has not yet been returned to the Class C Partners, in proportion to such Class C Partners unreturned Class C Capital Contributions; and

e. any remaining amount of such Net Operating Cash Flow shall be distributed to the Partners in proportion to their Percentage Interests.

3. Distributions in Liquidation. Sections 10.3(d), (e) and (1) of the Partnership Agreement are hereby replaced with the following provisions:

a. fourth, to the Class D Partners the excess of (x) the sum of (1) the aggregate amount of the Class D Partners’ unpaid Class D Preferred Return and (2) the aggregate amount of the Class D Capital Contributions made by the Class D Partners, over (y) the sum of (1) the aggregate amount of excess losses allocated to the Class D Partners over profits allocated to the Class D Partners, and (2) the aggregate amounts distributed to the Class D Partners that represent a return of Class D Capital Contributions (the “Aggregate Class D Liquidation Amount”), in proportion to portion of the Aggregate Class D Liquidation Amount attributable to each Class D Partner;

b. fifth, to the Class C Partners an amount equal to the aggregate Adjusted Capital Account balances of all Class C Partners on the date of such liquidation in proportion to their Adjusted Capital Account balances;

c. sixth, to the Class B Partners an amount equal to the aggregate Class B Liquidation Amounts of all Class B Partners on the date of such liquidation in proportion to their Class B Liquidation Amounts; and

4

d. any remaining amount shall be distributed to the Partners in proportion to their Percentage Interests.

4. Compounding of Preferred Returns. The Partners acknowledge and agree that the Class B Preferred Return and the Class D Preferred Return has been, and will continue to be, compounded monthly and that the return shall accrue on the sum of the Class B Amount or the Class D Amount, as the case may be, and the previously accrued Class B Preferred Return or Class D Preferred Return, as the case may be.

5. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Partnership Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Partnership Agreement shall remain in full force and effect without modification.

b. Counterparts; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic facsimile copies of the signed counterparts, which facsimile counterparts shall be binding upon the parties.

c. Authorization. By his or her signature, each person executing this Amendment on behalf of a party hereto represents and warrants to the other party hereto that he or she is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings, representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

5

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date and year first above written.

GENERAL PARTNER
J.F. SHEA, L.P.
By:

Name: Ronald L. Lakey

Title: Vice President

By:     

Name: Paul Mosley

Title: VP

LIMITED PARTNERS
J.F. SHEA CO., INC.,
a Nevada corporation
By:

Name: Ronald L. Lakey

Title: Vice President

By:

Name: Paul Mosley

Title: VP

John F. Shea, as Trustee
THE JOHN F. SHEA FAMILY TRUST DATED NOVEMBER 5, 1986, AS AMENDED
ORLANDO ROAD LLC
By:

Name: John F. Shea

Title: Manager

6

VIRGINIA ROAD LLC
By:

Name: Edmund H. Shea, Jr.

Title: Manager

BAY FRONT DRIVE LLC
By:

Name: Peter O. Shea

Title: Manager

SHEA INVESTMENTS
By:

Name: James Shea

Title:	President, REED LLC
	As Trustee of The James William Shea Trust, General Partner
TAHOE PARTNERSHIP I

By:

Name: Peter O. Shea

Title: Managing Partner

BALBOA PARTNERSHIP

By:

Name: Ronald L. Lakey, Trustee

Title:	Peter O. Shea, Jr. Trust. 1985
Ronald L. Lakey, as Trustee
THE 1996 CLAIRE SHEA TRUST NO. 1

7

        

Edmund H. Shea, Jr., as Trustee

THE E & M RP TRUST DATED OCTOBER 3, 1985, AS AMENDED

  

Peter O. Shea, as Trustee

THE PETER O. AND CAROLYN H. SHEA REVOCABLE TRUST DATED JANUARY 11, 1995, AS AMENDED

8

EX-3.3

Exhibit 3.3

CERTIFICATE OF INCORPORATION

OF

SHEA HOMES FUNDING CORP.

ARTICLE I

NAME OF CORPORATION

The name of the Corporation (the “Corporation”) is:

Shea Homes Funding Corp.

ARTICLE II

REGISTERED OFFICE

The address of the registered office of the Corporation in the State of Delaware is 160 Greentree Drive, Suite 101, in the City of Dover 19904, County of Kent, and the name of its registered agent at that address is National Registered Agents, Inc.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which Corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE IV

AUTHORIZED CAPITAL STOCK

The Corporation shall be authorized to issue one class of stock to be designated Common Stock. The total number of shares which the Corporation shall have authority to issue is 1,000, and each such share shall have a par value of $0.01.

ARTICLE V

BOARD POWER REGARDING BYLAWS

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind the bylaws of the Corporation.

ARTICLE VI

ELECTION OF DIRECTORS

Elections of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.

ARTICLE VII

LIABILITY

A director of the Corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.

ARTICLE VIII

CORPORATE POWER

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.

ARTICLE IX

INCORPORATOR

The name and mailing address of the incorporator of the Corporation is:

Kevin H. Yonei

c/o Gibson, Dunn & Crutcher LLP

333 S. Grand Avenue, 46th Floor

Los Angeles, California 90071

2

THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of incorporating and organizing a corporation under the General Corporation Law of the State of Delaware, does make and file this Certificate of Incorporation.

Dated: April 25, 2011

Kevin H. Yonei, Incorporator

3

EX-3.4

Exhibit 3.4

SHEA HOMES FUNDING CORP.

(a Delaware corporation)

BYLAWS

ARTICLE I

OFFICES

Section 1.1 Registered Office. Shea Homes Funding Corp. (the “Corporation”) shall maintain its registered office in the State of Delaware at National Registered Agents, Inc., 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, Delaware 19904.

Section 1.2 Other Offices. The Corporation may also have offices in such other places within or without the State of Delaware as the Board of Directors may, from time to time, determine or as the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2.1 Annual Meetings. Meetings of stockholders may be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors shall determine. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as described in Section 2.3 of these Bylaws in accordance with Section 211(a)(2) of the General Corporation Law of the State of Delaware. Stockholders may act by written or electronic transmission of consent to elect directors; provided, however, that if such consent is less than unanimous, such action by written or electronic transmission of consent may be in lieu of holding an annual meeting only if all of the directorships to which directors could have been elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. If the Board of Directors fails to determine the time, date and place for the annual meeting and the stockholders have not elected directors by written or electronic transmission of consent as permitted by law, the annual meeting shall be held, beginning in the year after the date of incorporation, at the principal office of the Corporation at 10 a.m. on the last Friday in March of each year.

Section 2.2 Special Meetings. Special meetings of stockholders, unless otherwise prescribed by statute, may be called by the Chairman of the Board of Directors, the President or by resolution of the Board of Directors and shall be called by the President or Secretary upon the written request of holders of not less than 10% in voting power of the outstanding stock entitled to vote at the meeting. Notice of each special meeting shall be given in accordance with Section 2.4 of these Bylaws. Unless otherwise permitted by law, business transacted at any special meeting of stockholders shall be limited to the purpose stated in the notice.

Section 2.3 Meetings by Remote Communications. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication:

(a) participate in a meeting of stockholders; and

(b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication,

provided, that

(i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder;

(ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and

(iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

Section 2.4 Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice or electronic transmission, in the manner provided in Section 232 of the General Corporation Law of the State of Delaware, of notice of the meeting, which shall state the place, if any, date and time of the meeting, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purposes for which the meeting is called, shall be mailed to or transmitted electronically to each stockholder of record entitled to vote thereat. Except as otherwise provided by law, the Certificate of Incorporation or these bylaws, such notice shall be given not less than 10 days nor more than 60 days before the date of any such meeting. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation.

Section 2.5 Quorum. Unless otherwise required by law or the Certificate of Incorporation, the holders of a majority in voting power of the issued and outstanding stock entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders. When a quorum is once present to organize a meeting, the quorum is not broken by the subsequent withdrawal of any stockholders. In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in Section 2.10 of these bylaws until a quorum shall attend. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to

2

vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any subsidiary of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

Section 2.6 Voting. (a) Unless otherwise provided in the Certificate of Incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. Upon the request of holders of not less than 10% in voting power of the outstanding stock entitled to vote at the meeting, voting shall be by written ballot, unless otherwise provided in the Certificate of Incorporation; if authorized by the stockholders, such requirement of a written ballot shall be satisfied, if authorized by the Board of Directors, by a ballot submitted by electronic transmission, provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxyholder.

(b) All elections of directors shall be determined by a plurality of the votes cast, and except as otherwise required by law, the Certificate of Incorporation or these bylaws, all other matters shall be determined by a majority of the votes cast.

Section 2.7 Proxy Representation. Any stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date, unless such proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary of the Corporation a revocation of the proxy or a new proxy bearing a later date.

Section 2.8 Organization. (a) The Chairman of the Board of Directors, if one is elected, or, in his or her absence or disability, the President of the Corporation, shall preside at all meetings of the stockholders.

(b) The Secretary of the Corporation shall act as Secretary at all meetings of the stockholders. In the absence or disability of the Secretary, the Chairman of the Board of Directors or the President shall appoint a person to act as Secretary at such meetings.

Section 2.9 Conduct of Meeting. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person of the meeting,

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may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 2.10 Adjournment. At any meeting of stockholders of the Corporation, if less than a quorum be present, a majority in voting power of the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Any business may be transacted at the adjourned meeting that might have been transacted at the meeting originally noticed. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 2.11 Consent of Stockholders in Lieu of Meeting.

(a) Unless otherwise restricted by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.

(b) Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the date the earliest dated consent is delivered to the Corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the Corporation in the manner prescribed in the first paragraph of this Section 2.11. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to

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act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section 2.11 to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(1) of the General Corporation Law of the State of Delaware. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing or electronic transmission and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date of such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the Corporation as provided by law.

(c) Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

Section 2.12 List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting or (ii) during ordinary business hours at the principal place of business of the Corporation. The list of stockholders must also be open to examination at the meeting as required by applicable law. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders required by this Section 2.12, or to vote in person or by proxy at any meeting of stockholders.

ARTICLE III

BOARD OF DIRECTORS

Section 3.1 Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors. The Board of Directors shall exercise all of the powers and duties conferred by law except as provided by the Certificate of Incorporation or these Bylaws.

Section 3.2 Number and Term. The number of directors of the Corporation shall initially be one (1), and shall be fixed at no less than one (1) nor more than five (5). Within the limits specified above, the number of directors shall be fixed from time to time by the Board of Directors or the Stockholders, in accordance with applicable law. The Board of Directors shall be elected by the stockholders at their annual meeting, and each director shall be elected to serve for the term of one year or until his or her successor is elected and qualified or until his or her earlier death, resignation, disqualification or removal. Directors need not be stockholders.

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Section 3.3 Resignations. Any director may resign at any time upon notice given in writing or by electronic transmission to the Board of Directors, the Chairman of the Board of Directors, the President or the Secretary. The resignation shall take effect at the time specified therein, and if no time is specified, at the time of its receipt by the Board of Directors, the Chairman of the Board of Directors, the President or Secretary, as the case may be. The acceptance of a resignation shall not be necessary to make it effective.

Section 3.4 Removal. Any director or the entire Board of Directors may be removed either with or without cause at any time by the affirmative vote of the holders of a majority in voting power of the outstanding shares then entitled to vote for the election of directors at any annual or special meeting of the stockholders called for that purpose or by written or electronic transmission of consent as permitted by law.

Section 3.5 Vacancies and Newly Created Directorships. Unless otherwise provided in the Certificate of Incorporation, vacancies occurring in any directorship and newly created directorships may be filled by a majority vote of the remaining directors then in office. Any director so chosen shall hold office for the unexpired term of his or her predecessor in the case of a director elected to fill a vacancy, until the next annual meeting of stockholders in the case of a director elected to fill a newly created directorship, and in each case until his or her successor shall be elected and qualified or until his or her earlier death, resignation, disqualification or removal.

Section 3.6 Meetings.

(a) The initial directors shall hold their first meeting to organize the Corporation, elect officers and transact any other business that may properly come before the meeting. An annual meeting of the Board of Directors shall be held immediately after each annual meeting of the stockholders, or at such time and place as may be noticed for the meeting.

(b) Regular meetings of the Board of Directors may be held at such places and times as shall be determined from time to time by written or electronic transmission of consent of a resolution of the directors.

(c) Special meetings of the Board of Directors shall be called by the President or by the Secretary on the written or electronic transmission of such request of a majority of the Board of Directors and shall be held at such place as may be determined by the directors or as shall be stated in the notice of the meeting.

Section 3.7 Notice of Meetings. Except as provided by law, notice of regular meetings need not be given. Notice of the time and place of any special meeting shall be given to each director by the Secretary. Notice of each such meeting shall be given to each director, if by mail, addressed to such director at his or her residence or usual place of business and deposited in a United States post office at least two days before the day on which such meeting is to be held, or by telegraph, telecopy, cable or wireless addressed to such director or delivered personally or by telephone at least 24 hours before the time at which such meeting is to be held. The notice of any meeting need not specify the purpose thereof.

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Section 3.8 Quorum, Voting and Adjournment. A majority of the total number of directors or any committee thereof shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of such adjourned meeting need not be given if the time and place of such adjourned meeting are announced at the meeting so adjourned.

Section 3.9 Committees. The Board of Directors may, by resolution, designate one or more committees, including but not limited to an Executive Committee and an Audit Committee, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the General Corporation Law of the State of Delaware to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation. All committees of the Board of Directors shall keep minutes of their meetings and shall report their proceedings to the Board of Directors when requested or required by the Board of Directors.

Section 3.10 Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or any committee thereof, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed in the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form or shall be in electronic form if the minutes are maintained in electronic form.

Section 3.11 Compensation. The Board of Directors shall have the authority to fix the compensation of directors for their services. In addition, as determined by the Board of Directors, directors may be reimbursed by the Corporation for their expenses, if any, in the performance of their duties as directors. A director may also serve the Corporation in other capacities and receive compensation therefor.

Section 3.12 Remote Meeting. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting by means of conference telephone or other

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communications equipment in which all persons participating in the meeting can hear each other. Participation in a meeting by means of conference telephone or other communications equipment shall constitute the presence in person at such meeting.

ARTICLE IV

OFFICERS

Section 4.1 Number. The officers of the Corporation shall include a President and a Secretary, both of whom shall be elected by the Board of Directors and who shall hold office for a term of one year and until their successors are elected and qualified or until their earlier resignation or removal. In addition, the Board of Directors may elect a Chairman of the Board of Directors, one or more Vice Presidents, including an Executive Vice President, a Chief Financial Officer or a Treasurer and one or more Assistant Treasurers and one or more Assistant Secretaries, who shall hold their office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The initial officers shall be elected at the first meeting of the Board of Directors and, thereafter, at the annual organizational meeting of the Board of Directors. Any number of offices may be held by the same person.

Section 4.2 Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it deems advisable, who shall hold their office for such terms and shall exercise and perform such powers and duties as shall be determined from time to time by the Board of Directors.

Section 4.3 Chairman. The Chairman of the Board of Directors shall be a member of the Board of Directors and shall preside at all meetings of the Board of Directors and of the stockholders. In addition, the Chairman of the Board of Directors shall have such powers and perform such other duties as from time to time may be assigned to him or her by the Board of Directors.

Section 4.4 President. The President of the Corporation shall exercise such duties as customarily pertain to the office of President and Chief Executive Officer, and shall have general and active management of the property, business and affairs of the Corporation, subject to the supervision and control of the Board of Directors. He or she shall perform such other duties as prescribed from time to time by the Board of Directors or these Bylaws. In the absence, disability or refusal of the Chairman of the Board of Directors to act, or the vacancy of such office, the President shall preside at all meetings of the stockholders and of the Board of Directors. Except as the Board of Directors shall otherwise authorize, the President shall execute bonds, mortgages and other contracts on behalf of the Corporation, and shall cause the seal to be affixed to any instrument requiring it and, when so affixed, the seal shall be attested by the signature of the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.

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Section 4.5 Vice Presidents. Each Vice President, if any are elected, of whom one or more may be designated an Executive Vice President, shall have such powers and shall perform such duties as shall be assigned to him or her by the President or the Board of Directors.

Section 4.6 Chief Financial Officer or Treasurer. The Chief Financial Officer or Treasurer shall have the general care and custody of the funds and securities of the Corporation, and shall deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected by the Board of Directors. He or she shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever. He or she shall exercise general supervision over expenditures and disbursements made by officers, agents and employees of the Corporation and the preparation of such records and reports in connection therewith as may be necessary or desirable. He or she shall, in general, perform all other duties incident to the office of Chief Financial Officer or Treasurer and such other duties as from time to time may be assigned to him or her by the Board of Directors.

Section 4.7 Secretary. The Secretary shall be the Chief Administrative Officer of the Corporation and shall: (a) cause minutes of all meetings of the stockholders and directors to be recorded and kept; (b) cause all notices required by these Bylaws or otherwise to be given properly; (c) see that the minute books, stock books, and other nonfinancial books, records and papers of the Corporation are kept properly; and (d) cause all reports, statements, returns, certificates and other documents to be prepared and filed when and as required. The Secretary shall have such further powers and perform such other duties as prescribed from time to time by the Board of Directors.

Section 4.8 Assistant Treasurers and Assistant Secretaries. Each Assistant Treasurer and each Assistant Secretary, if any are elected, shall be vested with all the powers and shall perform all the duties of the Treasurer and Secretary, respectively, in the absence or disability of such officer, unless or until the Board of Directors shall otherwise determine. In addition, Assistant Treasurers and Assistant Secretaries shall have such powers and shall perform such duties as shall be assigned to them by the Board of Directors.

Section 4.9 Corporate Funds and Checks. The funds of the Corporation shall be kept in such depositories as shall from time to time be prescribed by the Board of Directors. All checks or other orders for the payment of money shall be signed by the President, the Chief Financial Officer or the Treasurer or such other person or agent as may from time to time be authorized and with such countersignature, if any, as may be required by the Board of Directors.

Section 4.10 Contracts and Other Documents. The President, the Chief Financial Officer or the Treasurer, or such other officer or officers as may from time to time be authorized by the Board of Directors or any other committee given specific authority by the Board of Directors during the intervals between the meetings of the Board of Directors, shall have power to sign and execute on behalf of the Corporation deeds, conveyances and contracts, and any and all other documents requiring execution by the Corporation.

Section 4.11 Compensation. The compensation of the officers of the Corporation shall be fixed from time to time by the Board of Directors (subject to any employment agreements that may then be in effect between the Corporation and the relevant

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officer). None of such officers shall be prevented from receiving such compensation by reason of the fact that he or she is also a director of the Corporation. Nothing contained herein shall preclude any officer from serving the Corporation, or any subsidiary, in any other capacity and receiving such compensation by reason of the fact that he or she is also a director of the Corporation.

Section 4.12 Ownership of Stock of Another Corporation. Unless otherwise directed by the Board of Directors, the President, the Chief Financial Officer or the Treasurer, or such other officer or agent as shall be authorized by the Board of Directors, shall have the power and authority, on behalf of the Corporation, to attend and to vote at any meeting of stockholders of any corporation in which the Corporation holds stock and may exercise, on behalf of the Corporation, any and all of the rights and powers incident to the ownership of such stock at any such meeting, including the authority to execute and deliver proxies and consents on behalf of the Corporation.

Section 4.13 Delegation of Duties. In the absence, disability or refusal of any officer to exercise and perform his or her duties, the Board of Directors may delegate to another officer such powers or duties.

Section 4.14 Resignation and Removal. Any officer may resign at any time in the same manner prescribed under Section 3.3 of these Bylaws. Any officer of the Corporation may be removed from office for or without cause at any time by the Board of Directors.

Section 4.15 Vacancies. The Board of Directors shall have power to fill vacancies occurring in any office.

ARTICLE V

STOCK

Section 5.1 Certificates of Stock. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman or Vice Chairman of the Board of Directors, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number and class of shares of stock in the Corporation owned by him or her. Any or all of the signatures on the certificate may be a facsimile. The Board of Directors shall have the power to appoint one or more transfer agents and/or registrars for the transfer or registration of certificates of stock of any class, and may require stock certificates to be countersigned or registered by one or more of such transfer agents and/or registrars. Notwithstanding anything herein to the contrary, the Board of Directors may provide for uncertificated shares in accordance with the General Corporation Law of the State of Delaware.

Section 5.2 Transfer of Shares. Shares of stock of the Corporation shall be transferable upon its books by the holders thereof, in person or by their duly authorized attorneys or legal representatives, upon surrender to the Corporation by delivery thereof to the person in charge of the stock and transfer books and ledgers. Such certificates shall be cancelled and new certificates shall thereupon be issued. A record shall be made of each transfer. Whenever any

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transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented, both the transferor and transferee request the Corporation to do so. The Board of Directors shall have power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of certificates for shares of stock of the Corporation.

Section 5.3 Lost, Stolen, Destroyed or Mutilated Certificates. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation alleged to have been lost, stolen or destroyed, and the Board of Directors may, in its discretion, require the owner of such lost, stolen or destroyed certificate, or his or her legal representative, to give the Corporation a bond, in such sum as the Board of Directors may direct, in order to indemnify the Corporation against any claims that may be made against it in connection therewith. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation that has become mutilated without the posting by the owner of any bond upon the surrender by such owner of such mutilated certificate.

Section 5.4 List of Stockholders Entitled To Vote. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list required by General Corporation Law of the State of Delaware § 219 or to vote in person or by proxy at any meeting of stockholders.

Section 5.5 Dividends. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may at any regular or special meeting, declare dividends upon the stock of the Corporation either (a) out of its surplus, as defined in and computed in accordance with General Corporation Law of the State of Delaware § 154 and § 244 or (b) in case there shall be no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Before the declaration of any dividend, the Board of Directors may set apart, out of any funds of the Corporation available for dividends, such sum or sums as from time to time in its discretion may be deemed proper for working capital or as a reserve fund to meet contingencies or for such other purposes as shall be deemed conducive to the interests of the Corporation.

Section 5.6 Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing or by electronic transmission without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; (b) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten (10) days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (c) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (i) the record

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date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 5.7 Registered Stockholders. Prior to the surrender to the Corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner. Except as otherwise required by law, the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she is or was a director or an officer of the Corporation or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, agent or trustee, or in any other capacity while serving as a director, officer, employee, agent or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Section 6.3 of these Bylaws with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors.

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Section 6.2 Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 6.1 of these Bylaws, an indemnitee shall, to the fullest extent not prohibited by law, also have the right to be paid by the Corporation the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition (an “advancement of expenses”); provided, however, that, if the General Corporation Law of the State of Delaware as then in effect requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 6.2 or otherwise.

Section 6.3 Right of Indemnitee to Bring Suit. If a claim under Section 6.1 or 6.2 of these Bylaws is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (a) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (b) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the General Corporation Law of the State of Delaware. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VI or otherwise shall be on the Corporation.

Section 6.4 Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

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Section 6.5 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.

Section 6.6 Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VI with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

Section 6.7 Nature of Rights. The rights conferred upon indemnitees in this Article VI shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article VI that adversely affects any right of an indemnitee or it successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, alteration or repeal.

ARTICLE VII

MISCELLANEOUS

Section 7.1 Amendments. These Bylaws may be altered, amended or repealed, and new Bylaws made, by the Board of Directors, but the stockholders may make additional Bylaws and may alter and repeal any Bylaws whether adopted by them or otherwise.

Section 7.2 Electronic Transmission. For purposes of these Bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

Section 7.3 Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

Section 7.4 Fiscal Year. The fiscal year of the Corporation shall end on December 31 of each year, or such other 12 consecutive months as the Board of Directors may designate.

Section 7.5 Waiver of Notice. A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any

14

meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

Section 7.6 Section Headings. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 7.7 Inconsistent Provisions; Changes in Delaware Law. If any provision of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the General Corporation Law of the State of Delaware or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect. If any of the provisions of the General Corporation Law of the State of Delaware referred to above are modified or superceded, the references to those provisions is to be interpreted to refer to the provisions as so modified or superceded.

Date of Adoption: April 26, 2011

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EXHIBIT A

Limited Partner	Class D Amount
The John F. Shea Family Trust	$	59,000,000
E & M RP Trust	$	30,000,000
Peter and Carolyn Shea Revocable Trust	$	26,000,000
Tahoe Partnership I	$	5,000,000

EX-3.5

Exhibit 3.5

ARTICLES OF INCORPORATION

OF

HIGHLANDS RANCH DEVELOPMENT CORPORATION

The undersigned natural persons of the age of twenty-one (21) years or more, hereby associate themselves together to form a corporation, under and pursuant to the statutes of the state of Colorado, and adopt the following Articles of Incorporation.

ARTICLE I

The name of this Corporation shall be:

HIGHLANDS RANCH DEVELOPMENT CORPORATION

ARTICLE II

A. The nature of the business of the Corporation and the objects and purposes to be transacted, promoted and carried on by it are:

1. To provide for maintenance, preservation and architectural control of the development known as Highlands Ranch, and to promote the health, safety and welfare of the residents of such community;

2. To engage in the business of and to act as general contractors and land development managers; to contract for and coordinate the development activities of subcontractors and others on lands owned by the corporation or others; to engage in all activities, render all services, and handle and deal in all materials, supplies and products related or incidental to any and every phase of the building and construction trades;

3. To acquire by purchase, lease, or otherwise and to improve and develop real property. To erect dwellings, apartment houses, and other buildings, private or public, of all kinds, and to sell or rent the same. To rebuild, enlarge, alter, or improve any buildings or other structures held or occupied by the Corporation, end to carry on may lawful business therein or thereon. To lay out. grade, pave, and dedicate roads. streets, avenues, highways, alleys, courts, paths, walks, parks, and play-grounds. To buy, sell, mortgage, exchange, lease, let, hold for investment or otherwise, use, and operate real estate of all kinds, improved or unimproved, and any right, or interest therein.

589

4. To engage in any commercial, industrial, manufacturing or agricultural enterprises calculated or designed to be profitable to this Corporation and in conformity with the laws of the State of Colorado.

5. To generally engage in any lawful business.

The objects and purposes specified in each of the foregoing paragraphs shall not be limited or restricted by reference or inference from the terms of any other paragraph but each shall be regarded as an independent object and purpose.

B. In furtherance of the foregoing purposes, the Corporation shall have and may exercise all of the rights, powers and privileges now or hereafter conferred upon corporations organized under the laws of the State of Colorado. In addition, it may do everything necessary, suitable or proper for the accomplishment of any of its corporate purposes, including the following:

(a) To borrow money for any corporate purpose from its officers, directors or shareholders, upon fair and equitable terms and conditions.

(b) To acquire shares of its own capital stock, and to hold the same either as treasury stock, or to cancel the same in the manner provided by law; any stock so held in the treasury shall not be voted.

ARTICLE III

This corporation shall have perpetual existence.

ARTICLE IV

A. The aggregate number of shares which the Corporation shall have authority to issue is Fifty Thousand (50,000) shares of common stock of no par value. The consideration for the issuance of shares may be paid in whole or in part in money, and other property, tangible or intangible; or in labor or in services actually performed for the Corporation.

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590

When payment of the consideration for which shares are to be issued shall have been received, such shares shall be deemed to be fully paid and not liable for any further call or assessment thereon.

B. Each shareholder of record shall have one vote for each share of stock standing in his name on the books of the Corporation and entitled to vote. In the election of directors, cumulative voting shall not be allowed.

C. Shareholders of the capital stock of this Corporation shall have the pre-emptive or preferential right to subscribe for any shares of the capital stock of this Corporation, whether now or hereafter authorized, and the right to acquire additional or treasury shares of the Corporation or securities convertible into shares or carrying stock purchase warranty or privileges.

D. The Board of Directors nay, from time to time, distribute to the shareholders in partial liquidation, out of stated capital or capital surplus of the Corporation, a portion of its assets, in cash or property, subject to the limitations contained in the statutes of the State of Colorado.

ARTICLE V

The number of persons constituting the Board of Directors of the Corporation shall be fixed by the Bylaws of the Corporation. Directors need not be residents of the State of Colorado, nor shareholders of the Corporation, and shall exercise all the powers conferred on the Corporation by these Articles of Incorporation and by the laws of the State of Colorado. The initial Board of Directors shall consist of three (3) members, and the names and addresses of those persons who are to serve as Directors until the first annual meeting of shareholders, or until their successors shall have been elected and qualified, are as follows:

Philip J. Reilly	26137 La Paz Road
	Mission Viejo, California 92691

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James G. Toepfer	6-00 So. Yosemite
	Englewood, Colorado 80110
James L. Huesman	26137 La Paz Road
	Mission Viejo, California 92691

ARTICLE VI

No contract or other transaction of the Corporation with any other person, firm or corporation, or in which this Corporation is interested, shall be affected by reason of any of the directors or officers of this Corporation being interested, in their individual capacities, or as an officer or director of another corporation, individually or jointly with others as a party to such contract or transaction; provided that the fact of such interest is known or disclosed to the Board. Any member of the Board so interested may be counted in determining the existence of a quorum at which the matter is considered and may vote at the Meeting at which this matter is taken up, as if he were not so interested.

ARTICLE VII

A. The address of the initial registered office of the Corporation is 1900 First National Bank Building, 621 Seventeenth Street, Denver, Colorado 80293.

B. The name of the initial registered agent for the Corporation at such address is Thomas T. Grimshaw.

ARTICLE VIII

Any director or officer or former director or officer of the Corporation shall be indemnified by the Corporation against all costs and expenses actually and reasonably incurred by him for advice or assistance concerning, or in connection with the defense of any action, suit or proceeding, civil, criminal or administrative, except in relation to the liabilities under the Securities Act of 1933. as amended; the Securities Laws of the State of

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592

Colorado; or other applicable Securities Laws, in which he is made a party by reason of being or having been a director or officer of the Corporation, whether or not he continues to be a director or officer at the tine of incurring such costs or expenses, except costs and expenses incurred in relation to matters as to which such director or officer shall have been derelict in the performance of his duty as such director or officer,

(a) in a matter which shall have been subject of a suit or proceeding in be shall have been finally adjudged in such suit or proceeding to have been derelict in the performance of his duty as such director or officer, or

(b) in a matter not falling within (a) next preceding if either all disinterested members of the Board of Directors or a committee of disinterested stockholders of the Corporation (excluding therefrom any director or officer) selected as hereinafter provided, shall determine that he is derelict.

The selection of the committee of stockholders provided above may be made by unanimous action of the disinterested directors or, if there be no disinterested director or directors, by the chief executive officer of the Corporation, provided that no. less than two (2) stock-holders shall be selected in any case. A director or stock-holder shall be deemed disinterested in a matter if he has no interest therein other than as a director or stockholder of the Corporation, as the case may be. The foregoing shall not constitute exclusive tests as to dereliction and no determination as to dereliction shall be questioned on the ground that it is made otherwise than as provided above. The Corporation may pay the fees and expenses of the stock-holders or directors, as the case may be, incurred in connection with making a determination as above provided.

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593

The foregoing indemnification shall include reimbursement of all costs and expenses reasonably incurred in settling any such claim asserted, suit or proceeding, when the so doing appears to be for the best interests of the Corporation, and shall be in addition to any rights to which any director or officer way otherwise be entitled as a matter of law.

ARTICLE IX

The officers of the Corporation shall be subject to the doctrine of corporate opportunities only insofar as it applies to business opportunities in which this Corporation has expressed an interest as determined from time to time by the Corporation’s Board of Directors, as evidenced by resolutions appearing in its minutes. When so delineated, opportunities within such areas of interest shall be disclosed promptly to the Board of Directors. Until such time as this Corporation, through its Board of Directors, has designated an area of interest, the officers shall be free to engage in such areas and to continue a business existing prior to the time that such an area of interest has been designated.

ARTICLE X

The Corporation shall be entitled to treat the registered holder of any shares of the Corporation as the owner thereof for all purposes, including all rights derived from such shares, and shall not be bound to recognize any equitable or other claim to, or interest in, such shares or rights deriving from such shares, on the part of any other persons, including but without limiting the generality thereof, a purchaser, assignee or transferee of such shares or rights deriving from such shares, unless and until such purchaser, assignee, transferee or other person becomes a registered holder of such shares, whether or not the Corporation shall have either actual or constructive notice of the interest of such purchaser, assignee, transferee or other person. The purchaser, assignee or transferee of any

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594

of the shares of the Corporation shall not be entitled: (1) to receive notice of the meetings of the shareholders: (2) to vote at such meetings; (3) to examine a list of the shareholders; (4) to be paid dividends or other sums payable to shareholders; (5) to own, enjoy and exercise any other property or rights deriving from such shares against the Corporation, until such purchaser, assignee or transferee has become the registered holder of such shares.

ARTICLE XI

The names and addresses of the incorporators of this Corporation are as follows:

Ralph L. Poucher	1900 First National Bank Building 621 Seventeenth Street Denver, Colorado 80293
John J. Tipton	1900 First National Bank Building 621 Seventeenth Street Denver, Colorado 80293
Charles W. Lilley	1900 First National Bank Building 621 Seventeenth Street Denver, Colorado 80293
Executed this 27th day of September, 1979.
	Ralph L. Poucher
	John J. Tipton
	Charles W. Lilley

STATE OF COLORADO	)
	)	ss.
CITY AND COUNTY OF DENVER	)

I, Leigh J. Newcomb, a Notary Public, in and for the City and County and State aforesaid, do hereby certify that on the 27th day of September, 1979, personally appeared before me Ralph L. Poucher, John J. Tipton and Charles W. Lilley, who are personally known to me to be the persons whose names are subscribed to the foregoing Articles of Incorporation, and who being by me first duly sworn declared that they were the persons who signed the foregoing document as Incorporators, that they signed the same as their free and voluntary act and deed, and that the statements contained therein are true.

	Notary Public
My Commission Expires     July 3, 1981

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SUBMIT ONE

Filing Fee 85.00

STATEMENT OF CHANGE OF REGISTERED OFFICE

OR REGISTERED AGENT, OR BOTH

To the Secretary of State

of the State of Colorado

Pursuant to the provision of the Colorado Corporation Act, the undersigned corporation, organized under the laws of the State of Colorado submits the following statement for the purpose of changing its registered office or its registered agent, or both in the State of Colorado:

First:	The name of Corporation is     Highlands Ranch Development Corporation
Second:	The address of its REGISTERED OFFICE is     6 Inverness Court East, Englewood, Colorado 80112
Third:	he name of its REGISTERED AGENT is     Joseph B. Blake
Fourth:	The address as of its registered office and the address of the business office of its registered agent, as changed, will be identical.
Fifth:	The address of its place of business in Colorado is     6 Inverness Court East, Englewood, Colorado80112

*Sixth: REGARDING FOREIGN CORPORATIONS. THIS STATEMENT MAY BE EXECUTED BY THE REGISTERED AGENT WHEN IT INVOLVES ONLY A REGISTERED ADDRESS CHANGE. A COPY OF THIS STATEMENT HAS BEEN FORWARDED TO THE CORPORATION BY THE REGISTERED AGENT.

HIGHLANDS RANCH DEVELOPMENT CORPORATION (Note 1)
By:
	James C. Toepfer

STATE OF COLORADO

County of Arapahoe

Before me Barbara A. Dettis, a Notary Public in and for the said County and State, personally appeared James C. Toepfer who acknowledged before me that he is the President of Highlands Ranch Development Corporation a Colorado corporation, that be signed the foregoing, and that the statements contained therein are true.

In witness whereof I have hereunto set any hand on this 22^nd day of February, A.D. 1950

My commission expires 5/9/82

COMPUTER UPDATE COMPLETE

	MAIL TO:
	COLORADO SECRETARY OF STATE CORPORATIONS OFFICE 1560 Broadway, Suite 200 Denver, Colorado 80202 (303) 866-2361
SUBMIT ONE	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH
Filing Fee $5.00

This document must be typewritten.

Pursuant to the provisions of the Colorado Corporation Code, the Colorado Nonprofit Corporation Act and the Colorado Uniform Limited Partnership Act of 1981, the undersigned corporation or limited partnership organized under the laws of Colorado. Submits the following statement for the purpose of changing its registered office or its registered agent, or both, in the state of Colorado:

First: The name of the corporation or limited partnership is:

Highlands Ranch Development Corporation
Second: the address of its REGISTERED OFFICE is	8822 S. Ridgeline Blvd.
	Highlands Ranch, CO 80126
Third: The name of its REGISTERED AGENT is
Joseph B. Blake

Fourth: The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

Fifth: The address of its place of business in Colorado is    8822. S. Ridgeline Blvd.                                                                 

                     Highlands Ranch, CO 80126 (Note 1)

By: (Note 2)

Its	Vice	president
Its		authorized agent
Its		registered agent (Note 3)
Its		general partner

STATE OF Colorado

COUNTY OF Douglas

Subscribed and sworn to before me this                  day of                                                              , 19                .

My commission expires                     .

Notary Public (Note 4)

Address

Must be typed FILING FEE: $5.00 MUST SUBMIT TWO COPIES	Mail to: Secretary of State Corporations Section 1560 Broadway, Suite 200 Denver, CO 80202 (303) 894-2251 Fax (303) 894-2242: 19871382541
Please Include a typed self-addressed envelope	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH

Pursuant to the provisions of the Colorado Business Corporation Act, the Colorado Nonprofit Corporation Act, the Colorado Uniform Limited Partnership Act of 1981 and the Colorado Limited Liability Company Act, the undersigned, organized under the laws of:

submits the following statement for the purpose of changing its office or its registered agent, or both in the state of Colorado:

FIRST:	The name of the corporation, limited partnership or limited liability company is:
	Highlands Ranch Development Corporation
SECOND:	Street address of the current registered office is:
	8822 South Ridgeline Boulevard, Highlands Ranch, CO 80126
	(Include City, State, Zip)
	and if changed, the NEW STREET ADDRESS is:
	300 West Plaza Drive, Suite 300, Highlands Ranch, CO 80126
	(Include City, State, Zip)
THIRD:	The name of its current registered agent is:      James B. Borgel
	and if changed, the NEW REGISTERED AGENT is:     Bert Selva
	Signature of NEW REGISTERED AGENT:

The address of the registered office and the address of the business office of the registered agent, as changed, will be identical.

FOURTH: If changing the principal place of business address ONLY, the new address is:

Signature
	Jeffrey H. Donnelson
Title	Assistant Secretary

MUST BE TYPED FILING FEE: $5.00 MUST SUBMIT TWO COPIES	Mail to: Secretary of State Corporations Section 1560 Broadway, Suite 200 Denver, CO 80202 (303)894-2251 Fax (303) 894-2242
Please include a typed self addressed envelope	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH

Pursuant to the provisions of the Colorado Business Corporation Act, the Colorado Nonprofit Corporation Act, the Colorado Uniform Limited Partnership Act of 1981 and the Colorado Limited Liability Company Act, the undersigned, organized under the laws of:

    Colorado

submits the following statement for the purpose of changing its registered office or its registered agent, or both, in the state of Colorado:

FIRST:	The name of the corporation, limited partnership or limited liability company is:
Highlands Ranch Development Corporation
SECOND:	Street address of current REGISTERED OFFICE is:     300 West Plaza Drive, Suite 300
Highlands Ranch, CO. 80126
	(Include City, State, Zip)
	9135 S. Ridgeline Blvd.
	and if changed, the new street address is:     Highlands Ranch, CO.80129
	(Include City, State, Zip)
THIRD:	The name of its current REGISTERED AGENT is:     Bert Selva
	and if changed, the new registered agent is:     Jeffrey H. Donnelson
	Signature of New Registered Agent
	9135 S. Ridgeline Blvd.
	Principal place of business    Highlands Ranch, CO. 80129
	(City, State, Zip)

The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

FOURTH: If changing the principal place of business address ONLY, the new address is                                                              

Signature
Title	Agent

EX-3.6

Exhibit 3.6

BYLAWS

OF

HIGHLANDS RANCH DEVELOPMENT CORPORATION

ARTICLE I

Offices

The principal office of the Corporation shall be in the State of Colorado. The Corporation may have offices and places of business at such other places within or without the State of Colorado as shall be determined by the Directors.

The registered office of the Corporation required by the Colorado Corporation Act must be maintained in the State of Colorado and it may be, but need not be, identical with the principal office, if in the State of Colorado; and the address of the registered office may be changed from time to time as provided by Colorado statute.

ARTICLE II

Shareholders Meetings

1. Annual Meetings. The annual meeting of the Shareholders of this Corporation shall be held at a reasonable hour on the third Monday of the second month following the end of the Corporation’s fiscal year unless that day be a holiday, when it shall be held on the next business day following that day for the purpose of electing directors and for the transacting of such other corporate business as may come before the meeting.

2. Special Meetings. Special meetings of the Shareholders of the Corporation may be called at any time by the Chairman of the Board of Directors, if any, President or by resolution of the Board of Directors, and the President shall call a special meeting within ten (10) days of receipt of written request by the holders of not less than one-tenth (1/10) of the issued and outstanding stock of the Corporation. The notice or call of a special meeting shall state the purpose or purposes for which the meeting is called.

3. Place of Meeting. The person or persons calling the meeting may designate any place, either within or without the State of Colorado, as the place for any annual meeting or for any special meeting of the Shareholders of the Corporation. A waiver of notice signed by all Shareholders entitled to vote at a meeting may designate any place for such meeting. If no designation is made, or if a special meeting shall be called other than by the Board, the place of meeting shall be the principal office of the Corporation in Colorado.

4. Notice of Meeting. Written or printed notice stating the place, day and hour of the meeting shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the President, Secretary or the Officer or persons calling the meeting, to each Shareholder of record

entitled to vote at such meeting except that if the authorized capital stock is to be increased, at least thirty (30) days’ notice shall be given. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Shareholder at his address as it appears on the stock transfer books of the Corporation, with postage prepaid.

5. Waiver of Notice. Any Shareholder, either before, at, or after a Shareholders’ meeting, may waive notice of the meeting, and his waiver shall be deemed the equivalent of giving notice. Attendance at a Shareholders’ meeting, either in person or by proxy, of a person entitled to notice shall constitute a waiver of notice of the meeting unless he attends for the express purpose of objection to the transaction of business on the ground that the meeting was not lawfully called or convened.

6. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or entitled to receive payment of any dividend or in order to make a determination of Shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock transfer books shall be closed for the purpose of determining Shareholders entitled to notice of or to vote at a meeting of Shareholders such books shall be closed for at least ten (10) days immediately preceding said meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of Shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of Shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of Shareholders is to be taken. If the stock transfer books are not closed, and no record date is fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders, or Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of the stock transfer books, and the stated period of closing has expired.

7. Voting List. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least ten (10) days before each meeting of Shareholders, a complete list of the Shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the principal office of the Corporation, whether within or without the State of Colorado, and shall be subject to inspection by any Shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any Shareholder during the whole time of the meeting. The original stock

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transfer books shall be prima facie evidence as to who are the Shareholders entitled to examine such list or transfer books or to vote at any meeting of Shareholders.

8. Proxies. A Shareholder entitled to vote may vote in person or by proxy executed in writing by the Shareholder or by his attorney in fact. The proxy shall not be valid after eleven (11) months from the date of its execution unless a longer period is expressly stated in it.

9. Voting Rights. Each outstanding share, regardless of class, shall be entitled to one vote, and each fractional share shall be entitled to a corresponding fractional vote on each matter submitted to a vote at a meeting of Shareholders except to the extent that the voting rights of the shares of any class or classes are limited or denied by the Articles of Incorporation.

At each election for Directors every Shareholder entitled to vote at such election shall have the right to vote in person or by proxy the number of shares owned by him for as many persons as there are Directors to be elected and for whose election he has a right to vote, and cumulative voting in the election of such Directors shall not be permitted.

Neither treasury shares, nor shares of its own stock held by the Corporation in a fiduciary capacity shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the Bylaws of such corporation may prescribe or, in the absence of such provision, as the Board of Directors of such corporation may determine.

Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name.

Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed.

10. Quorum. The presence, in person or by proxy, of the holders of a majority of the shares outstanding and entitled to vote shall constitute a quorum at meetings of the Shareholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Shareholders unless the vote of a greater number or voting by classes is required by the statutes of the State of Colorado or the Articles of Incorporation. In the event any Shareholders withdraw from a duly organized meeting at which a quorum was initially present, the remaining shares represented shall constitute a quorum for the purpose of continuing to do business, and the affirmative vote of the majority of the remaining shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Shareholders unless the vote of a greater number or voting by classes is required by the statutes of the State of Colorado or the Articles of Incorporation.

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11. Adjournments. If less than a majority of the outstanding shares are represented at any meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Any meeting of the Shareholders may adjourn from time to time until its business is completed.

12. Informal Action By Shareholders. Any action required to be taken at a meeting of the Shareholders, or any other action which may be taken at a meeting of the Shareholders, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the Shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Shareholders and may be stated as such in any articles or documents filed with the Secretary of State of Colorado under the Colorado Corporation Act.

ARTICLE III

Board of Directors

1. Number, Qualifications and Term of Office. The business and affairs of the Corporation shall be managed by a Board of Directors consisting of from three to nine members, none of whom needs to be a resident of the State of Colorado or hold shares in this Corporation. Each Director, except one appointed to fill a vacancy, shall be elected at each Annual Meeting of Shareholders and shall hold such office until his successor shall be elected and shall qualify. No decrease in the number of Directors on the Board shall have the effect of shortening the term of any incumbent Director.

2. Vacancies. Any Director may resign at any time by giving written notice to the President or to the Secretary of the Corporation. Such resignation shall take effect at the time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any vacancy occurring on the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors though less than a quorum. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, remaining shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Shareholders unless the vote of a greater number or voting by classes is required by the statutes of the State of Colorado or the Articles of Incorporation.

3. Removal. At a meeting of Shareholders called for that purpose the entire Board of Directors or any individual Director may be removed from office without assignment of cause by the vote of the majority of the shares entitled to vote at an election of Directors.

4. Compensation. By resolution of the Board of Directors, any Director may be paid any one or more of the following: his expenses, if any, of attendance at meetings; a fixed sum

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for attendance at each meeting; or a stated salary as Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV

Meetings of the Board

1. Place of Meetings. The meetings of the Board of Directors may be held at the principal office of the Corporation or any place within the State of Colorado and at any place without the State of Colorado that a majority of the Board of Directors may from time to time by resolution appoint.

2. Regular Meetings. The Board of Directors shall meet each year immediately after, and at the same place as, the Annual Meeting of the Shareholders for the purpose of electing officers and transacting such business as may come before the meeting. The Board of Directors may provide, by resolution, for the holding of additional regular meetings without other notice than such resolution.

3. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, if any, the President or by a majority of the members of the Board of Directors.

4. Notice of Meetings. Notice of the regular meetings of the Board of Directors need not be given. Written notice of each special meeting, setting forth the time and the place of the meeting, shall be given to each Director not less than five (5) days prior to the time fixed for the meeting. This notice may be given either personally, or by sending a copy of the notice through the United States mail or by telegram, charges prepaid, to the address of each Director appearing on the books of the Corporation. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid thereon. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

5. Waiver of Notice. A Director may waive in writing notice of a special meeting of the Board of Directors either before, at, or after the meeting; and his waiver shall be deemed the equivalent of giving notice. Attendance of a Director at a meeting shall constitute waiver of notice of that meeting unless he attends for the express purpose of objecting to the transaction of business because the meeting has not been lawfully called or convened.

6. Quorum. At meetings of the Board of Directors a majority of the number of Directors fixed by these Bylaws shall be necessary to constitute a quorum for the transaction of business. If a quorum is present, the acts of the majority of Directors in attendance shall be acts of the Board.

7. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be deemed to

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have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.

8. Executive Committee. The Board of Directors may, by a resolution passed by a majority of the number of Directors fixed by these Bylaws, designate a majority of their number to constitute an Executive Committee, which shall have and may exercise all of the authority of the Board of Directors or such lesser authority as may be set forth in said resolution. No such delegation of authority shall operate to relieve the Board of Directors or any member of the Board from any responsibility imposed by law.

9. Informal Action by Directors. Any action required or permitted to be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Directors and may be stated as such in any articles or documents filed with the Secretary of State of Colorado under the Colorado Corporation Act.

ARTICLE V

Officers and Agents

1. General. The executive officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board held after each Annual Meeting of the Shareholders and shall consist of a President, a Secretary and a Treasurer, or a Secretary/Treasurer. One or more Vice Presidents, a Chairman of the Board, other officers, assistant officers, agents and employees that the Board of Directors may from time to time deem necessary may be elected by the Board of Directors or be appointed in a manner prescribed by the Board.

Two or more offices may be held by the same person except that one person shall not at the same time hold the offices of President and Vice President, or the offices of President and Secretary. Officers shall hold office until their successors are chosen and have qualified unless they are sooner removed from office as provided in these Bylaws.

2. General Duties. All officers and agents of the Corporation as between themselves and the Corporation shall have such authority and shall perform such duties in the management of the Corporation as may be provided in these Bylaws or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws. In all cases where the duties of any officer, agent or employee are not prescribed by the Bylaws or by the Board of Directors, such officer, agent or employee shall follow the orders and instructions of the President.

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3. Vacancies. When a vacancy occurs in one of the executive offices by a death, resignation or otherwise, it shall be filled by the Board of Directors. The officer so selected shall hold office until his successor is chosen and qualified.

4. Salaries. The Board of Directors shall fix the salaries of the officers of the Corporation. The salaries of other agents and employees of the Corporation may be fixed by the Board of Directors or by an officer to whom that function has been delegated by the Board.

5. Removal. Any officer or agent of this Corporation may be removed by the Board of Directors or by the Executive Committee, if any, whenever in its judgment the best interests of the Corporation may be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or an agent shall not of itself create contract rights.

6. Chairman of the Board. The Chairman of the Board shall preside as Chairman at meetings of the Shareholders and the Board of Directors. He shall, in addition, have such other duties as the Board may prescribe that he perform. At the request of the President, the Chairman of the Board may, in the case of the President’s absence, or inability to act, temporarily act in his place. In the case of death of the President or in the case of his absence or inability to act without having designated the Chairman of the Board to act temporarily in his place, the Chairman of the Board shall perform the duties of the President. If the Chairman of the Board shall be unable to act, all the Vice Presidents may exercise such powers and perform such duties.

7. President. The President shall be the chief executive officer of the Corporation and shall have general supervision of the business of the Corporation. In the event the position of Chairman of the Board shall not be occupied or the Chairman shall be absent or otherwise unable to act, the President shall preside at meetings of the Shareholders and Directors and shall discharge the duties of the presiding officer. The President shall present at each annual meeting of the Shareholders a report of the business of the Corporation of the preceding fiscal year and shall perform whatever other duties the Board of Directors may from time to time prescribe.

8. Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board of Directors may from time to time prescribe or as the President may from time to time delegate to him. At the request of the President, any Vice President may, in the case of the President’s absence, or inability to act, temporarily act in his place. In the case of the death of the President, or in the case of his absence or inability to act without having designated a Vice President to act temporarily in his place, the Vice President, or Vice Presidents, to perform the duties of the President shall be designated by the Board of Directors. If no such designation shall be made, all the Vice Presidents may exercise such powers and perform such duties.

9. The Secretary. The Secretary shall keep or cause to be kept in books provided for that purpose the minutes of the meetings of the Shareholders, Executive Committee, if any, and of the Board of Directors; shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; shall be custodian of the records and

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of the seal of the Corporation and see that the seal is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized and in accordance with the provisions of these Bylaws; and, in general, shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to him by the Board of Directors or by the President. In the absence of the Secretary or his inability to act, the assistant secretaries, if any, shall act with the same powers, subject to the same restrictions as are applicable to the Secretary.

10. The Treasurer. The Treasurer shall have custody of corporate funds and securities. He shall keep full and accurate accounts of receipts and disbursements and shall deposit all corporate monies and other valuable effects in the name and to the credit of the Corporation in a depository or depositories of the Corporation and shall render to the President or the Board of Directors whenever they may require an account of his transactions as Treasurer and of the financial condition of the Corporation. Such power given to the Treasurer to disburse the funds shall not, however, preclude any other officer or employee of the Corporation from also depositing and disbursing funds when authorized to do so by the Board of Directors. He shall, if required by the Board of Directors, give the Corporation a bond in such amount and with such surety or sureties as may be ordered by the Board of Directors for the faithful performance of duties of his office. He shall have such other powers and perform such other duties as may be from time to time prescribed by the Board of Directors or the President. In the absence of the Treasurer or his inability to act, the assistant treasurers, if any, shall act with the same authority and subject to the same restrictions, as are applicable to the Treasurer.

11. Delegation of Duties. Whenever an officer is absent, or whenever, for any reason, the Board of Directors may deem it desirable, the Board may delegate the powers and duties of an officer to any other officer or officers or to any Director or Directors.

ARTICLE VI

Share Certificates and the Transfer of Shares

1. Share Certificates. Subject to statutory requirements, the share certificates shall be in a form approved by the Board of Directors, consecutively numbered, and signed in the name of the Corporation by the President or the Vice-president and the Secretary or an assistant secretary and shall be sealed with the seal of the Corporation, or with a facsimile thereof. In case any officer who has signed such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. Any restriction upon the transfer of shares represented by a certificate issued by this Corporation, whether imposed by these Bylaws or by separate agreement, shall be noted on each certificate subject to such restriction.

2. Consideration for Shares. Shares shall be issued for such consideration, expressed in dollars, but not less than the stated value therefor, as shall be fixed from time to

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time by the Board of Directors. Treasury shares shall be disposed of for such consideration expressed in dollars as may be fixed from time to time by the Board. Such consideration may consist, in whole or in part, of money, other property, tangible or intangible, or in labor or services actually performed for the Corporation, but neither promissory notes nor future services shall constitute payment or part payment for shares.

3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of a certificate alleged to have been destroyed or lost if the owner makes an affidavit or affirmation of that fact and produces such evidence of loss or destruction as the Board may require. The Board, in its discretion, may as a condition precedent to issuing a new certificate, require the owner to give the Corporation a bond as indemnity against any claim that may be made against the Corporation on the certificate allegedly destroyed or lost.

4. Transfer of Shares. Shares of the Corporation shall only be transferred on its books upon the surrender to the Corporation of the share certificates duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer and such documentary stamps as may be required by law. In that event, the surrendered certificates shall be cancelled, new certificates issued to the persons entitled to them and the transaction recorded on the books of the Corporation.

5. Registered Shareholders. The Corporation shall be entitled to treat the holder of record of shares as the holder in fact and, except as otherwise provided by the laws of Colorado, shall not be bound to recognize any equitable or other claim to or interest in the shares.

6. Stock Ledger. An appropriate stock journal and ledger shall be kept by the Secretary or such registrars or transfer agents as the Directors by resolution may appoint in which all transactions in the shares of stock of the Corporation shall be recorded.

7. Restriction on Transfer. Transfer of the stock of the Corporation may be restricted by any written agreement of all Shareholders, and notice of such restriction shall be given on each certificate of stock issued.

ARTICLE VII

Seal and Fiscal Year

1. Seal. The Corporation shall have a seal in the form impressed on this paragraph of the Bylaws.

2. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors and set forth in the Minutes of the Directors. Said fiscal year may be changed from time to time by the Board of Directors in its discretion.

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ARTICLE VIII

Dividends

Dividends shall be declared and paid out of the net profits and surplus of the Corporation as often and at such times as the Board of Directors may determine, taking into account reserve, capital and other needs of the Corporation. No unclaimed dividend shall bear interest against the Company. Dividends of capital stock may also be declared when, in the judgment of the Board of Directors, it is considered proper for the best interests of the Corporation.

ARTICLE IX

Amendments

The Board of Directors may amend, supplement and repeal these Bylaws, and all such changes shall affect and be binding upon the holders of all shares heretofore as well as hereafter authorized, subscribed for or offered.

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EX-3.7

Exhibit 3.7

CERTIFICATE OF FORMATION

OF

MONTY GREEN HOLDINGS, LLC

The undersigned, an authorized natural person for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is:

MONTY GREEN HOLDINGS, LLC

2. The address of the registered office and the name and the address of the registered agent of the limited liability company, required to be maintained, by Section 18-104 of the Delaware Limited liability Company Act, are National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.

Executed on July 18, 2005

Max B. Johnson, Authorized Person

EX-3.8

Exhibit 3.8

LIMITED LIABILITY COMPANY AGREEMENT

OF

MONTY GREEN HOLDINGS, LLC

This Limited Liability Company Agreement (this “Agreement”) of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of the 2nd day of August, 2005, by Shea Homes Limited Partnership, a California limited partnership (the sole Member of the Company).

RECITALS

The Member desired to form the Company to own interest in an Monty Green, LLC.

Therefore, the Member formed a limited liability company under the Delaware Limited Liability Company Act (the “Act”) on the following terms and conditions:

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a Delaware limited liability company by the filing of a Certificate of Formation pursuant to the Act with the Delaware Secretary of State. A copy of the Certificate is attached to this Agreement as Exhibit A.

1.2 Name. The name of the Company is MONTY GREEN HOLDINGS, LLC and all Company business shall be conducted under that name or such other names that comply with the applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to complete infrastructure and construct homes on real property contributed by Member, and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 160 Greentree Drive, Suite 101, Dover, Delaware 19901, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19901. The Company may have such other offices as the Member may designate from time to time.

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Act. The Delaware Limited Liability Company Act, as amended from time to time.

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. Shea Homes Limited Partnership, a California limited partnership.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 18-607 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 18-607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

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Section 4 MANAGEMENT

4.1 Management by Manager. The business and affairs of the Company shall be managed by the Shea Homes Limited Partnership, a California limited partnership as its statutory Manager. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

4.2 Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the Delaware General Corporation Law, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 18-502 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(l)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

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Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

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8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Delaware Secretary of State a certificate of cancellation in accordance with Section 18-203 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A Certificate of Formation

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9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

Shea Homes Limited Partnership, a California limited partnership Sole Member
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership
	Its:	General Partner
		By:	JFS Management, L.P.
			a Delaware limited partnership
		Its:	General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation
			Its:	General Partner
				By:
					Paul E. Mosley
				Its:	Vice President
				By:
					Max B. Johnson
				Its:	Vice President

6

LIMITED LIABILITY COMPANY AGREEMENT

OF Untitled Active Adult Project, LLC

EXHIBIT A

Certificate of Formation

7

FIRST AMENDMENT TO LIMITED LIABILITY COMPANY AGREEMENT

OF

MONTY GREEN HOLDINGS, LLC

THIS FIRST AMENDMENT TO LIMITED LIABILITY COMPANY AGREEMENT OF MONTY GREEN HOLDINGS, LLC (this “Amendment”) is entered into as of October 18, 2007, by and between SHEA HOMES, INC., a Delaware corporation (“SHI”) and SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership (“SHLP”).

R E C I T A L S

A. SHLP entered into that certain Limited Liability Company Agreement of Monty Green Holdings, LLC (the “Company”), dated as of August 2, 2005 (the “Operating Agreement”).

B. SHLP is the sole member of the Company, and SHLP is the sole owner of SHI.

C. SHLP wishes to distribute its membership interest in the Company to SHI, and SHI wishes to accept such distribution and to become the sole member of the Company.

C. SHLP and SHI wish to enter into this Amendment to evidence such distribution. Unless otherwise noted, capitalized terms used in this Amendment shall have the meanings given to them in the Operating Agreement. Any references in the Operating Agreement to this “Agreement” shall mean and refer to the Operating Agreement as amended by this Amendment.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, SHLP and SHI hereby amend the Operating Agreement in the following particulars only:

1. Distribution of Membership Interest. (a) SHLP hereby distributes one hundred percent (100%) of its membership interest in the Company to SHI and withdraws from the Company, (b) SHI shall thereafter be the sole Member of the Company and (c) SHI hereby accepts the distribution of SHLP’s membership interest in the Company.

2. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Operating Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Operating Agreement shall remain in full force and effect without modification.

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b. Counterparts; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic facsimile copies of the signed counterparts, which facsimile counterparts shall be binding upon the parties.

c. Authorization. By his or her signature, each person executing this Amendment on behalf of a party hereto represents and warrants to the other party hereto that he or she is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings, representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

e. Recitals. The Recitals above are incorporated into this Amendment and the Operating Agreement by reference and are hereby verified by SHI and SHLP.

[Signatures on Next Page]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date and year first above written.

SHI
SHEA HOMES, INC., a Delaware corporation
By:
	Max B. Johnson
	Vice President
By:
	Ronald L. Lakey Vice President

SHLP
SHEA HOMES LIMITED PARTNERSHIP,
a California limited partnership
By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
	Its:	General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
		Its:	General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
			Its:	General Partner
				By:
					Max B. Johnson
					Vice President
				By:
					Ronald L. Lakey Vice President

FIRST AMENDED AND RESTATED

OPERATING AGREEMENT

OF

MONTY GREEN HOLDINGS, LLC

This First Amended & Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of July 1, 2009 by Shea Homes, Inc., a Delaware corporation (the “Member”) as sole member of the Company.

R E C I T A L S

WHEREAS, Shea Homes Limited Partnership, a California limited partnership (“SHLP”) formed the Company and entered into that certain Limited Liability Company Agreement of the Company, dated as of August 2, 2005 (the “Original Agreement”);

WHEREAS, SHLP and Member entered into that certain First Amendment to the Limited Liability Company dated as October 18, 2007 (the “Amendment”), pursuant to which SHLP distributed its membership interest in the Company to Member;

WHEREAS, Member now desires to amend and restate the Original Agreement as set forth below.

A G R E E M E N T

NOW, THEREFORE, the Member, as sole member of the Company, hereby agrees as follows:

Section 1 FORMATION

1.1 Name. The name of the Company is MONTY GREEN HOLDINGS, LLC.

1.2 Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

1.3 Office and Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent. The Company may have such other offices as the Member may designate from time to time.

1.4 Member. The name and address of the Member is Shea Homes, Inc., 655 Brea Canyon Road, Walnut, California 91789.

1.5 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Delaware Limited Liability Company Act, as amended from time to time.

Agreement. This Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. SHEA HOMES, INC. a Delaware corporation.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the LLC. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 18-607 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 18-607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

COMPANY MANAGEMENT

Shea Homes Inc. as the sole Member of the Company, hereby elects to have the Company be a Manager Managed Company as provided under Section 18-402 of the Act.

4.1 Executive Committee. Authority of the executive Committee. The Member acknowledges that the Company shall be managed by or under the direction of an Executive Committee as Manager, in accordance with Section 18-402 of the Act. Subject to any restrictions set forth in the Articles of Organization, this Agreement or the Act, all powers to control and manage the business and affairs of the Company and to bind the Company shall be exclusively vested in the Executive Committee, and the Executive Committee may exercise all powers of the Company and do all such lawful acts not inconsistent with the foregoing. In exercising its powers, the Executive Committee shall have the right and authority to take all actions that it deems necessary, useful or appropriate for the management and conduct of the Company’s business and affairs and in the pursuit of the purposes of the Company, including delegating the right and authority to take such actions to the Administrator and such Officers as are designated by the Executive Committee. The Executive Committee, in addition to the Administrator, shall be considered a manager for purposes of the Act.

4.1.1 Composition and Election of the Executive Committee; Decisions. The Executive Committee shall consist of three (3) members, each to be elected by the affirmative vote of the Members holding a majority of the Percentage Interests. The initial members of the Executive Committee shall be John C. Morrissey, James G. Shontere and Ronald L. Lakey. Any member of the Executive Committee may be removed as such, with or without cause, by the affirmative vote of the Members holding a majority of the Percentage Interests.

4.1.2 Meetings of the Executive Committee. (a) Meetings of the members of the Executive Committee may be called upon the request of any Member or any member of the Executive Committee. Members of the Executive Committee may vote in person, by proxy or by telephone at such meeting and may waive advance notice of such meeting. Each member of the Executive Committee shall have one vote. The vote or consent of 2 of the 3 members of the Executive Committee shall be required to constitute the act of the Executive Committee. Meetings may be conducted, in whole or in part, by telephone. Meetings are not required and the Executive Committee may conduct its business informally.

(b) The Executive Committee may act without a meeting and without a vote if at least 2 members consent to the proposed action in writing or by electronic transmission.

(c) Each member of the Executive Committee may authorize any Person or Persons to act for him on all matters in which he is entitled to participate, including voting at or participating in a meeting of the Executive Committee or consenting to actions of the Executive Committee as provided in Section 4.1.2 (b). An Executive Committee member’s authorization of his representative shall be delivered to the other members of the Executive Committee in writing or by electronic transmission. The Executive Committee member may revoke the authority of his representative or appoint another representative at his sole discretion by the same means.

(d) Each meeting of the Executive Committee shall be conducted by such individual as the Executive Committee deems appropriate, pursuant to such rules for the conduct of the meeting as the Executive Committee or such individual deems appropriate.

4.1.3 Duties and Obligations of the Executive Committee. (a) The Executive Committee, by its own action or through the Officers or the Administrator, shall take all actions

that may be necessary or appropriate for the (i) continuation of the Company’s valid existence as a limited liability company under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Members or to enable the Company to conduct the business in which it is engaged, (ii) accomplishment of the Company’s purposes, including the acquisition, development, maintenance, preservation and operation of Property in accordance with the provisions of this Agreement and applicable laws and regulations, (iii) provision or arrangement for all of the Company’s management, reporting, financial, legal, tax and other services, and (iv) availability of the books and records of the Company for the Members’ inspection.

(b) The Executive Committee shall be under a fiduciary duty to conduct the affairs of the Company in the best interests of the Company and of the Members, including the safekeeping and use of all of the Property for the exclusive benefit of the Company.

4.1.4 Major Decisions. Notwithstanding any other provision of this Agreement, only the Executive Committee shall have the authority to authorize and approve the following acts with regard to the Company:

(a) any transfer or assignment of rights in the Company’s Property for other than a Company purpose;

(b) the incurrence, assumption, or other liability for any Debt or the creation of any liens on the Property of the Company other than (i) expenditures in the ordinary course of business, (ii) capital expenditures that are consistent with the Company’s strategic business plans and (iii) additional capital expenditures not in excess of $ 1,000,000;

(c) any loan or other advance of money to any Person or any guarantee of obligations of any Person in excess of $100,000 per occurrence and $1,000,000 in the aggregate;

(d) any act of Voluntary Bankruptcy;

(e) any distribution to any Member of any Property, other than as provided in this Agreement;

(f) any merger, consolidation, or sale of all or substantially all of the Company’s Property;

(g) the admission of any Member other than in accordance with Section 11 of this Agreement;

(h) discretionary distributions to the Members;

(i) any change in the Company’s independent accountants;

(j) an adoption of or change in a significant tax or accounting practice or principle of the Company, any significant tax or accounting election, or the adoption of any position for purposes of any tax return that will have a Material Adverse Effect on any Member (unless the making of such election is expressly contemplated by this Agreement); or

(k) a change in the Company’s Fiscal Year.

4.1.5 Appointment of an Administrator. The Executive Committee shall have the authority, exercisable in its discretion, to hire a third party (the “Administrator”) to provide such services and management to the Company as the Executive Committee deems necessary or

convenient, and authorize the Administrator to perform. The services may include management, reporting, financial, legal, tax and other services. The Administrator shall perform the services pursuant to a written contract, which will contain such terms and conditions as the Executive Committee deems appropriate. The Administrator may be an Affiliate of a Member. The Administrator shall report directly to the President of the Company, if such officer has been appointed, and ultimately to the Executive Committee. The Administrator, in addition to the Executive Committee, shall be considered a manager for purposes of the Act.

4.1.6 “Authorized Person” under the Act. Each member of the Executive Committee and the Administrator shall be an “authorized person” to file with the Delaware Department of State certificates and other documents on behalf of the Company, as required or permitted by the Act.

Section 4.2 Officers-Designation; Qualifications.

4.2.1 The Executive Committee may, from time to time, designate one or more individuals to be officers of the Company (the “Officers”). The Officers of the Company shall include a President (the “President”) and may include such other officers as the Executive Committee or the President may, from time to time, deem necessary. Any Officer so designated shall have all authority necessary to implement the decisions of the Executive Committee, and such further authority as the Executive Committee may deem necessary or convenient to delegate to him or her. Any Person may hold any number of offices. No Officer need be a Member, a Delaware resident or a United States citizen.

4.2.2 Removal and Resignation, Any Officer may be removed as such, with or without cause, by the Executive Committee or the President, at any time. Any Officer may resign as such at any time upon written notice to the Executive Committee or the President. Such resignation shall be made in writing and shall take effect at the time specified or, if no time is specified, at the time of its receipt by the Executive Committee or the President.

4.2.3 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Executive Committee or the President.

4.2.4 Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Executive Committee or the President.

4.2.5 Conflicting Authority. When in this Agreement the Executive Committee, the Administrator, the President, an Officer or any other Person are each given the right to act, the right of the Administrator, the President, such Officer or Person to act shall at all times be subject to the right, but not the obligation, of the Executive Committee to approve the act. If the acts of the Administrator, the President, the Officer or Person and the Executive Committee should conflict, the act of the Executive Committee shall govern. If the acts of the President, the Officer or Person and the Administrator should conflict, the act of the Administrator shall govern.

4.2.6 Execution of Documents; Reliance by Third Parties. The execution of any document shall be authorized in accordance with the preceding provisions and the document may be signed by any two of the members of: the Executive Committee and/or the Officers. The

preceding sentence notwithstanding, any third party may rely upon any document signed by any two of the members of the Executive Committee and/or the Officers as duly authorized and binding on the Company without any duty of inquiry.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 18-502 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(l)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Delaware Secretary of State a certificate of cancellation in accordance with Section 18-203 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

Shea Homes, Inc., a Delaware corporation
	By:
	Name: Paul E. Mosley
	Title: Vice President
	By:
	Name: Ronald L. Lakey
	Title: Vice President

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

3

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By:	JFS Management, L.P., its sole General Partner
		By: J.F. Shea Construction Management, Inc., its sole General Partner
		By:
		Name: James G. Shontere
		Title: Secretary
		By:
		Name: Robert O’Dell
		Title: Treasurer
SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By:	J.F. Shea L.P., its sole General Partner
		By: JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner

    By:

    Name: James G. Shontere

    Title: Secretary

    By:

    Name: Robert O’Dell

    Title: Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC

By:

Name: James G. Shontere

Title: Secretary

By:

Name: Robert O’Dell

Title: Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC

By: J.F. SHEA CO., INC., its Manager

By:

Name: James G. Shontere

Title: Secretary

By:

Name: Robert O’Dell

Title: Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC

By:

Name: James G. Shontere

Title: Secretary

By:

Name: Robert O’Dell

Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC

By:

By: Ronald L. Lakey

Its:  Vice President

By:

By: James G. Shontere

Its: Secretary

J.F. SHEA CO., INC., as Manager of Coast Cable Partners

By:

Name: James G. Shontere

Title: Secretary

By:

Name: Robert O’Dell

Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.9

Exhibit 3.9

ARIZONA CORPORATION COMMISSION

CORPORATIONS DIVISION

Phoenix Address:	1200 West Washington	Tucson Address:	402 West Congress
	Phoenix, Arizona 86007		Tucson, Arizona 86701

        CERTIFICATE OF DISCLOSURE        

A.R.S. Sections 10-128 & 10-1084

PLEASE SEE REVERSE SIDE	MountainBrook Village Company
CHECK APPROPRIATE BOX(ES) A or B ANSWER “C”	EXACT CORPORATE NAME

THE UNDERSIGNED CERTIFY THAT:

A. x No persons serving either by elections or appointment as officers, directors, incorporations and persons controlling, or holding more than 10% of the issued and outstanding common shares or 10% of any other proprietary, beneficial or membership interest in the corporation:

1. Have been convicted of a felony involving a transaction in securities, consumer fraud or antitrust in any state or federal jurisdiction within the seven year period immediately preceding the execution of this Certificate.

2. Have been convicted of a felony, the essential elements of which consisted of fraud, misrepresentations, theft by false pretenses or restraining the trade or monopoly in any state or federal jurisdiction within the seven-year period immediately preceding the execution of this Certificate.

3. Have been or are subject to an injunction, judgment, decree or permanent order of any state or federal court entered within the seven-year period immediately preceding the execution of this Certificate where such injunction, judgment, decree or permanent order:

(a) involved the violation of fraud or registration provisions of the securities laws of that jurisdiction: or

(b) involved the violation of the consumer fraud laws of that jurisdiction: or

(c) involved the violation of the antitrust or restraint of trade laws of that jurisdiction.

B. ¨ For any person or persons who have been or are subject to one or more of the statements in Items A.1 through A.3 above, the following information MUST be attached:

1.	Full name and prior name(s) used.	6.	Social Security number.
2.	Full birth name.	7.	The nature and description of each or judicial action, date and location, the court and public agency involved and file or cause number of case.
3.	Present home address.
4.	Prior addresses (for immediate preceding 7-year period).
5.	Date and location of birth.

      STATEMENT OF BANKRUPTCY, RECEIVERSHIP OR REVOCATION      

A.R.S. Sections 10-128.01 and 10-1083

C. Has any person serving (a) either by election or appointment as an officer, director, trustee or incorporation of the corporation or, (b) major stockholder possessing or controlling any proprietary, beneficial or membership interest in the corporation, served in any such capacity or held such interest in any corporation which has been placed in bankruptcy or receivership or had its charter revoked?    YES            NO    X  

Under penalties of law, the undersigned incorporations/Officers declare that we have examined this Certificate, including any attachments, and to the best of our knowledge and belief it is true, correct and complete.

BY DATE 10/22/92

TITLE Nancy L. Immordino, Incorporator

BY DATE

TITLE

BY DATE 10/22/92

TITLE Ingrid S. Williams, Incorporator

BY DATE

TITLE
	FISCAL DATE:	9/30

ARTICLES OF INCORPORATION

OF

MOUNTAINBROOK VILLAGE COMPANY

1. Name: The name of the corporation (hereinafter called “Corporation”) shall be MountainBrook Village Company.

2. Purpose: The purpose for which this Corporation is organized is the transaction of any and all lawful business for which corporations may be incorporated under the laws of the State of Arizona, as they may be amended from time to time.

3. Initial Business: The Corporation initially intends to conduct the business of serving as general partner of a partnership which will own, develop and operate real property; provided, however, that such initial intention shall in no manner whatever limit the character of the business which the Corporation may ultimately conduct.

4. Authorized Capital: The authorized capital stock of this Corporation shall be 1000 shares of common stock, no par value.

5. Statutory Agent: The name and address of the initial statutory agent of the Corporation is Lowe & Berman, P.A., 2901 North Central Avenue, Suite 1100, Phoenix, Arizona 85012.

6. Known Place of Business: The known place of business of the Corporation shall initially be 4812 South Mill Avenue, Tempe, Arizona 85282, but a different and other offices and places for conducting business, both within and without the State of Arizona, may be established from time to time by the Board of Directors.

7. Board of Directors: The initial Board of Directors shall consist of three (3) directors. The persons who are to serve as directors until the first annual meeting of the shareholders or until their successors are elected and qualified are:

Richard C. Kraemer

4812 South Mill Avenue

Tempe, Arizona 85282

Robert H. Daskal

4812 South Mill Avenue

Tempe, Arizona 85282

Gary D. Haarer

4812 South Mill Avenue

Tempe, Arizona 85282

Otherwise, the number of persons to serve on the Board of Directors shall be fixed by the Bylaws of the Corporation.

8. Quorum: A quorum at any meeting of the Board of Directors shall consist of a majority of the number of directors then serving, but not less than two directors, provided that if and when a Board of Directors comprised of one member is authorized, or in the event that only one director is then serving, then one director shall constitute a quorum.

9. Incorporators: The names and addresses of the incorporators of the Corporation are:

Nancy L. Immordino

2901 North Central Avenue

Suite 1100

Phoenix, Arizona 85012

2

Ingrid S. Williams

2901 North Central Avenue

Suite 1100

Phoenix, Arizona 85012

All powers, duties and responsibilities of the incorporators shall cease at the time of filing of these Articles of Incorporation with the Arizona Corporation Commission.

10. Distributions From Capital Surplus: The Board of Directors of the Corporation may, from time to time, distribute on a pro rata basis to its shareholders out of the capital surplus of the Corporation a portion of its assets, in cash or in property.

11. Indemnification of Officers, Directors, Employees and Agents: Subject to the further provisions hereof, the Corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees, judgments, penalties, and amounts paid in settlement or compromise, which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them, other than an action by or in the right of the Corporation, for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as director, officer, employee, or agent of the Corporation, if he or she acted, or failed to act, or refused to act, in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, whether or not any action is or has been filed against them and whether or not any settlement or compromise is approved by a court. Subject to the further provisions

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hereof, the Corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees (but excluding judgments, penalties, and, except as hereinafter set forth, amounts paid in settlement or compromise), which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them by or in the right of the Corporation, for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as director, officer, employee, or agent of the Corporation, if he or she acted, or failed to act, or refused to act, in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, whether or not any action is or has been filed against them and except that no indemnification shall be made under this sentence in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which such court shall deem proper. In connection with any action referred to in the previous sentence, if a court shall determine that indemnity for amounts paid in settlement is proper, indemnification shall be mandatory and shall be automatically extended by the Corporation for the amounts so paid in settlement and for expenses, including attorneys’ fees to the extent the court deems proper. Except as

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provided in the next sentence, the Corporation shall have the right to refuse indemnification in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the Corporation, at its own expense and through counsel of its own choosing, to defend him or her in the action. Indemnification against expenses, including attorneys’ fees shall be mandatory and shall be automatically extended by the Corporation whether the legal action brought or threatened is by or in the right of the Corporation or by any other person to the extent the director, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above.

12. Repurchase of Shares: The Board of Directors of the Corporation may, from time to time, cause the Corporation to purchase its own shares to the extent of the unreserved and unrestricted earned and capital surplus of the Corporation.

13. Dividends: The Board of Directors may authorize the payment of dividends to the holders of shares of any class of stock payable in shares of any other class.

IN WITNESS WHEREOF, we, the undersigned, have hereunder set our hands this 22nd day of October, 1992.

Nancy L. Immmordino

Ingrid S. Williams

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STATE OF ARIZONA

NOTICE OF ACCEPTANCE

OF APPOINTMENT OF STATUTORY AGENT

OF

MOUNTAINBROOK VILLAGE COMPANY

TO: Arizona Corporation Commission

1200 West Washington Street

Phoenix, Arizona 85007

You are hereby notified that the undersigned has accepted the position of Statutory Agent of:

MOUNTAINBROOK VILLAGE COMPANY

DATED: October22, 1992
	Lowe & Berman, P.A. 2901 North Central Avenue Suite 1100 Phoenix Arizona 85012
	By
		Ronald E. Lowe, Secretary

EX-3.10

Exhibit 3.10

BYLAWS

OF

MOUNTAINBROOK VILLAGE COMPANY

INDEX TO BYLAWS

ARTICLE I	OFFICES AND CORPORATE SEAL	1
Section 1	Principal Office	1
Section 2	Other Offices	1
Section 3	Corporate Seal	1
ARTICLE II	SHAREHOLDERS
Section 1	Shareholders’ Meeting	1
Section 2	Annual Meetings	2
Section 3	Special Meetings of Shareholders	2
Section 4	List of Shareholders	2
Section 5	Notice of Shareholders’ Meetings	3
Section 6	Closing of Transfer of Books or Fixing of Record Date	3
Section 7	Quorum and Adjournment	4
Section 8	Voting	5
Section 9	Action Without meeting	5
Section 10	Waiver of Notice	6
ARTICLE III	DIRECTORS
Section 1	Number	6
Section 2	Vacancies	6
Section 3	Powers	6
Section 4	Removal of Directors	7
Section 5	Place of Meetings	7
Section 6	Annual Meetings	7

Section 7	Regular Meetings	8
Section 8	Special Meetings	8
Section 9	Quorum	8
Section 10	Action Without Meeting	8
Section 11	Committees of the Board	8
Section 12	Composition	9
Section 13	Waiver of Notice	9
ARTICLE IV	OFFICERS
Section 1	Designation of Titles	9
Section 2	Election, Term of Office Qualification	10
Section 3	Subordinate Officers, Etc.	10
Section 4	Removal	10
Section 5	Vacancies	11
Section 6	Chairman of the Board	11
Section 7	The President	11
Section 8	Vice President	12
Section 9	The Treasurer	12
Section 10	The Secretary	13
ARTICLE V	RESIGNATIONS
ARTICLE VI	CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1	Contracts	14
Section 2	Loans	14
Section 3	Checks, Drafts, Etc.	14

Section 4	Deposits	14
ARTICLE VII	CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1	Certificates for Shares	15
Section 2	Transfer of Shares	15
ARTICLE VIII	FISCAL YEAR	16
ARTICLE IX	DIVIDENDS	16
ARTICLE X	INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS	16
ARTICLE XI	REPEAL, ALTERATION OR AMENDMENT	19

BYLAWS

OF

MOUNTAINBROOK VILLAGE COMPANY

ARTICLE I

OFFICES AND CORPORATE SEAL

SECTION 1. Principal Office. MountainBrook Village Company (hereinafter called “the corporation”) shall maintain a principal office in Arizona.

SECTION 2. Other Offices. The corporation may also maintain offices at such other place or places, either within or without the State of Arizona, as may be designated from time to time by the Board of Directors (hereinafter called “the board”), and the business of the corporation may be transacted at such other offices with the same effect as that conducted at the principal office.

SECTION 3. Corporate Seal. A corporate seal shall not be a requisite to the validity of any instrument executed by or on behalf of the corporation, but nevertheless if in any instance a corporate seal be used, the same shall be a circle having on the circumference thereof the name of the corporation and in the center the words “corporate seal,” the year incorporated, and the state where incorporated.

ARTICLE II

SHAREHOLDERS

SECTION 1. Shareholders’ Meetings. All meetings of shareholders shall be held at such place as may be fixed from time to time by the board, or in the absence of direction by the board, by the president or secretary of the corporation, either within or without the State of Arizona, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

SECTION 2. Annual Meetings. Annual meetings of shareholders shall be held within one hundred eighty (180) days of the end of the corporation’s fiscal year on such date as is designated by the president or secretary of the corporation or the shareholders of the corporation owning a majority of the entire capital stock of the corporation issued, outstanding and entitled to vote. At the annual meeting, shareholders shall elect a board and transact such other business as may properly be brought before the meeting.

SECTION 3. Special Meetings of Shareholders. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by Arizona statute or by the Articles of Incorporation (hereinafter called “articles”), may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board, or at the request in writing of shareholders owning a majority of the entire capital stock of the corporation issued, outstanding, and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

SECTION 4. List of Shareholders. The officer who has charge of the stock transfer books for shares of the corporation shall prepare and make a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address and the number of shares registered in the name of each shareholder. Such list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder present.

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SECTION 5. Notice of Shareholders’ Meetings. Written notice of the annual meeting stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given, either personally or by mail, to each shareholder of record entitled to vote at such meeting not less than ten (10) nor more than fifty (50) days before the date of the meeting. If mailed, such notice shall be deemed to be delivered when mailed to the shareholder at his address as it appears on the stock transfer books of the corporation. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice unless determined otherwise by the unanimous vote of the holders of all the issued and outstanding shares of the corporation present at the meeting in person or represented by proxy.

SECTION 6. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the board may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of shareholders,

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not less than ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, 4:00 p.m. on the day before the day on which notice of the meeting or the actual dividend check is mailed shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof.

SECTION 7. Quorum and Adjournment.

(a) The holders of a majority of the shares issued, outstanding, and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of shareholders for the transaction of business except as otherwise provided by Arizona statute or by the articles.

(b) Business may be conducted once a quorum is present and may continue until adjournment of the meeting notwithstanding the withdrawal or temporary absence of sufficient shares to reduce the number present to less than a quorum. Unless the vote of a greater number, or voting by classes, is required by Arizona statute or the articles, the affirmative vote of the majority of the shares then represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders; provided, however, that if the shares then represented are less than required to constitute a quorum, the affirmative vote must be such as would constitute a majority if a quorum were present; and provided further, that the affirmative vote of a majority of the shares then present shall be sufficient in all cases to adjourn a meeting.

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(c) If a quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting to another time or place, without notice other than announcement at the meeting at which adjournment is taken, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

SECTION 8. Voting. At every meeting of the shareholders, each shareholder shall be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such shareholder, but no proxy shall be voted or acted upon after eleven (11) months from its date, unless the proxy provides for a longer period.

SECTION 9. Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote, by a consent in writing, setting forth the action so taken, shall be signed by the holders of all of the outstanding shares entitled to vote with respect to the subject matter of the action.

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SECTION 10. Waiver of Notice. Attendance of a shareholder at a meeting shall constitute waiver of notice of such meeting, except when such attendance is for the purpose of protesting that the meeting is not lawfully called or convened. Any shareholder may waive notice of any annual or special meeting of shareholders by executing a written waiver of notice either before, at or after the time of the meeting.

ARTICLE III

DIRECTORS

SECTION 1. Number. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than fifteen (15). The directors shall be elected at the annual meeting of the shareholders, except as provided in Section 2 of this article, and each director elected shall hold office until his or her successor is elected and qualified. Directors need not be shareholders.

SECTION 2. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by the affirmative vote of a majority of the remaining directors then in office, though not less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute.

SECTION 3. Powers. The business and affairs of the corporation shall be managed by the board, which may exercise all such powers of the corporation and do all such lawful acts as are prohibited not by Arizona statute, the Articles of Incorporation, or these Bylaws directed or required to be exercised or done by the shareholders.

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SECTION 4. Removal of Directors. Any director or the entire board may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of directors at a meeting of shareholders called expressly for that purpose.

SECTION 5. Place of Meetings. The board of the corporation may hold meetings, both regular and special, either within or without the State of Arizona, and such meetings may be held by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such meeting.

SECTION 6. Annual Meetings. Annual meetings of the board shall be held immediately following the annual meeting of shareholders and in the same place as the annual meeting of shareholders, and no notice to the newly elected directors of such meeting shall be necessary in order legally to hold the meeting, provided a quorum shall be present. In the event such meeting is not held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board, or as shall be specified in a written waiver of notice by all of the directors.

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SECTION 7. Regular Meetings. Regular meetings of the board may be held without notice at such time and at such place as shall from time to time be determined by the board.

SECTION 8. Special Meetings. Special meetings of the board may be called by the president or the secretary on one (1) day’s notice to each director, either personally, by mail, by telegram, or by telephone; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two (2) directors.

SECTION 9. Quorum. A quorum at any meeting of the board shall consist of a majority of the number of directors then serving, but not less than two (2) directors, provided that if and when a board comprised of one member is authorized, or in the event that only one director is then serving, then one director shall constitute a quorum as provided by Arizona statute or by the articles. If a quorum shall not be present at any meeting of the board, the directors then present may adjourn the meeting to another time or place, without notice other than announcement at the meeting, until a quorum shall be present.

SECTION 10. Action Without Meeting. Unless otherwise restricted by the articles or these bylaws, any action required or permitted to be taken at any meeting of the board or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

SECTION 11. Committees of the Board. The board by resolution, adopted by a majority of the full board, may designate from among its members an executive

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committee and one or more other committees each of which, to the extent provided in such resolution and permitted by law, shall have and may exercise all the authority of the board. The board, with or without cause, may dissolve any such committee or remove any member thereof at any time. The designation of any such committee and the delegation thereto of authority shall not operate to relieve the board, or any member thereof, of any responsibility imposed by law.

SECTION 12. Compensation. By resolution of the board, each director may be paid his expenses, if any, of attendance at each meeting of the board of directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the board or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

SECTION 13. Waiver of Notice. Attendance of a director at a meeting shall constitute waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Any director may waive notice of any annual, regular, or special meeting of directors by executing a written notice of waiver either before or after the time of the meeting.

ARTICLE IV

OFFICERS

SECTION 1. Designation of Titles. The officers of the corporation shall be chosen by the board and shall be a president, who shall be a member of the board, a vice president, a secretary, and a treasurer. The board may also choose a chairman of the

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board. Any number of offices, except the offices of president and secretary, may be held by the same person, unless the articles or these bylaws otherwise provide. The board may require any such officer, agent or employee to give security for the faithful performance of his duties.

SECTION 2. Election, Term of Office, Qualification. The executive officers of the corporation shall be elected annually by the board, each to hold office for one year or until his successor shall have been duly appointed or elected and shall qualify, or until his death, or until he shall resign, or shall have been removed in the manner hereinafter provided.

SECTION 3. Subordinate Officers, Etc. The board may appoint such subordinate officers, agents or employees as the board may deem necessary or advisable, including one or more additional vice presidents, one or more assistant treasurers and one or more assistant secretaries, each of whom shall hold office for such period, have authority and perform such duties as are provided in these bylaws or as the board may from time to time determine. The board may delegate to any executive officer or to any committee the power to appoint any such additional officers, agents or employees. Notwithstanding the foregoing, no assistant secretary or assistant treasurer shall have power or authority to collect, account for, or pay over any tax imposed by any federal, state, or city government.

SECTION 4. Removal. Any officer or agent may be removed by the board whenever in its judgment the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

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SECTION 5. Vacancies. A vacancy in any office, because of death, resignation, removal, or any other cause, shall be filled for the unexpired portion of the term in the manner prescribed in Sections 2 and 3 of this Article IV for election or appointment to such office.

SECTION 6. Chairman of the Board. The chairman of the board, if one shall have been appointed and be serving, shall preside at all meeting of the board and shall perform such other duties as from time to time may be assigned to him.

SECTION 7. The President. The president shall preside at all meetings of shareholders, and if a chairman of the board shall not have been appointed or, having been appointed, shall not be serving or be absent, the president shall preside at all meetings of the board. The president shall be the principal executive officer of the corporation and, subject to the control of the board, shall in general supervise and control all of the business and affairs of the corporation. He may sign, either alone or with the secretary or any other proper officer of the corporation thereunto authorized by the board, certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the board has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the board or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of the president and such other duties as may be prescribed by the board from time to time.

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SECTION 8. Vice President. Each vice president shall have such powers and perform such duties as the board or the president may from time to time prescribe and shall perform such other duties as may be prescribed by these bylaws. At the request of the president, or in case of his absence or inability to act, the vice president or, if there shall be more than one vice president then in office, then one of them who shall be designated for the purpose by the president or by the board shall perform the duties of the president, and when so acting shall have all powers of, and be subject to all the restrictions upon, the president.

SECTION 9. The Treasurer. The treasurer shall have charge and custody, and be responsible for, all the funds and securities of the corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name of and to the credit of the corporation in such banks and other depositaries as may be designated by the board; he shall disburse the funds of the corporation as may be ordered by the board, taking proper vouchers for such disbursements, and shall render to the president and to the directors at the regular meetings of the board or whenever they may require it, a statement of all his transactions as treasurer and an account of the financial condition of the corporation; and, in general, he shall perform all the duties incident to the office of treasurer and such other duties as may from time to time be assigned to him by the board. He may sign, with the president or a vice president, certificates of stock of the corporation.

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SECTION 10. The Secretary. The secretary shall act as secretary of, and keep the minutes of, all meetings of the board and of the shareholders; he shall cause to be given notice of all meetings of the shareholders and directors; he shall be custodian of the seal of the corporation and shall affix the seal, or cause it to be fixed, to all proper instruments when deemed advisable by him; he shall have charge of the stock book and also of the other books, records and papers of the corporation relating to its organization as a corporation, and shall see that the reports, statements and other documents required by law are properly kept or filed; and he shall in general perform all the duties incident to the office of secretary. He may sign, with the president, certificates of stock of the corporation. He shall also have such powers and perform such duties as are assigned to him by these bylaws, and he shall have such other powers and perform such other duties, not inconsistent with these bylaws, as the board shall from time to time prescribe.

ARTICLE V

RESIGNATIONS

Any director or other officer may resign his office at any time by giving written notice of his resignation to the president or the secretary of the corporation. Such resignation shall take effect at the time specified therein, at the time of the receipt thereof, and the acceptance thereof shall not be necessary to make it effective.

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ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1. Contracts. The board may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

SECTION 2. Loans. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the board, except that the president of the corporation is authorized to contract loans or issue negotiable paper on behalf of the corporation and in its name to the extent of $10,000. Such authority may be general or confined to specific instances.

SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board.

SECTION 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the board may select.

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ARTICLE VII

CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 1. Certificates for Shares. Certificates representing shares of the corporation shall be in such form as shall be determined by the board. Such certificates shall be signed by the president or a vice president and by the secretary or an assistant secretary and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the corporation itself or one of its employees. Each certificate for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the board may prescribe.

SECTION 2. Transfer of Shares. Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes.

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ARTICLE VIII

FISCAL YEAR

The fiscal year of the corporation shall be as determined by the board.

ARTICLE IX

DIVIDENDS

The board may, from time to time, declare and the corporation may pay dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its articles.

ARTICLE X

INDEMNIFICATION OF OFFICERS, DIRECTORS

EMPLOYEES AND AGENTS

Subject to the further provisions hereof, the corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees, judgments, penalties, and amounts paid in settlement or compromise, which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them, other than an action by or in the right of the corporation, for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as director, officer, employee, or agent of the corporation, if he or she acted, or failed to act, or refused to act, in good faith and in a manner he or she reasonably

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believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, whether or not any action is or has been filed against them and whether or not any settlement or compromise is approved by a court. Subject to the further provisions hereof, the corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees (but excluding judgments, penalties, and, except as hereinafter set forth, amounts paid in settlement or compromise), which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them by or in the right of the corporation, for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as director, officer, employee, or agent of the corporation, if he or she acted, or failed to act, or refused to act, in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, whether or not any action is or has been filed against them and except that no indemnification shall be made under this sentence in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

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In connection with any action referred to in the previous sentence, if a court shall determine that indemnity for amounts paid in settlement is proper, indemnification shall be mandatory and shall be automatically extended by the corporation for the amounts so paid in settlement and for expenses, including attorneys’ fees to the extent the court deems proper. Except as provided in the next sentence, the corporation shall have the right to refuse indemnification in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the corporation, at its own expense and through counsel of its own choosing, to defend him or her in the action. Indemnification against expenses, including attorneys’ fees shall be mandatory and shall be automatically extended by the corporation whether the legal action brought or threatened is by or in the right of the corporation or by any other person to the extent the director, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above.

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ARTICLE XI

REPEAL, ALTERATION OR AMENDMENT

These bylaws may be repealed, altered, or amended, or substitute bylaws may be adopted at any time by a majority of the board at any regular or special meeting.

The undersigned, Rex H. Manz, Secretary of MountainBrook Village Company, hereby certifies that the foregoing bylaws were duly adopted by Unanimous Consent of the Board of Directors of MountainBrook Village Company In Lieu of First Meeting effective the 22nd day of October, 1992.

Rex H. Manz, Secretary

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UNANIMOUS CONSENT OF DIRECTORS

IN LIEU OF SPECIAL MEETING

OF DIRECTORS OF

MOUNTAINBROOK VILLAGE COMPANY

The undersigned, constituting all of the directors of MountainBrook Village Company, an Arizona corporation (the “Corporation”), hereby consent to the following action taken without a meeting as permitted by the Bylaws of the Corporation and applicable law:

WHEREAS, the Corporation is a general partner in MountainBrook Village Joint Venture, an Arizona general partnership (the “Joint Venture”), and the Joint Venture is a limited partner in Gold Canyon Golf Resort Limited Partnership, an Arizona limited partnership (the “Partnership”); and

WHEREAS, in connection with a Four Million Dollar ($4,000,000.00) loan to the Partnership from Greyhound Financial Corporation, a Delaware corporation (the “Lender”), it is contemplated that the Joint Venture shortly will enter into a Subordination and Standstill Agreement (Affiliates) (the “Agreement”) in favor of the Lender; and

WHEREAS, the Corporation desires to ratify, confirm and approve the Agreement;

NOW, THEREFORE, BE IT RESOLVED, that the Corporation hereby ratifies, confirms and approves the Agreement and the transaction contemplated thereby; and

FURTHER RESOLVED, that Richard C. Kraemer, President of the Corporation, Gary D. Haarer, Vice President of the Corporation, Robert H. Daskal, Treasurer of the Corporation, Rex H. Manz, Secretary of the Corporation and Larry W. Seay, Assistant Treasurer of the Corporation (collectively, the “Authorized Representatives”), should be, and each of them acting alone hereby is, authorized, on behalf of the Corporation as a general partner of the Joint Venture, to execute the Agreement and any and all other documentation contemplated thereby, in such form and having such substance as any of them deems appropriate in his sole and absolute discretion;

FURTHER RESOLVED, that all action taken by the Authorized Representatives, or any one or more of them prior to the adoption of these Resolutions in connection with the Agreement and the transaction contemplated thereby, should be, and the same hereby is, ratified, confirmed and approved in all respects.

This consent shall be deemed effective as of the 1st day of March, 1993 and shall be filed with the minutes of the proceedings of the Board.

Richard C. Kraemer

Robert H. Daskal

Gary D. Haarer

R85400001UDCMOUNTAIN002

2

UNANIMOUS CONSENT OF DIRECTORS

IN LIEU OF SPECIAL MEETING

OF DIRECTORS OF

MOUNTAINBROOK VILLAGE COMPANY

The undersigned, constituting all of the directors of MountainBrook Village Company, an Arizona corporation (the “Corporation”), hereby consent to the following action taken without a meeting as permitted by the Bylaws of the Corporation and applicable law:

RESOLVED, that the Corporation should, and it hereby does, approve the formation of an Arizona general partnership to be known as MountainBrook Village Joint Venture (the “Joint Venture”) (with the Corporation and SMI - MountainBrook Limited Partnership, an Arizona limited partnership, to be general partners), and the execution of the Joint Venture Agreement and Certificate of Partnership of the Joint Venture (the “Joint Venture Documents”) contemplated by the formation of the Joint Venture;

FURTHER RESOLVED, that the Corporation, as the general partner of the Joint Venture, should, and it hereby does, approve the formation of an Arizona limited partnership to be known as Gold Canyon Golf Resort Limited Partnership (the “Partnership”) (with UDC Advisory Services, Inc., an Illinois corporation, to be the general partner and the Joint Venture to be the limited partner), and the execution of the Limited Partnership Agreement and Certificate of Limited Partnership of the Partnership (the “Partnership Documents”);

FURTHER RESOLVED, that Richard C. Kraemer, President of the Corporation, Gary D. Haarer, Vice President of the Corporation, Robert H. Daskal, Treasurer of the Corporation, Rex H. Manz, Secretary of the Corporation and Larry W. Seay, Assistant Treasurer of the Corporation (collectively, the “Authorized Representatives”), should be, and each of them acting alone hereby is, authorized, on behalf of the Corporation, to execute the Joint Venture Documents and any and all other documentation contemplated thereby, in such form and having such substance as any of them deems appropriate in his sole and absolute discretion;

FURTHER RESOLVED, that the Authorized Representatives should be, and each of them acting alone hereby is, authorized, on behalf of the Corporation, as the general partner of the Joint Venture, to execute the Partnership Documents and any and all other documentation contemplated thereby, in such form and having such substance as any of them deems appropriate in his sole and absolute discretion;

FURTHER RESOLVED, that all action taken by the Authorized Representatives, or any one or more of them prior to the adoption of these Resolutions in connection with the Joint Venture Documents or the Partnership Documents and the transactions contemplated thereby, should be, and the same hereby are, ratified, confirmed and approved in all respects.

This consent shall be deemed effective as of the 1st day of February, 1993 and shall be filed with the minutes of the proceedings of the Board.

Richard C. Kraemer

Robert H. Daskal

Gary D. Haarer

R85400001UDCMOUNTAIN001A

2

UNANIMOUS CONSENT IN LIEU OF

FIRST MEETING OF THE BOARD OF DIRECTORS OF

MOUNTAINBROOK VILLAGE COMPANY

The undersigned, being the Directors named in the Articles of Incorporation of MountainBrook Village Company, an Arizona corporation, hereby consent to the following action taken without a meeting as permitted by Section 10-044 of the Arizona Revised Statutes:

WHEREAS, the Articles of Incorporation of the Corporation were filed with the Arizona Corporation Commission on October 22, 1992, and a copy of the Articles of Incorporation is being transmitted to a newspaper published and printed in, and of general circulation in Maricopa County, Arizona, for publication in three consecutive issues as required by law; and

WHEREAS, all acts required to complete and validate the incorporating of the Corporation (subject to the filing of the affidavit of publication of the Articles) have now been taken and, therefore, the Corporation may function in perpetuity from October 22, 1992, unless its incorporation is sooner revoked by authority of law; and

WHEREAS, the initial Directors desire to confirm the appointment of the Directors of the Corporation, approve Bylaws of the Corporation, elect officers of the Corporation, approve a form of stock certificate of the Corporation, approve a form of seal of the Corporation, approve the appointment of the statutory agent of the Corporation, adopt a fiscal year for the Corporation, and otherwise take action in lieu of the organizational meeting of the Board of Directors of the Corporation contemplated by A.R.S. § 10-057; and

WHEREAS, UDC Homes, Inc. has submitted a written offer to subscribe for a share of the Corporation’s common stock, which offer is attached hereto as Exhibit “A”; and

WHEREAS, it will be necessary or convenient for the Corporation from time to time to open bank accounts (which term shall include savings and loan associations); and

WHEREAS, various banks often demand different resolutions in order to open such accounts, and it is the desire of the Corporation to give certain persons broad authority to open such accounts and to certify to such resolutions required by such banks.

NOW, THEREFORE, BE IT RESOLVED, that a copy of the Articles of Incorporation and the Affidavit of Publication of the Articles of Incorporation in a newspaper published and printed in, and of general circulation in Maricopa County, Arizona (when received), all of which are more particularly referred to above, shall be placed in the minute book of the Corporation.

FURTHER RESOLVED, that the appointment of Richard C. Kraemer, Robert H. Daskal and Gary D. Haarer as Directors of the Corporation in the Articles of Incorporation is hereby ratified, confirmed and approved.

FURTHER RESOLVED, that without prejudice to the powers of the Board of Directors of the Corporation to make, alter, amend or repeal the Bylaws of this Corporation as conferred by the provisions of its Articles of Incorporation, the form of Bylaws submitted herewith to the Directors should be, and it hereby is, in all respects approved, and that said Bylaws should be, and they hereby are, adopted as the Bylaws of the Corporation.

FURTHER RESOLVED, that a copy of the Bylaws be incorporated in the minute book of the Corporation immediately following the copy of the Articles of Incorporation.

2

FURTHER RESOLVED, that the following persons are unanimously elected to the offices shown opposite their names for the term specified in the Corporation’s Bylaws:

Richard C. Kraemer	President
Gary D. Haarer	Vice President
Robert H. Daskal	Treasurer
Rex H. Manz	Secretary
Larry W. Seay	Assistant Treasurer
Gina M. Self	Assistant Secretary

FURTHER RESOLVED, that acceptances of the aforesaid offices from the above-named persons should be, and they hereby are, attached hereto and made a part hereof as Exhibits “B,” “C,” “D,” “E,” “F” and “G”.

FURTHER RESOLVED, that the form of stock certificate conforming to Article VII, Section 1 of the Bylaws is approved and adopted as the form of certificate for shares of the capital stock of the Corporation, and same should be, and hereby is, attached hereto and made a part hereof as Exhibit “H”.

FURTHER RESOLVED, that the following form of seal conforming to Article I, Section 3 of the Bylaws should be, and it hereby is, approved and adopted:

FURTHER RESOLVED, that the appointment in the Articles of Incorporation of Lowe & Berman, P.A., 2901 North Central Avenue, Suite 1100, Phoenix, Arizona 85012, as statutory agent for the Corporation should be, and it hereby is, ratified, confirmed and approved.

FURTHER RESOLVED, that the Corporation hereby adopts as its fiscal year, for the purpose of Title 43 of the Arizona Revised Statutes, as well as for other purposes, the first day of October to the last day of September of each year.

FURTHER RESOLVED, that the offer from UDC Homes, Inc. to subscribe for one (1) share of the

3

Corporation’s authorized but unissued common capital stock in consideration of the contribution to the Corporation of its receivable from Superstition Mountain Investment, Ltd., an Illinois limited partnership, in the amount of $100,000.00 be, and it hereby is, accepted and $99,900.00 of such consideration is hereby allocated to capital surplus and the remainder of such consideration shall constitute stated capital.

FURTHER RESOLVED, that any officer of the Corporation should be, and he hereby is, authorized and empowered to open bank accounts in such banks as he may determine in his discretion, on behalf of the Corporation; that he should be, and hereby is, authorized and empowered to sign checks on any accounts which are opened; and that he should be, and he hereby is, authorized and empowered to have access to any safe deposit boxes established by the Corporation under the authority granted herein.

FURTHER RESOLVED, that the Secretary and any Assistant Secretary, are each authorized to execute such standard forms of certificate of corporate resolutions as such bank or banks may require in connection with any accounts which are opened or for use of such bank’s or banks’ night depository or safe deposit facilities.

This consent shall be deemed effective as of October 22, 1992 and shall be filed with the minutes of the proceedings the Board.

Richard C. Kraemer

Robert H. Daskal

Gary D. Haarer

4

OFFER

October 22, 1992

To: MountainBrook Village Company

The undersigned, UDC Homes, Inc., a Delaware corporation, hereby subscribes for one (1) share of the authorized common capital stock of MountainBrook Village Company, an Arizona corporation, for which the undersigned agrees to contribute to said corporation a portion of its receivable from Superstition Mountain Investment, Ltd., an Illinois limited partnership, in the amount of $100,000.00.

The undersigned understands that the share to be purchased has not been registered under federal, state or other securities laws; that, consequently, it is not freely transferable; and that the corporation will make appropriate stop-transfer notations on its stock transfer records and may, at its option, place an appropriate legend evidencing the restrictions on transfer of the certificates representing the share.

UDC HOMES, INC., a Delaware corporation
By
	Its	Executive Vice President-Finance

EXHIBIT “A”

ACCEPTANCE OF ELECTION

The undersigned hereby accepts his election as a Director and as President of MountainBrook Village Company, an Arizona corporation, as of October 22, 1992.

Richard C. Kraemer

EXHIBIT “B”

ACCEPTANCE OF ELECTION

The undersigned hereby accepts his election as a Director and as Vice President of MountainBrook Village Company, an Arizona corporation, as of October 22, 1992.

Gary D. Haarer

EXHIBIT “C”

ACCEPTANCE OF ELECTION

The undersigned hereby accepts his election as a Director and as Treasurer of MountainBrook Village Company, an Arizona corporation, as of October 22, 1992.

Robert H. Daskal

EXHIBIT “D”

ACCEPTANCE OF ELECTION

The undersigned hereby accepts his election as Secretary of MountainBrook Village Company, an Arizona corporation, as of October 22, 1992.

Rex H. Manz

EXHIBIT “E”

ACCEPTANCE OF ELECTION

The undersigned hereby accepts his election as Assistant Treasurer of MountainBrook Village Company, an Arizona corporation, as of October 22, 1992.

Larry W. Seay

EXHIBIT “F”

ACCEPTANCE OF ELECTION

The undersigned hereby accepts her election as Assistant Secretary of MountainBrook Village Company, an Arizona corporation, as of October 22, 1992.

Gina M. Self

EXHIBIT “G”

EXHIBIT “H”

EX-3.11

Exhibit 3.11

ARTICLES OF INCORPORATION OF SAND CREEK CATTLE COMPANY 444071

These Articles of Incorporation are signed and verified this 22^nd day of July, 1981 for delivery in duplicate to the Secretary of State of Colorado, for the purpose of forming a corporation under the Colorado Corporation Code.

I. NAME

1.1. Name. The name of the corporation is Sand Creek Cattle Company.

II. DURATION

2.1. Duration. The period of duration of the corporation shall be perpetual.

III. PURPOSES AND POWERS

3.1. Purposes. The purposes for which the corporation is organized are as follows:

(a) To engage in the business of ranching and farming and the buying, raising, breeding, feeding and selling of livestock.

(b) To acquire, hold, own, improve, develop, sell and lease real property and interests therein, wherever located, and personal property in connection therewith, and

(c) To engage in the transaction of any lawful business and to pursue any lawful purposes for which a corporation may be organized under the laws of the State of Colorado.

3.2. Powers. This corporation shall have, enjoy and may exercise all of the rights, powers and privileges conferred upon corporations organized under the laws of the State of Colorado, whether now or hereafter in effect, and whether or not herein specifically mentioned.

3.3. Purposes and Powers Not Limited. The enumeration of purposes and powers herein shall not limit or restrict powers which may now or hereafter be allowed or permitted by law and each purpose and power specified herein shall be independent and shall not be restricted by reference to or inference from the terms of any other purpose or power.

IV. SHARES AND SHAREHOLDERS’ RIGHTS

4.1. Capital Stock. The total number of shares which the corporation shall have authority to issue is 50,000 shares, which shall consist of one class only, designated “common stock”. Each of such shares shall have a par value of $1.00.

4.2. No Preemptive Rights. Shareholders shall not have preemptive rights to acquire additional or treasury shares of the corporation or securities convertible into shares or carrying stock purchase warrants or privileges, or stock rights or options.

4.3. No Cumulative Voting. Cumulative voting shall not be permitted in the election of directors.

4.4. No Two-Thirds Vote Requirements. Shareholders may take any action by vote or concurrence of a majority of the outstanding shares of the corporation or any kinds or series thereof entitled to vote on any subject matter which, except for this provision, would require a two-thirds vote under the Colorado Corporation Code as amended.

4.5. Restrictions on Stock Transfers – Shareholders Agreements. The Corporation shall have the right to impose restrictions on the transfer of all, or any part of, its shares and may become a party to agreements entered into by any of its shareholders restricting transfer or encumbrance of any of its shares, or subjecting any of its shares to repurchase or release obligations.

V. BOARD OF DIRECTORS

5.1. Authority and Election of Directors. The business and affairs of the corporation shall be managed by a board of directors which shall be elected at an annual meeting of the shareholders, or at a special meeting called for that purpose.

5.2. Initial Board of Directors. The initial board of directors shall consist of the following three members, who shall serve until the first annual meeting of shareholders and until their successors be elected and qualified.

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Director	Address
Philip J. Reilly	26137 La Paz Road Mission Viejo, California 92675
James G. Toepfer	6 Inverness Court East Englewood, Colorado 80112
Paul B. Pressman	6 Inverness Court East Englewood, Colorado 80112

5.3. Increase or Decrease in Directors. The number of directors may be increased or decreased from time to time by amendment to the bylaws of the corporation, but no decrease shall have the effect of shortening the term of any incumbent director.

VI. REGISTERED OFFICE AND AGENT

6.1 Registered Office and Agent. The initial registered office of the corporation shall be 6 Inverness Court East, Englewood, Colorado 80112, and the initial registered agent at such address shall be Paul B. Pressman.

VII. INCORPORATOR

7.1. Incorporator. The name and address of the incorporator is:

Dennett L. Hutchinson	2600 Colorado National Bldg.
	950 Seventeenth Street
	Denver, Colorado 80202

VIII. INDEMNIFICATION OF DIRECTORS AND OTHERS

8.1. Certain Definitions. “Corporate Official” shall mean any person who is or was a director, officer, employee, fiduciary, or agent of the corporation or who is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partner-ship, joint venture, trust or other enterprise. “Expenses” shall mean all expenses, including attorney fees, judgments, fines and amounts paid in settlement of a Proceeding. “Proceeding” shall mean any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.

8.2. Rights of Indemnification. The corporation shall indemnify any Corporate Official against any and all Expenses actually and reasonably incurred by him in connection

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with any Proceeding in which such Corporation Official was or is a party or is threatened to be made a party by reason of the fact that he is or was a Corporate Official, if much Corporate Official acted in good faith and in a manner he reasonably believed to be in the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the Corporate Official did not act in good faith and in a manner which he reasonably believed to be in the best interests of the corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

8.3. Limitation if Proceeding Brought by Corporation. Notwithstanding the foregoing, no indemnification shall be made in connection with a Proceeding by or in the right of the corporation to procure a judgment in its favor in respect of any claim, issue or matter as to which the Corporate Official has been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless, and only to the extent that, the court in which such Proceeding was brought determines, upon application, that, despite the adjudication of liability, but in view of all circumstances of the case, such Corporate Official is fairly and reasonably entitled to indemnification for such expenses which such court deems proper.

8.4. Indemnification if Successful Defense. To the extent that a Corporate Official has been successful on the merits in defense of any Proceeding or in defense of any claim, issue or matter therein, he shall be indemnified against Expenses actually and reasonably incurred by him in connection therewith.

8.5. Determination That Indemnification Proper. Any indemnification under Sections 8.2 and 8.3 hereof shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the Corporate Official is proper in the circumstances because has met the applicable standard of conduct set forth in Sections 8.2 and 8.3 hereof. Such determination shall be made by the board of directors by a majority of a quorum consisting of directors who are not parties to the Proceeding or, if such quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel, in a written opinion, or by the shareholders.

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8.6. Advancement of Expenses. Expenses incurred in defending a Proceeding may be paid by the corporation in advance of the final disposition of such Proceeding upon a determination that indemnification is proper as authorized in Section 8.5 hereof, upon receipt of an undertaking by or on behalf of the Corporate Official to repay such amount unless it is ultimately determined that he is entitled to be indemnified by the corporation under this Article VIII.

8.7. Rights Not Exclusive. The indemnification provided under this Article VIII shall not be deemed exclusive of any other rights to which a Corporate Official may be entitled under the Articles of Incorporation, any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, and any procedure provided for by any of the foregoing, both as to action in his official capacity and as to action in another capacity while holding office as a Corporate Official.

8.8. Rights Continue After Cease to be Corporate Official. The indemnification provided in this Article VIII shall continue as to a person who has ceased to be a Corporate Official and shall inure to the benefit of heirs, executors and administrators of such a person.

8.9. Authority to Insure. The corporation pay purchase and maintain insurance on behalf of any person who is or was a Corporate Official against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article VIII.

IX. OTHER PROVISIONS

9.1. Transactions with Directors and Related Entities. No contract or other transaction between the corporation and one or more of its directors or any other corporation, firm, association, or entity in which one or more of its directors are directors or officers or are financially interested shall be either void or voidable solely because of such relationship or interest or solely because such directors are present at the meeting of the board of directors or a committee thereof which authorities, approves, or ratifies such contract or transaction or solely because their votes are counted for such purpose if: (a) the fact of such relationship or interest is disclosed or known to the board of directors or committee which authorizes, approves, or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; or (b) the fact of such relationship or interest is

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disclosed or known to the shareholders entitled to vote and they authorize, approve, or ratify such contract or transaction by vote or written consent; or (c) the contract or transaction is fair and reasonable to the corporation. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction.

Dennett L. Hutchinson

STATE OF COLORADO	)
CITY AND	)    ss.
COUNTY OF DENVER	)

The foregoing instrument was acknowledged before me this 22^nd day of July, 1981 by Dennett L. Hutchinson.

Witness my hand and official seal.

My commission expires 4 October 1982.

Notary Public

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55 Form DFI (Rev 1/86)	MAIL TO: COLORADO SECRETARY OF STATE CORPORATIONS OFFICE 1560 Broadway, Suite 200 Denver, Colorado 80202
	(303) 866-2361
SUBMIT ONE Filling Fee $5.00	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH,

This document must be type written.

Pursuant to the provisions of the Colorado Corporation Code, the Colorado Nonprofit Corporation Act and the Colorado Uniform Limited Partnership Act of 1981, the undersigned corporation or limited partnership organized under the laws of         Colorado         submits the following statement for the purpose of changing its registered office or its registered agent, or both, in the state of Colorado:

First: The name of the corporation or limited partnership is:

Sand Creek Cattle Company

	Second: the address of its REGISTERED OFFICE is	8822 S. Ridgeline Blvd.
Highlands Ranch, CO 80126

	Third: The name of its REGISTERED AGENT is
Joseph B. Blake

Fourth: The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

Fifth: The address of its place of business in Colorado is        8822 S. Ridgeline Blvd. Highlands Ranch, CO 80126     (Note 1)

By: (Note 2)

Its	X	president
Its		authorized agent
Its		registered agent (Note 3)
Its		general partner

STATE OF COLORADO

COUNTY OF Douglas

Subscribed and sworn to before me this             day of                                         , 19            

My commission expires                             .

Notary Public (Note 4)

Address

	Mail to: Secretary of State
	Corporations Section
	1560 Broadway, Suite 200
	Denver, CO 80202
	(303) 894-2251
MUST BE TYPED	Fax (303) 894-2242
FILING FEE: $10.00
MUST SUBMIT TWO COPIES
Please include a typed self addressed envelope	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH

DP871444071

Pursuant to the provisions of the Colorado Business Corporation Act, the Colorado Nonprofit Corporation Act, the Colorado Uniform Limited Partnership Act of 1981 and the Colorado Limited Liability Company Act, the undersigned, organized under the laws of:

        Colorado

submits the following statement for the purpose of changing its registered office or its registered agent, or both, in the state of Colorado:

FIRST: The name of the corporation, limited partnership or limited liability company is:

        SAND CREEK CATTLE COMPANY NC&S

SECOND:	Street address of current REGISTERED OFFICE is:	8822 South Ridgeline Boulevard
		Highlands Ranch, CO 80126

and if changed, the new street address is:             Same as above            

THIRD: The name of its current REGISTERED AGENT is:     Joseph B. Blake            

and if changed, the new registered agent is:             James B. Borgel            

Signature of Registered Agent

Principal place of business     8822 South Ridgeline Boulevard, Highlands ranch, CO 8012

The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

	SAND CREEK CATTLE COMPANY
	Name of Entity
By
	James B. Borgel
Its	Assistant Secretary
Title

	Mail to: Secretary of State
	Corporation Section
	1560 Broadway, Suite 200
Must be typed	Denver, Co 80202
FILING FEE: $5.00	(303) 894-2251
MUST SUBMIT TWO COPIES	Fax (303) 894-2242
	DPC 19871444071
Please include a typed self-addressed envelope	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH

Pursuant to the provisions of the Colorado Business Corporation Act, the Colorado Nonprofit Corporation Act, the Colorado Uniform Limited Partnership Act of 1981 and the Colorado Limited Liability Company Act, the undersigned, organized under the laws of:

submits the following statement for the purpose of changing its office or its registered agent, or both in the state of Colorado:

FIRST:	The name of the corporation, limited partnership or limited liability company is:
	Sand Creek Cattle Company NCGS

SECOND:	Street address of the current registered office is:
	8822 South Ridgeline Boulevard, Highlands Ranch, CO 80126
	(Include City, State, Zip)
	and if changed, the NEW STREET ADDRESS is:
	300 West Plaza Drive, Suite 300, Highlands Ranch. CO 80126
	(Include City, State, Zip)

THIRD: The name of its current registered agent is:

and if changed, the NEW REGISTERED AGENT is:

Signature of NEW REGISTERED AGENT:

The address of the registered office and the address of the business office of the registered agent, as changed, will be identical.

FOURTH: If changing the principal place of business address ONLY, the new address is:

Signature
	Jeffrey H. Donelson
Title	Assistant Secretary

	Mail to: Secretary of State Corporations Section 1560 Broadway, Suite 200 Denver, CO 80202 (303) 894-2251 Fax (303) 894-2242
MUST BE TYPED FILING FEE: $5.00 MUST SUBMIT TWO COPIES
Please include a typed self addressed envelope	DPC 1987 1444071 STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH

Pursuant to the provisions of the Colorado Business Corporation Act, the Colorado Nonprofit Corporation Act, the Colorado Uniform Limited Partnership Act of 1981 and the Colorado Limited Liability Company Act, the undersigned, organized under the laws of:

    Colorado

submits the following statement for the purpose of changing its registered office or its registered agent, or both, in the state of Colorado:

FIRST:	The name of the corporation, limited partnership or limited liability company is:
Sand Creek Cattle Company

SECOND:	Street address of current REGISTERED OFFICE is:	300 West Plaza Drive, Suite 100
Highlands Ranch, Co 80126

(Include City, State, Zip)

and if changed, the new street address is:	9135 S. Ridgeline Blvd.
Highlands Ranch, CO. 80129	(Include City, State, Zip)

THIRD: The name of its current REGISTERED AGENT is:     Bert Selva

and if changed, the new registered agent is:     Jeffrey H. Donelson

Signature of New Registered Agent         See below

Principal place of business	9135 S. Ridgeline Blvd.     Highlands Ranch, CO. 80129
	(City, State, Zip)

The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

FOURTH: If changing the principal place of business address ONLY, the new address is

Signature

Title         Agent

EX-3.12

Exhibit 3.12

BYLAWS

OF

SAND CREEK CATTLE COMANY

I. GENERAL

1.1 Purpose of Bylaws: These bylaws are adopted for the regulation and management of the affairs of the corporation.

1.2 Controlling Laws and Instruments. These bylaws shall be controlled by and shall always be consistent with the provisions of the Colorado Corporation Code and the Articles of Incorporation as the same may be amended from time to time.

II. OFFICES

2.1 Principal Office: The principal offices of the corporation shall initially be at 6 Inverness Court East, Englewood, Colorado 80112, but the board of directors, in its discretion, may keep and maintain offices wherever the business of the corporation may require.

2.2 Registered Office and Agent: The corporation shall have and continuously maintain in the State of Colorado a registered office, which may be the same as its principal office, and a registered agent whose business office is identical with such registered office. The initial registered office and the initial registered agent are specified in the Articles of Incorporation. The corporation may change its registered office or change its registered agent, or both, upon filing a statement as specified by law in the office of the Secretary of State of Colorado.

III. MEETINGS OF SHAREHOLDERS

3.1 Time and Place of Shareholders Meetings: Any meeting of shareholders, may be held at such time and place, within or outside of the State of Colorado, as may be fixed by the board of directors or as shall be specified in the notice of the meeting or waiver of notice of the meeting.

3.2 Annual Meeting of Shareholders: The annual meeting of shareholders shall be held in February of each year at the principal offices of the corporation on such date or at such other place or date as the board of directors may determine.

3.3 Special Meetings of Shareholders: Special meetings of shareholders, for any purpose or purposes, may be called by the president, the board of directors, or the holders of not less than 10% of all of the shares entitled to vote at the meeting.

3.4 Record Date for Determining Shareholders: For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors may fix in advance a date as the record date for any such determination of shareholders. The record date may not be fixed more than fifty and, in the case of a meeting of shareholders, not less than ten days before the date of the proposed action, except when it is proposed that the authorized shares be increased, in which case the record date shall be set not less than thirty days before the date of such action.

3.5 Voting List of Shareholders: At least ten days before each meeting of shareholders, the secretary of the corporation shall make a complete list of the shareholders entitled to vote at such meeting, or any adjournment of such meeting, which list shall be arranged in alphabetical order and shall contain the address of and number of shares held by each shareholder. This list shall be kept on file at the principal office of the corporation for a period of ten days prior to such meeting, shall be produced and kept open at the meeting, and shall be subject to inspection by any shareholder for any purpose germane to the meeting during usual business hours of the corporation and during the whole time of the meeting.

3.6 Notices of Shareholder Meetings: Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than fifty days before the date of the meeting unless it is proposed that the authorized shares be increased in which case at least thirty days notice shall be given. Notice shall be given either personally or by mail, by or at the direction of the president, the secretary, or the officer or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage

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prepaid, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation. If delivered personally, such notice shall be deemed to be delivered when handed to the shareholder or deposited at his address is it appears on the stock transfer books of the corporation.

3.7 Quorom at Shareholder Meetings: Except as otherwise provided by law, a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. If a quorum shall not be present or represented, the shareholders present in person or by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, for a period not to exceed sixty days at any one adjournment, until the number of shares required for a quorum shall be present. At any such adjourned meeting at which a quorum is represented, any business may be transacted which might have been transacted at the meeting originally called. The shareholders present or represented at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

3.8 Voting by Shareholders – Proxies: Except as otherwise provided by law, all matters shall be decided by a vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter. Each outstanding share shall be entitled to one vote on each matter submitted to a vote of the shareholders. A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Voting shall be oral, except as otherwise provided by law, but shall be by written ballot if such written vote is demanded by any shareholder present in person or by proxy and entitled to vote.

3.9 Waiver of Notice of Shareholder Meetings: Whenever law or these bylaws require a notice of a meeting to be given, a written waiver of notice signed by a shareholder entitled to notice, whether before, at, or after the time stated in the notice, shall be equivalent to the giving of notice. Attendance of a shareholder in person or by proxy at a meeting shall constitute a waiver of notice of a meeting, except where a shareholder attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.

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3.10 Action by Shareholders Without a Meeting: Any action required to or which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to such action. Such consent may be executed in counterparts and shall be effective as of the date of the last signature thereon.

IV. DIRECTORS

4.1 Powers and Duties of Board: The business and affairs of the corporation shall be managed by a board of directors which shall exercise all the powers of the corporation, except as otherwise provided by Colorado law or the articles of incorporation of the corporation.

4.2 Number of Directors: The number of directors of this corporation shall initially be three and shall, in any event, never be less than three except that there need by only as many directors as there are shareholders. Subject to such limitation, the number of directors may be increased or decreased by amendment to these bylaws but no decrease shall have the effect of shortening the term of any incumbent director.

4.3 Qualifications of Directors. Directors shall be natural persons at the age of eighteen years or older, but need not be residents of the State of Colorado or shareholders of the corporation.

4.4 Election of Directors – No Cumulative Voting: The board of directors shall be elected at the annual meeting of shareholders or at a special meeting called for that purpose. Cumulative voting shall not be permitted in the election of directors.

4.5 Term of Directors: Each director shall be elected to hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified.

4.6 Removal and Resignation of Directors: Any director may be removed at a meeting expressly called for that purpose, with or without cause, by a vote of the holders of the majority of shares entitled to vote at an election of

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directors. Any director may resign at any time by giving written notice to the president or to the secretary, and acceptance of such resignation shall not be necessary to make it effective unless the notice so provides.

4.7 Vacancies in Board: Any vacancy occurring on the board of directors and any directorship to be filled by reason of an increase in the size of the board of directors shall be filled by the affirmative vote of a majority, though less than a quorum, of the remaining directors. A director elected to fill a vacancy shall hold office during the unexpired term of his predecessor in office. A director elected to fill a position resulting from an increase in the board of directors shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified.

4.8 Regular Meetings of Board: A regular meeting of the board of directors shall be held immediately after, and at the same place as, the annual meeting of shareholders. No notice of this meeting of the board of directors need be given. The board of directors, or any committee designated by the board of directors, may, by resolution, establish a time and place for additional regular meetings which may thereafter be held without further notice.

4.9 Special Meetings of the Board or Committees: Special meetings of the board of directors, or any committee designated by the board of directors, may be called by the president or any two members of the board of directors or of such committee.

4.10 Notices of Meetings of Board or Committees. Except for regular meetings of the board of directors established as provided in Section 4.8 of these bylaws, notice of each meeting of the board or of a committee of the board stating the date, hour and place of such meeting shall be given to each member of the board of directors, or committee of the board of directors, as the case may be, by the secretary, the president or the members of the board or such committee calling the meeting. The notice may be deposited in the United States mail at least seven days before the meeting addressed to the director at the last address he has furnished to the corporation for this purpose, and any notice so mailed shall be deemed to have been given at the time it is mailed. Notice may also be given at least two days before the meeting in person, or by telephone, prepaid telegram, telex, cablegram or radiogram, and such notice shall be deemed to have been given at the time when the personal or telephone conversation occurs, or when the telegram, telex, cablegram or radiogram is

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either personally delivered to the director or delivered to the last address of the director furnished to the corporation by him for this purpose.

4.11 Quorum of Board: A majority of the number of directors fixed in accordance with these bylaws shall constitute a quorum for the transaction of business at all meetings of the board of directors. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as otherwise specifically required by law.

4.12 Waiver of Notice of Board Meetings: A written waiver of notice signed by a director entitled to notice, whether before, at, or after the time stated therein, shall be equivalent to the giving of notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.

4.13 Attendance by Telephone at Board and Committee Meetings: Members of the board of directors or any committee designated by the board of directors may participate in a meeting of the board or committee by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the meeting.

4.14 Action by Directors Without a Meeting: Any action required to or which may be taken at a meeting of the board of directors, executive committee, or other committee of the directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors, executive or other committee members entitled to vote with respect to the proposed action. Such consent may be executed in counterparts and shall be effective as of the date of the last signature thereon.

4.15 Executive and Other Committees of Board: The board of directors, by resolution adopted by a majority of the full board of directors, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in the resolution, shall have all of the authority of the board of directors. The board of directors may provide by resolution such powers, limitations, and procedures for such committees as the board deems advisable. However, no such executive or other committee shall have the authority of the board of directors to (a) declare

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dividends or distributions; (b) approve or recommend to shareholders actions or proposals required by the Colorado Corporation Code to be approved by shareholders; (c) fill vacancies on the board of directors or any committee thereof; (d) amend the bylaws; (e) approve a plan of merger not requiring shareholder approval; (f) reduce earned or capital surplus; (g) authorize or approve the reacquisition of shares unless pursuant to a general formula or methods specified by the board of directors; or (h) authorize or approve the issuance or sale of, or any contract to issue or sell, shares or designate the terms or series of a class of shares except that the board of directors may authorize a committee to fix the terms upon which shares may be issued and sold as provided in and subject to the provisions of Section 7-5-107 of the Colorado Corporation Code, as amended.

V. OFFICERS

5.1 Number and Election of Officers: The officers of the corporation shall be a president, a secretary, a treasurer and a chairman of the board, who shall be elected by the board of directors. In addition, the board of directors may elect one or more vice presidents and the board of directors or the president may appoint one or more assistant secretaries or assistant treasurers, and such other subordinate officers as they or he shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the president. Any two or more offices may be hald by the same person, except the offices of president and secretary. The officers of the corporation shall be natural persons of the age of eighteen years or older.

5.2 President. The president shall be the chief executive officer of the corporation and shall preside at all meetings of shareholders and of the board of directors in the absence of the chairman of the board. Subject to the direction and control of the board of directors, he shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. He may execute contracts, deeds and other instruments on behalf of the corporation as is necessary and appropriate. He shall perform such additional functions and duties as are appropriate and customary for the office of president and as the board of directors may prescribe from time to time.

5.3 Vice President. The vice president, or, if there shall be more than one, the vice presidents in the order determined by the board of directors, shall be the officers

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next in seniority after the president. Each vice president shall also perform such duties and exercise such powers as are appropriate and as are prescribed by the board of directors or president. Upon the death, absence or disability of the president, the vice president, or, if there shall be more than one, the vice presidents in the order determined by the board of directors, shall perform the duties and exercise the powers of the president.

5.4 Secretary: The secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the board of directors, keep the minutes of such meetings, have charge of the corporate seal and stock records, be responsible for the maintenance of all corporate records and files and the preparation and filing of reports to governmental agencies, other than tax returns, have authority to affix the corporate seal to any instrument requiring it (and, when so affixed, it may be attested by his signature), and perform such other functions and duties as are appropriate and customary for the office of secretary as the board of directors or the president may prescribe from time to time.

5.5 Assistant Secretary: The assistant secretary, or, if there shall be more than one, the assistant secretaries in the order determined by the board of directors or the president, shall, in the event of the death, absence or disability of the secretary or in case such duties are specifically delegated to him by the board of directors, president or secretary, perform the duties and exercise the powers of the secretary and shall, under the supervision of the secretary, perform such other duties and have such other powers as may be prescribed from time to time by the board of directors or the president.

5.6 Treasurer: The treasurer shall have control of the funds and the care and custody of all stocks, bonds and other securities owned by the corporation and shall be responsible for the preparation and filing of tax returns. He shall receive all moneys paid to the corporation and shall have authority to give receipts and vouchers, to sign and endorse checks and warrants in its name and on its behalf, and give full discharge for the same. He shall also have charge of disbursement of the funds of the corporation, shall keep full and accurate records of the receipts and disbursements, and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as shall be designated by the board of directors. He shall

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perform such other duties and have such other powers as are appropriate and customary for the office of treasurer as the board of directors or president may prescribe from time to time.

5.7 Assistant Treasurer: The assistant treasurer, or, if there shall be more than one, the assistant treasurers in the order determined by the board of directors or the president, shall, in the event of the death, absence or disability of the treasurer or in case such duties are specifically delegated to him by the board of directors, president or treasurer, perform the duties and exercise the powers of the treasurer, and shall, under the supervision of the treasurer, perform such other duties and have such other powers as the board of directors or the president may prescribe from time to time.

5.8 Removal and Resignation of Officers: Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any officer appointed by the president may be removed at any time by the board of directors or the president. Any officer may resign at any time by giving written notice of his resignation to the president or to the secretary, and acceptance of such resignation shall not be necessary to make it effective, unless the notice so provides. Any vacancy occurring in any office, the election or appointment to which is made by the board of directors, shall be filled by the board of directors. Any vacancy occurring in any other office of the corporation may be filled by the president for the unexpired portion of the term.

5.9 Compensation of Officers: Officers shall receive such compensation for their services as may be authorized or ratified by the board of directors. Election or appointment of an officer shall not of itself create a contract right to compensation for services performed as such officer.

VI. STOCK

6.1 Certificates of Stock: Certificates representing shares of the capital stock of the corporation shall be in such form as may be approved by the board of directors and shall be signed by the chairman or vice chairman of the board of directors or by the president or any vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. All certificates shall be consecutively numbered and the names of the owners, the number of the shares and the date of issue shall be entered on the books of

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the corporation. Each certificate representing shares shall state upon its face (a) that the corporation is organized under the laws of the State of Colorado, (b) the name of the person to whom issued, (c) the number of shares which the certificate represents, (d) the par value of each share represented by the certificate, and (e) any restrictions placed upon the transfer of the shares represented by the certificate.

6.2 Facsimile Signatures on Stock Certificates: If a certificate is countersigned by a transfer agent or is registered by a registrar other than the corporation itself or an employee of the corporation, any other signature on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature or signatures have been placed upon, any certificate, shall cease to be such officer, transfer agent, or registrar, whether because of death, resignation or otherwise, before the certificate is issued by the corporation, it may nevertheless be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

6.3 Transfers of Stock: Transfers of shares shall be made on the books of the corporation only upon presentation of the certificate or certificates representing such shares properly endorsed by the person or persons appearing upon the face of such certificate to be the owner, or accompanied by a proper transfer or assignment separate from the certificate, except as may otherwise be expressly provided by the statutes of the State of Colorado or by order of a court of competent jurisdiction. The officers or transfer agents of the corporation may, in their discretion, require a signature guaranty before making any transfer. The corporation shall be entitled to treat the person in whose name any shares of stock are registered on its books as the owner of those shares for all purposes, and shall not be bound to recognize any equitable or other claim or interest in the shares on the part of any other person, whether or not the corporation shall have notice of such claim or interest.

VII. MISCELLANEOUS

7.1 Corporate Seal: The board of directors may adopt a seal which shall be circular in form and shall bear the name of the corporation and the words “SEAL” and “COLORADO” which,

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when adopted, shall constitute the corporate seal of the corporation. The seal may be used by causing it or a facsimile thereof to be impressed, affixed, manually reproduced, or rubber stamped with indelible ink.

7.2 Fiscal Year: The fiscal year of the corporation shall be from January 1 to December 31 of each year but the board of directors may, by resolution, adopt a different fiscal year for this corporation.

7.3 Amendment of Bylaws: These bylaws may at any time and from time to time be amended, supplemented or repealed by the board of directors.

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EX-3.13

Exhibit 3.13

		LLC-1	File #	200835110172
	State of California Secretary of State		FILED In the Office of the Secretary of State of the State of California DEC 15 2008
LIMITED LIABILITY COMPANY ARTICLES OF ORGANIZATION
A $70.00 filing fee must accompany this form.
IMPORTANT – Read instructions before completing this form.			This Space For Filing Use Only

ENTITY NAME (End the name with the words “Limited Liability Company,” or the abbreviations “LLC” or “L.L.C.” The words “Limited” and “Company” may be abbreviated to “Ltd.” and “Co.,” respectively.)
1.	NAME OF LIMITED LIABILITY COMPANY
	SERENADE AT NATOMAS, LLC
PURPOSE (The following statement is required by statute and should not be altered.)
2.	THE PURPOSE OF THE LIMITED LIABILITY COMPANY IS TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY FOR WHICH A LIMITED LIABILITY COMPANY MAY BE ORGANIZED UNDER THE BEVERLY-KILLEA LIMITED LIABILITY COMPANY ACT.
INITIAL AGENT FOR SERVICE OF PROCESS (If the agent is an individual, the agent must reside in California and both Items 3 and 4 must be completed. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 3 must be completed (leave Item 4 blank).
3.	NAME OF INITIAL AGENT FOR SERVICE OF PROCESS
	MAX B. JOHNSON
4.	IF AN INDIVIDUAL, ADDRESS OF INITIAL AGENT FOR SERVICE OF PROCESS IN CALIFORNIA      CITY                      STATE                 ZIP CODE
	655 BREA CANYON ROAD                                                                                               WALNUT    CA            91789
MANAGEMENT (Check only one)
5.	THE LIMITED LIABILITY COMPANY WILL BE MANAGED BY:
	xONE MANAGER
	¨MORE THAN ONE MANAGER
	¨ALL LIMITED LIABILITY COMPANY MEMBER(S)
ADDITIONAL INFORMATION
6.	ADDITIONAL INFORMATION SET FORTH ON THE ATTACHED PAGES, IF ANY, IS INCORPORATED HEREIN BY THIS REFERENCE AND MADE A PART OF THIS CERTIFICATE.
EXECUTION
7.	I DECLARE I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
	12/15/2008
	DATE	SIGNATURE OF ORGANIZER
		Paul E. Mosley
		TYPE OR PRINT NAME OF ORGANIZER
LLC-1 (REV 04/2007)		APPROVED BY SECRETARY OF STATE

EX-3.14

Exhibit 3.14

OPERATING AGREEMENT

OF

SERENADE AT NATOMAS, LLC

This Operating Agreement (this “Agreement”) of SERENADE AT NATOMAS, LLC, a California limited liability company (the “Company”), is entered into effective as of December 15, 2008, by Shea Homes, Inc., a Delaware corporation (the “Member”), as sole member of the Company.

R E C I T A L S

WHEREAS, the Member caused the Company to be formed pursuant to the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”); and

WHEREAS, the Member, as sole member of the Company, desires to enter into this Agreement to define formally the terms of such limited liability company and the Member’s rights and obligations with respect thereto.

A G R E E M E N T

NOW, THEREFORE, the Member, as sole member of the Company, hereby agrees as follows:

Section 1 FORMATION

1.1 Name. The name of the Company is SERENADE AT NATOMAS, LLC.

1.2 Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

1.3 Office and Registered Agent. The Company shall continuously maintain an office and registered agent in the State of California as required by section 17057 of the Act. The address of the office of the Company in California is 655 Brea Canyon Road, Walnut, California 91789. The registered agent for service of process of the Company is Max B. Johnson, c/o J.F. Shea Co., Inc., 655 Brea Canyon Road, Walnut, California 91789.

1.4 Member. The name and the address of the Member is Shea Homes, Inc., 655 Brea Canyon Road, Walnut, California 91789.

1.5 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Beverly-Killea Limited Liability Company Act, as amended from time to time.

Agreement. This Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Articles of Organization of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. SERENADE AT NATOMAS, LLC, a California limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. SHEA HOMES, INC., a Delaware corporation.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 17254 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 17254 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

Section 4 MANAGEMENT

4.1 Management by Member. The business and affairs of the Company shall be managed by the Member. The Member shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

4.2 Officers. The Member may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such

2

duties as the Member may, from time to time, delegate to them. Unless the Member decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the California Corporation Code, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 17101 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 17250 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(l)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

3

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the California Secretary of State a certificate of cancellation in accordance with Section 17350 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of California.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be

4

affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A                    Articles of Organization

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

[SIGNATURES ON FOLLOWING PAGE]

5

The Member has executed this Agreement as of the date set forth above.

Shea Homes, Inc. a Delaware corporation Its: Sole Member and Manager
	By:
	Name: James G. Shontere
	Title: Secretary
	By:
	Name: Paul Mosley
	Title: VP

6

LIMITED LIABILITY COMPANY AGREEMENT

OF SERENADE AT NATOMAS, LLC

EXHIBIT A

Articles of Organization

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

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as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC

By: J.F. Shea L.P., its sole General Partner

By: JFS Management, L.P., its sole General Partner
	By: J.F. Shea Construction Management, Inc., its sole General Partner
	By:
	Name: James G. Shontere
	Title: Secretary
	By:
	Name: Robert O’Dell
	Title: Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC

By: Shea Homes Limited Partnership, its Manager
	By: J.F. Shea L.P., its sole General Partner
		By: JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name: James G. Shontere
				Title: Secretary
				By:
				Name: Robert O’Dell
				Title: Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:

Name: James G. Shontere

Title: Secretary

By:
Name: Robert O’Dell
Title: Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC

By: J.F. SHEA CO., INC., its Manager

By:

Name: James G. Shontere

Title: Secretary

By:

Name: Robert O’Dell

Title: Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:

Name:	James G. Shontere
Title:	Secretary

By:
Name: Robert O’Dell
Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC
By:
By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:

Name: James G. Shontere

Title: Secretary

By:

Name: Robert O’Dell

Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.15

Exhibit 3.15

ARTICLES OF ORGANIZATION

OF

SEVILLE GOLF AND COUNTRY CLUB LLC

The undersigned hereby adopts the following Articles of Organization pursuant to the Arizona Limited Liability Company Act

The name of this limited liability company is Seville Golf and Country Club LLC

The address of the registered office of this limited liability company is 8800 North Gainey Center Drive, Suite 350, Scottsdale, Arizona 85258

The name and business address of the agent for service of process are Gallagher & Kennedy Service Corporation, 2575 East Camelback Road, Phoenix, Arizona 85016-9225

Management of this limited liability company is reserved to its sole member

The name and business address of the sole member of this limited liability company are.

Shea Homes Limited Partnership

8800 N. Gainey Center Drive, Suite 350

Scottsdale, AZ 85258

The undersigned has signed these Articles of Organization this 13 day of December, 2000

David A. Durfee

889491/99 8469

CONSENT OF STATUTORY AGENT

Gallagher & Kennedy Service Corporation, an Arizona corporation, having been designated to act as statutory agent of Seville Golf and Country Club LLC, hereby consents to act in that capacity until removed or until resignation is submitted in accordance with the Arizona Revised Statutes

GALLAGHER & KENNEDY SERVICE
CORPORATION, an Arizona corporation
By
	Cynthia Haynes
	Its Assistant Secretary

889491/99 8469

EX-3.16

Exhibit 3.16

OPERATING AGREEMENT

OF

SEVILLE GOLF AND COUNTRY CLUB, LLC

This Operating Agreement (the “Agreement”) for SEVILLE GOLF AND COUNTRY CLUB. LLC, an Arizona limited liability company (the “Company”) is entered into as of October 25, 2010, by Shea Homes Limited Partnership, an California limited partnership, the sole member (“Member”) of the Company.

RECITALS

The Member, as the sole member of the Company, formed the Company as a limited liability company pursuant to Arizona Limited Liability Company Act §29-608 (“Act”); and desires to enter into this Agreement to define formally the terms and conditions and the Member’s rights and obligations with respect thereto.

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as an Arizona limited liability company by the filing of Articles of Organization pursuant to the Statues §29-632 with the Arizona Corporation Commission.

1.2 Name. The name of the Company is Seville Golf and Country Club, LLC and all Company business shall be conducted under that name or such other names that comply with the applicable law as the Member may select from time to time.

13 Purpose and Scope. The Purpose is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

1.4 Term. The Company shall commence on the date the Articles of Organization were filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Arizona shall be located at 638 N. Fifth Avenue, Phoenix, Arizona 85003, or such other office (which need not be a place of business of the Company) as the Member may designated from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 638 N. Fifth Avenue, Phoenix, Arizona 85003. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Arizona Limited Liability Company Act, as amended from time to time.

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

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Certificate. The Articles of Organization of the Company, as originally field and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. SEVILLE GOLF AND COUNTRY CLUB, LLC, an Arizona limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds for the a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Manager. Shea Homes Limited Partnership, a California limited liability company.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by §29-704 of the Act. If the Member received a distribution from the Company which is determined to have been prohibited by §29-706 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

Section 4

Section 4 MANAGEMENT

4.1 Management by Member. The business and affairs of the Company shall be managed by the Member. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

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4.2 Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the Delaware General Corporation Law, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Except as agreed upon in writings signed by the Members, no Member shall be liable for the debts, liabilities, contracts or any other obligations of the Company. Except as agreed upon by the Members, and except as otherwise provided by §29-651 of the Act. No member shall have any personal liability for the repayment of the Capital Contributions or loans of die other Member.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(l)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 RIGHTS OF SECURED PARTY

8.1 Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments as may be required by the terms and conditions of the Security Document and (c) if the Secured

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Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

8.2 Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

8.3 All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

8.4 Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

8.5 At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor members of the Manager will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Section 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

8.6 The provisions of this Article 8 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members, Managers and their respective successors and assigns.

8.7 At all times prior the Termination Date, none of the provisions of this Section 8 or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.

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Section 9 DISSOLUTION AND LIQUIDATION

9.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

9.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

93 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

9.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Arizona Corporation Commission a certificate of cancellation in accordance with §29-781 of the Act.

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Section 10 GENERAL PROVISIONS

10.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Arizona.

10.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

10.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

10.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

10.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

10.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

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10.7 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

Shea Homes Limited Partnership, a California limited partnership
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
	Its:	General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
		Its:	General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
			Its:	General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Paul Mosley
				Title:	Vice President

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EX-3.17

Exhibit 3.17

CERTIFICATE OF FORMATION

OF

SHEA BREA DEVELOPMENT, LLC

The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. Name. The name of the limited liability company is Shea Brea Development, LLC.

2. Registered Office. The address of its registered office in the State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, 19801, County of New Castle.

3. Registered Agent. The name and address of its registered agent for service of process in the State of Delaware is The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Shea Brea Development, LLC on this 28th of December, 2001.

/s/ Kellie E. Davidson

Kellie E. Davidson, Authorized Person

CERTIFICATE OF AMENDMENT TO CERTIFICATE OF FORMATION

OF

SHEA BREA DEVELOPMENT, LLC

SHEA BREA DEVELOPMENT, LLC (hereinafter called the “company”), a limited liability company organized and existing under and by virtue of the Limited Liability Company Act of the State of Delaware, does hereby certify:

1. The name of the limited liability company is SHEA BREA DEVELOPMENT, LLC.

2. The Certificate of Formation of the domestic limited liability company is hereby amended to change the name and address of the registered agent and the address of the registered office within the State of Delaware as follows:

National Registered Agents, Inc.

9 East Loockerman Street, Suite 1B

Dover, Delaware 19901

County of Kent

Executed on January 28, 2003.

Max B. Johnson, Authorized Person

EX-3.18

Exhibit 3.18

LIMITED LIABILITY COMPANY AGREEMENT

OF

SHEA BREA DEVELOPMENT, LLC

a Single Member Delaware Limited Liability Company

THIS OPERATING AGREEMENT (this “Agreement”) of Shea Brea Development, LLC (the “Company”) is entered into as of December 31, 2001, by Shea Homes Limited Partnership, a California limited partnership (the “Member”).

RECITALS

A. The Member has formed the Company for the purposes of owning, developing and operating real property and the other purposes described in this Agreement.

B. A Certificate of Formation for Shea Brea Development, LLC, a limited liability company under the laws of the State of Delaware, has previously been filed with the Delaware Secretary of State.

C. The Member desires to adopt and approve a limited liability company agreement for the Company.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Member hereby provides as follows:

Article I.

DEFINITIONS

When used in this Agreement, the following terms shall have the meanings set forth below:

“Act” shall mean the Delaware Limited Liability Company Act, as the same may be amended from time to time.

“Affiliate” with respect to any Person, shall mean with respect to any Person, any individual, general partnership, limited partnership, limited liability company, limited liability partnership, corporation, trust, estate, real estate investment trust, association or any other entity, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with such Person. The term “control,” as used in the immediately preceding sentence, means, with respect to a corporation or other entity, the right to exercise, directly or indirectly, more than 25% of the voting rights attributable to the controlled corporation or other entity, and, with respect to any individual, partnership, trust, limited liability company, limited liability partnership or other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

“Agreement” means this Limited Liability Company Agreement and all amendments and exhibits hereto.

“Capital Contribution” means the property and the cash actually contributed by the Member to the capital of the Company.

“Certificate” shall mean the Certificate of Formation for the Company originally filed with the Delaware Secretary of State, as amended from time to time.

“Company” shall mean the limited liability company formed pursuant to this Agreement.

“Company Expenses” mean, collectively, (i) any costs, fees or expenses incurred or payable by the Company or the Member (or its Affiliates) in connection with the operation of the Company’s business or the maintenance of the Company’s assets and (ii) any amounts which the Company is obligated to pay to or on behalf of an Indemnifiable Person pursuant to Section 10.1.

“Indemnifiable Person” means (i) the Member, (ii) any Affiliate of the Member and (iii) any member, manager, partner, officer, director, attorney, agent, representative or employee of any of the Persons set forth in clause(i) or clause (ii) of this definition.

“Member” means Shea Homes Limited Partnership, a California limited partnership, who shall manage the business and affairs of the Company pursuant to the terms and conditions of this Agreement and who shall have all of the rights and powers which may be possessed by a “manager” under the Act, and such rights and powers as are otherwise conferred by law or by this Agreement or are necessary, advisable or convenient to the management of the business and affairs of the Company.

“Membership Interest” Member’s entire interest in the Company.

“Organization Expenses” mean the fees, costs and expenses of and incidental to organizing and funding the Company.

“Person” includes any natural person, corporation, trust, association, joint stock company, partnership, limited liability company, joint venture and other entity and any government or agency, instrumentality or political subdivision thereof.

“Section” means, except as otherwise indicated, the applicable section or subsection of this Agreement.

“Terminating Dissolution” shall have the meaning assigned to such term in Section 8.1.

“Transfer” means, with respect to the Membership Interest, any sale, assignment, conveyance or other transfer of such Membership Interest (or any interest therein), whether voluntary or involuntary, including a transfer by operation of law.

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Article II.

ORGANIZATION

2.1 Formation. The Member hereby forms a limited liability company pursuant to the Act.

2.2 Name. The name of the Company is “Shea Brea Development, LLC.”

2.3 Certificate of Formation. An authorized person has executed the Certificate, which has been filed in the Office of the Secretary of State of Delaware and shall execute or cause to be executed all other instruments, certificates, notices and documents, and shall do or cause to be done all such filings, recordings, publications and other acts as may be necessary or appropriate from time to time to comply with all applicable requirements for the formation and operation and, when appropriate, termination of a limited liability company in the State of Delaware.

2.4 Registered Office; Registered Agent. The address of the registered office of the Company in the State of Delaware is 9 East Loockerman Street, Dover, Delaware 19901. The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is National Registered Agents, Inc., 9 East Loockerman Street, Dover, Delaware 19901.

2.5 Principal Place of Business. The principal place of business of the Company shall be located at 603 South Valencia Avenue, Brea, CA 92823, or at such other place or places as may be determined by the Member from time to time. The Member or an authorized person shall execute all other instruments, certificates, notices and documents, and shall do or cause to be done all such filings, recordings, publications and other acts as may be necessary or appropriate from time to time to comply with all applicable requirements for the operation of the Company in the State of California.

2.6 Business. The nature of the business and of the purposes to be conducted and promoted by the Company, to acquire, own, develop, hold, finance, mortgage, encumber and sell real property and to engage in any activities incidental thereto. In connection with the foregoing purposes, the Company shall have, and may exercise, all of the rights and powers now or hereafter conferred by the laws of the State of Delaware on limited liability companies formed thereunder.

2.7 Term. Subject to Section 8.1, the term of the Company shall commence on the date of this Agreement and shall continue until December 31, 2031, unless otherwise extended by the Member.

Article III.

MEMBER AND MEMBER CONTRIBUTIONS

3.1 Member. The name and address of the Member are as follows: Shea Brea Development, LLC, 603 South Valencia Avenue, Brea, CA 92823.

3.2 Additional Members. Additional Persons may be admitted as Members with the written consent of the sole Member.

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3.3 Initial Contributions. Concurrent with the execution hereof, the Member shall make an initial capital contribution to the Company in such amounts as determined by the Member.

3.4 Additional Contributions; Return of Distributions. The Member shall make additional capital contributions in such amounts and at such times as the Member shall determine are necessary and appropriate in connection with the acquisition, ownership and operation of the Property. Except as provided in the Act or applicable law, the Member shall not be required to return any distribution made to the Company by it.

3.5 Limited Liability. Except to the extent provided by Law, the Member shall not be bound by, or personally liable for, the expenses, liabilities or obligations of the Company.

Article IV.

ALLOCATIONS; INCOME TAX TREATMENT

4.1 Allocations. All items of income, gain, loss, deduction and credit for federal and state income tax and book purposes shall be allocated to the Member.

4.2 Tax Treatment of Company. Solely or federal and state income tax purposes, it is intended that the Company will be disregarded as an entity separate from the Member as set forth in Section 301.7701-3 (b)(1)(ii) of the Treasury Regulations promulgated pursuant to the Internal Revenue Code of 1986, as amended, and the corresponding provisions under California law.

Article V.

DISTRIBUTIONS

5.1 Distributions. All distributions shall be made to the Member.

5.2 Limitation on Distributions. No distribution shall be made to the extent that such distribution would violate the Act or any other applicable law.

Article VI.

MANAGEMENT OF THE COMPANY

6.1 Management. The business and affairs of the Company shall be managed by or under the authority of the Member. The Member shall have all of the rights and powers which may be possessed by a “manager” under the Act, and such rights and powers as are otherwise conferred by law or by this Agreement or are necessary, advisable or convenient to the management of the business and affairs of the Company.

6.2 Expenses. The Company shall pay all Organization Expenses and Company Expenses.

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Article VII.

TRANSFER OF MEMBERSHIP INTEREST

The Member may Transfer all or any portion of its Membership Interest.

Article VIII.

DISSOLUTION AND WINDING UP OF THE COMPANY

8.1 Dissolution of the Company. The Company shall be dissolved upon the first to occur of any of the following events (each a “Terminating Dissolution”):

8.1.1 a determination by the Member to dissolve the Company;

8.1.2 the expiration of the term of the Company set forth in Section 2.7; or

8.1.3 the entry of a decree of judicial dissolution under the Act.

8.2 Winding Up of the Company. Upon a Terminating Dissolution of the Company, the Member shall wind up the business and affairs of the Company in an orderly manner. Company assets not previously distributed to the Member, or the proceeds therefrom to the extent the Member elects to liquidate the same, to the extent sufficient therefor, shall be applied and distributed in the following order:

8.2.1 To the payment and discharge of all of the Company’s debts and liabilities to Persons other than the Member;

8.2.2 To the establishment of any reserve which the Member may deem reasonably necessary for any contingent liabilities or obligations of the Company; such reserve may be paid over by the Member to any bank or other acceptable party, as escrow agent, to be held for disbursement in payment of any of the aforementioned liabilities and, at the expiration of such reasonable period as shall be determined by the Member, for distribution of the balance, in the manner hereinafter provided in this Section 8.2;

8.2.3 To the payment and discharge of all of the Company’s debts and liabilities to the Member (other than in respect of the Member’s Membership Interest); and

8.2.4 The balance of such assets or proceeds shall be distributed to the Member.

Article IX.

BOOKS OF ACCOUNT AND ACCOUNTING; REPORTS; BANKING

9.1 Books of Account and Accounting. The Company’s books and records shall be maintained at the principal place of business of the Company or at the offices of any provider of administrative or similar services to the Company as the Member may select. The financial and accounting books and records of the Company may be maintained in accordance with such accounting procedures and principles as the Member may deem appropriate.

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9.2 Banking. The Member shall open and thereafter maintain one or more separate bank accounts in the name of the Company in which there shall be deposited all the funds of the Company. No funds of any other Person shall be deposited in such account, and the funds in such account shall be used solely for the business of the Company.

Article X.

MISCELLANEOUS

10.1 Exculpation and Indemnification.

10.1.1 Exculpation. No Indemnifiable Person shall have any liability or obligation to the Company or any Member arising out of or relating to any act or omission of such Indemnifiable Person (or of any other Indemnifiable Person), except for 1iabilities or obligations directly arising out of acts or omissions with respect to the Company’s business that are finally determined by a court of competent jurisdiction (which determination is not successfully overturned on timely appeal) to constitute actual fraud or willful malfeasance.

10.1.2 Indemnification. For the purpose of this Section 10.1.2, “proceeding” means any threatened, pending or completed claim, demand, action or proceeding, whether civil, criminal, administrative, legislative or investigative; and “expenses” includes without limitation attorneys’ fees and any expenses of establishing a right to indemnification under this Section 10.1.2. Except as expressly provided in this Section 10.1.2, the Company shall, to the fullest and broadest extent permitted by law, indemnify and hold harmless each Indemnifiable Person against losses, damages, 1iabilities or expenses, of any kind or nature, incurred by it in connection with, or while acting (or omitting to act) on behalf of, the Company. Without limiting the generality of the foregoing, the Company hereby agrees to indemnify each Indemnifiable Person, and to save and hold him or it harmless, from and in respect of (i) all fees, costs and expenses incurred in connection with or resulting from any demand, claim, action or proceeding against such Indemnifiable Person or the Company which arises out of or in any way relates to the Company or its properties business or affairs, and (ii) all such demands, claims, actions and proceedings and any losses or damages resulting therefrom, including judgments, fines and amounts paid in settlement or compromise of any such demand, claim, action or proceeding; provided, however, that this indemnity shall not extend to conduct by an Indemnifiable Person proved to constitute actual fraud or willful malfeasance. Unless the Member otherwise determines, the Company shall pay the expenses incurred by any Indemnifiable Person in connection with any proceeding in advance of the final disposition of such proceeding, upon receipt by the Company of an undertaking of such Indemnifiable Person to repay such payment if there shall be a final adjudication or determination that such Indemnifiable Person is not entitled to indemnification as provided herein. Notwithstanding any provision hereof or of any other document governing the formation, management or operation of the Company to the contrary, any indemnification shall be fully subordinated to any obligations respecting the Property and shall not constitute a claim against the Company in the event that cash flow is insufficient to pay such obligations.

10.2 Other Activities of the Member. The Member and its Affiliates have other business interests and activities which may be in direct or indirect conflict or competition

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with the business of the Company, and shall have no obligation to offer any interest in such activities to the Company. The Company shall not have any right or interest in such activities, or the income or profits derived therefrom, and such activities, even if competitive with the business of the Company, shall not be deemed wrongful or improper.

10.3 Section Headings. Section and other headings contained in this Agreement are for reference purposes only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

10.4 Severabililty. Each provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement.

10.5 Amendment of Agreement. This Agreement may be amended by the Member.

10.6 Governing Law. Notwithstanding the place where this Agreement may be executed, all the terms and provisions hereof shall be construed under the laws of the State of Delaware.

10.7 Interpretation. Masculine, feminine and neuter pronouns used herein shall each include the other, and the use of the singular or plural includes the other unless the context clearly otherwise requires. In addition, “or” is not exclusive unless the context clearly otherwise requires.

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

SHEA BREA DEVELOPMENT, LLC, a

Delaware limited liability company

BY:	SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership, its managing member
	By:
		Name:	LEE THOMAS
		Title:	V.P.
	By:
		ALAN F. TOFFOLI
		ASSISTANT SECRETARY

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OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE[    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC

By:  J.F. Shea L.P., its sole General Partner

By:  JFS Management, L.P., its sole General Partner

By:  J.F. Shea Construction Management,

Inc., its sole General Partner

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC

By: J.F. SHEA CO., INC., its Manager

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC

By:  Shea Homes Limited Partnership its Manager

By:  J.F. Shea L.P., its sole General Partner

By:  JFS Management, L.P., its sole General Partner

By:  J.F. Shea Construction Management,

Inc., its sole General Partner

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT

COMPANY, INC., as Manager of

215 Bayview Apartments, LLC, Shea Baker Ranch,

LLC and Shea Rivermark Village, LLC

By:
By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast

Cable Partners

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.19

Exhibit 3.19

CERTIFICATE OF FORMATION

OF

SHEA CAPITAL II, LLC

The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is SHEA CAPITAL II, LLC.

2. The address of the registered office and the name and the address of registered agent of the limited liability company required to be maintained by Section 18-104 of the Delaware Limited Liability Company Act and National Registered Agents, Inc., 160 Greentree Drive, Ste. 101, Dover, Delaware 19904.

Executed on October 18, 2005

Vicki R. Stump, Authorized Person

EX-3.20

Exhibit 3.20

AMENDED AND RESTATED OPERATING AGREEMENT

OF

SHEA CAPITAL II, LLC

This Amended and Restated Operating Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of January 11, 2010 by Shea Homes Limited Partnership, a California limited partnership and Shea Homes, Inc., a Delaware corporation (each a “Member” and collectively the “Members”) as members of the Company.

RECITALS

WHEREAS, Shea Homes Limited Partnership, Partners Insurance Company, Inc. (“PIC”), and Ca1PERS Housing Holding Company (“CalPERS”) formed the Company and entered into that certain Limited Liability Company Agreement of the Company, dated as of November 7, 2005 (the “Original Agreement”);

WHEREAS, Shea Homes Limited Partnership, PIC and Ca1PERS entered into that certain Assignment and Assumption Agreement dated as of September 4, 2008, pursuant to which Ca1PERS assigned its membership interest in the Company to Shea Homes Limited Partnership (the “First Assignment”); and

WHEREAS, Shea Homes, Inc. and PIC entered into that certain Assignment of LLC Membership Interest and Amendment to Operating Agreement dated as January 11, 2010 (the “Amendment”), pursuant to which PIC distributed its membership interest in the Company to Shea Homes, Inc.

WHEREAS, Member now desires to amend and restate the Original Agreement as set forth below.

AGREEMENT

SECTION 1. FORMATION

Section 1.1. Name. The name of the Company is “Shea Capital II, LLC”.

Section 1.2. Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

Section 1.3. Office and Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent, or such other office (which need not be a place of business of the Company) as the Manager may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent. The Company may have such other offices as the Member may designate from time to time.

Section 1.4. Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Delaware Limited Liability Company Act, as amended from time to time.

Agreement. This Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. SHEA CAPITAL II, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Manager. SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership Shea Homes Limited Partnership, a California limited partnership, or any Person that succeeds it as the manager of the Company under the terms of this Agreement.

Members. SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership and SHEA HOMES, INC., a Delaware corporation. Three and a half percent (3.5%) for Shea Homes, Inc. and ninety-six and a half percent (96.5%) for Shea Homes Limited Partnership.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

SECTION 2. CAPITALIZATION OF THE COMPANY

Section 2.1. The Members shall have no obligation to contribute additional capital to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Members, or either of them, may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

SECTION 3. DISTRIBUTIONS AND ALLOCATIONS

Section 3.1. Distributions. The Company may distribute Distributable Cash to the Members in such amounts and at such times as the Manager may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 18-607 of the Act. Distributions to the Members shall be in proportion to their Percentage Interests. If a Member receives a distribution from the Company which is determined to have been prohibited by Section 18 607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

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Section 3.2. Income, loss, etc. Except as otherwise provided in Section 3.3, all items of income, gain, loss, deduction and credit of the Company shall be allocated to the Members in proportion to their Percentage Interests.

Section 3.3. Tax Allocations. If Company property is contributed to the Company at a fair market value that differs from the adjusted tax basis of the property, then depreciation, depletion, amortization, and gain or loss, as computed for tax purposes, with respect to the property, shall be determined and allocated among the Members, solely for tax purposes, so as to take account of the variation between the adjusted tax basis and the fair market value of the property in any reasonable method determined by the Manager and permitted under Section 704(c) of the Code and applicable Treasury Regulations.

SECTION 4. MANAGEMENT

Section 4.1. Management by Manager. The business and affairs of the Company shall be managed by Shea Homes Limited Partnership, a California limited partnership as its statutory Manager. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

Section 4.2. Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the Delaware General Corporation Law, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

SECTION 5. INTERESTS OF MEMBERS

Section 5.1. Limited Liability. Subject to the provisions of Section 18 502 of the Act, the Members shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Members shall not be required to return any distribution made to them.

Section 5.2. Dissolved Member. If a Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of a Member, the Company shall not dissolve but shall continue in existence.

SECTION 6. NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

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SECTION 7. ACCOUNTING MATTERS

Section 7.1. Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

Section 7.2. Tax Matters. The Company’s taxable year and accounting method for income tax purposes shall be as determined under the Code and Treasury Regulations. The Manager shall be the ‘tax matters partner” within the meaning of Section 6231(a) (7) of the Code. The tax matters partner shall keep each Member informed as to the status of any audit of the Company’s tax affairs. The tax matters partner shall have all of the authority granted by the Code to a tax matters partner.

SECTION 8. DISSOLUTION AND LIQUIDATION

Section 8.1. Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Members to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Members of the proceeds of the sale or other disposition.

Section 8.2. Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

Section 8.3. Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Manager will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(i) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Members) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(ii) The balance, if any, to the Members and among them in proportion to their Percentage Interests.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

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(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if a Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

Section 8.4. Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Manager shall prepare, execute and deliver to the Delaware Secretary of State a certificate of cancellation in accordance with Section 18-203 of the Act.

SECTION 9. GENERAL PROVISIONS

Section 9.1. Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

Section 9.2. Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

Section 9.3. Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

Section 9.4. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

Section 9.5. No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Members, and their successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

Section 9.6. Amendments. Any amendment to this Agreement shall be in writing, dated and Signed by the Members. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

Section 9.7. Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be

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detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes. The Members have executed this Agreement as of the date set forth above.

(Signatures on next page)

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The Members have executed this Agreement as of the date set forth above.

SHEA HOMES LIMITED PARTNERSHIP,

a California limited partnership

By:	J.F. Shea, L.P.,
	a Delaware limited partnership,
Its:	General Partner

By:	JFS Management, L.P.,
	a Delaware limited partnership,
Its:	General Partner

By:	J.F. Shea Construction Management, Inc.,
	a California corporation,
Its:	General Partner

By:
Name:	James G. Shontere
Title:	Secretary

By:
Name:	Robert R. O’Dell
Title:	Treasurer

SHEA HOMES, INC.,

a Delaware corporation

By:
Name:	James G. Shontere
Title:	Secretary

By:
Name:	Robert R. O’Dell
Title:	Treasurer

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC

By:  J.F. Shea L.P., its sole General Partner

By:  JFS Management, L.P., its sole General Partner

By:  J.F. Shea Construction Management,

Inc., its sole General Partner

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC

By: J.F. SHEA CO., INC., its Manager

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC

By:  Shea Homes Limited Partnership, its Manager

By:  JFS Management, L.P., its sole General Partner

By:  J.F. Shea L.P., its sole General Partner

By:  J.F. Shea Construction Management, Inc., its sole General Partner

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT

COMPANY, INC., as Manager of

215 Bayview Apartments, LLC, Shea Baker Ranch,

LLC and Shea Rivermark Village, LLC

By:
By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast

Cable Partners

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.21

Exhibit 3.21

CERTIFICATE OF INCORPORATION

OF

UDC CORPORATION

ARTICLE FIRST: The name of this corporation is UDC Corporation.

ARTICLE SECOND: The address of the registered office of this corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE THIRD: The nature of the business to be conducted or promoted and the purposes of this corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE FOURTH: The total number of shares of capital stock that the corporation shall have authority to issue shall be 1,000 shares of common stock and all such shares are to be without par value.

ARTICLE FIFTH: The name and mailing address of the incorporator is as follows:

Gary A. Rosenberg

Universal Development Corporation

4800 Three First National Plaza

Chicago, Illinois 60602

1

ARTICLE SIXTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(2) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-laws of the Corporation.

(3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-laws of the Corporation. Election of directors need not be by written ballot unless the By-laws so provide.

(4) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the statutes of Delaware, this Certificate of Incorporation, and any By-laws hereafter adopted by the stockholders, provided, however, that no By-laws hereafter adopted by the stockholders shall

2

invalidate any prior act of the directors which would have been valid if such By-laws had not been adopted.

ARTICLE SEVENTH: Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-laws of the Corporation.

ARTICLE EIGHTH: The books of the corporation may be kept (subject to any requirement of the laws of the State of Delaware) out of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-laws of the corporation. The election of directors need not be by written ballot unless the By-laws of this corporation shall so provide.

ARTICLE NINTH: a. This corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, but not limited to, and in addition to any other type of action, suit or proceeding, an action, suit or proceeding by or in the right of this corporation) by reason of the fact that he is or was a director, officer, employee or agent of this corporation, or is or was serving

3

at the request of this corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding to the full extent permitted by the General Corporation Law of the State of Delaware from time to time in effect.

b. The indemnification provided by this ARTICLE NINTH shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of heirs, executors and administrators of such person.

ARTICLE TENTH: This corporation reserves the right to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

I, the UNDERSIGNED, being the incorporator hereinbefore name for the purpose of forming a corporation pursuant to the

4

Title 8 of the Delaware Code, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 28^th day of December, 1984.

[ILLEGIBLE]

RECEIVED FOR RECORD

DEC 28 1984

[ILLEGIBLE]

5

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

UDC CORPORATION

UDC Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

FIRST, that the Board of Directors of said corporation, at a meeting of the board of directors duly called and at which a quorum was at all times present, duly adopted a resolution proposing and declaring it advisable that Article Fourth of the certificate of incorporation of said corporation, as previously amended (“Amended Certificate”) be amended as follows:

RESOLVED, that Section 3C(iii) of Part 3 of said Article Fourth be deleted and replaced in its entirety by the following:

(iii) In the event a Breach occurs, any holder of Preferred Stock may require the Company to redeem all or any portion of the Preferred Stock owned by such holder at a price per Share equal to the Redemption Price. The Company will notify each holder of Preferred Stock of a Breach not later than 10 days after the occurrence thereof, and each such holder will have until 20 days after receipt of such notice of such Breach to request redemption (by written notice delivered to the Company) of all or any portion of the Preferred Stock owned by such holder. Upon receipt of such request, the Company will be obligated to redeem the number of Shares specified in such request within 90 days after the occurrence of such Breach. A “Breach” will be deemed to have occurred for the purposes hereof at any time that (A) the Loan Origination and Lending Services Agreement (“Services Agreement”), dated July 16, 1985, between UDC Mortgage Corporation, an Arizona corporation and wholly-owned subsidiary of the Company (the “Mortgage Company”) and UDC-Universal Development, L.P., a Delaware limited partnership (“UDC L.P.”), as originally in effect, is modified, amended or terminated without the consent of the holders of a majority of the Preferred Stock, (B) UDC L.P. breaches its obligations or is in default, including any default in payment, under the Services Agreement (whether or not such breach or default is waived by the Mortgage Company), or (C) the Mortgage

1

Company breaches its obligations or is in default under the Services Agreement (whether or not such breach or default is waived by UDC L.P.), except if the Mortgage Company assigns its rights under the Services Agreement provided in paragraph 5 thereof or UDC L.P. agrees to make the payments provided for in paragraph 5 thereof in lieu of such assignment.

FURTHER RESOLVED, that the definition of “Purchase Agreement” contained in Part 9 of said Article Fourth be deleted and replaced in its entirety by the following:

“Purchase Agreement” means the Preferred Stock Purchase Agreement, dated as of July 16, 1985, by and between the Company and First Chicago Investment Corporation, a Delaware corporation, as such agreement may from time to time be amended in accordance with its terms.

SECOND: that such amendments have been duly adopted in accordance with the provisions Section 228 and 242 of the General Corporation Law of the State of Delaware by the unanimous written consent of the sole stockholder entitled to vote thereon and that the capital of the corporation will not be reduced by reason of said amendment.

IN WITNESS THEREOF, we have signed this certificate as of the 11^th day of September, 1985.

	UDC CORPORATION
By:
	Bryant H. Prentice III
	President

ATTEST:

Sheldon I. Saitlin

Secretary

2

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

UDC CORPORATION

UDC Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

FIRST, that the Board of Directors of said corporation, at a meeting of the Board of Directors duly held on August 16, 1990, adopted a resolution proposing and declaring it advisable that Article Fourth of the certificate of incorporation of said corporation, as previously amended on September 23, 1985 (“Amended Certificate”) be amended as follows:

RESOLVED, that part 1D of said Article Fourth is hereby amended in its entirety to read as follows:

“ 1D. “Variable Rate” means a per annum rate which is two and one-quarter (2.25) percentage points below the Applicable Rate in effect from time to time: provided that the Variable Rate will in no event be less than 7% per annum or greater than 13% per annum on shares redeemed according to the original redemption schedule. For shares not redeemed according to their original redemption schedule, the Variable Rate will in no event be less than 7.5% per annum or greater than 13.5% per annum. “Applicable Rate” means the “Applicable Rate” as determined and published from time to time by First Chicago Corporation with respect to its outstanding Class C Preferred with Cumulative and Adjustable Dividends, Series B (the “First Chicago Preferred”). At any time that no shares of First Chicago Preferred are outstanding, the Applicable Rate will be determined by the Company in accordance with the terms and provisions of the First Chicago Preferred as in effect on the last day prior to such determination on which any shares of First Chicago Preferred were outstanding.”

FURTHER RESOLVED, that part 3A of said Article Fourth is hereby amended in its entirety to read as follows:

“3A. Scheduled Redemptions. The Company will redeem the following numbers of Shares of Preferred Stock then outstanding (the “Scheduled Redemptions”) on the dates set forth below (the “Scheduled Redemption Dates”), at a price per Share equal to the Redemption Price thereof:

Date	Number of Shares
June 28, 1986		300
June 28, 1987		500
June 28, 1988		700
June 28, 1989		820
June 28, 1990		410
June 28, 1991		410
June 28, 1992		820
June 28, 1993		820
June 28, 1994		820	”

SECOND, that such amendments have been duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware by the unanimous written consent of the sole stockholder entitled to vote thereon and that the capital of the corporation will not be reduced by reason of said amendments.

IN WITNESS THEREOF, we have signed this certificate as of the 16^th day of August, 1990.

Richard C. Kraemer, President

Sheldon I. Saitlin, Secretary

CERTIFICATE OF MERGER

OF

UDC MERGER CORP.

INTO

UDC CORPORATION

Pursuant to Section 251(c)

of the Delaware General Corporation Law

UDC Corporation, a corporation formed under the laws of the State of Delaware, desiring to merge with UDC Merger Corp., a corporation formed under the laws of the State of Delaware, pursuant to the provisions of Section 251(c) of the General Corporation Law of the State of Delaware (“GCL”), DOES HEREBY CERTIFY as follows:

FIRST: That the names, forms of organization and states of domicile of each constituent entity are:

NAME	FORM OF ORGANIZATION	STATE OF DOMICILE
UDC Corporation	Corporation	Delaware
UDC Merger Corp.	Corporation	Delaware

SECOND: That an Agreement of Merger has been approved, adopted, certified, executed and acknowledged by each constituent corporation in accordance with Section 251(c) of the GCL.

THIRD: That the name of the surviving entity is UDC Corporation.

FOURTH: That the Certificate of Incorporation of UDC Corporation shall be the certificate of incorporation of the surviving entity.

FIFTH: That an executed copy of the Agreement of Merger is on file at the principal place of business of UDC Corporation at 4812 South Mill Avenue, Tempe, Arizona 85282.

SIXTH: That a copy of the Agreement will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent entity.

SEVENTH: The merger shall be effective as of 11:59 p.m. (Delaware time) on September 30, 1992.

IN WITNESS WHEREOF, said UDC Corporation has caused this Certificate to be executed by its officers thereunto duly authorized this 22^nd day of September, 1992.

UDC CORPORATION
By:
	President

ATTEST:

(Assistant) Secretary

2

CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE

AND OF REGISTERED AGENT

It is hereby certified that:

1. The name of the corporation (hereinafter called the “Corporation”) is UDC CORPORATION.

2. The registered office of the Corporation within the State of Delaware is hereby changed to 9 East Loockerman Street, Suite 1B, City of Dover 19901, County of Kent.

3. The registered agent of the Corporation within the State of Delaware is hereby changed to National Registered Agents, Inc., the business office of which is identical with the registered office of the corporation as hereby changed.

4. The Corporation has authorized the changes hereinbefore set forth by resolution of its Board of Directors.

Executed on Jan 8, 2003.

Max B. Johnson, Vice President

STATE of DELAWARE

CERTIFICATE OF AMENDMENT OF

CERTIFICATE OF INCORPORATION

UDC CORPORATION

a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware.

DOES HEREBY CERTIFY:

FIRST: That at a meeting of the Board of Directors of UDC CORPORATION resolutions were duly adopted setting forth a proposed amended to the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment as follows:

RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “First” so that, as amended, said Article shall be and read as follows:

“The name of the corporation is SHEA COMMUNITIES MARKETING COMPANY.”

SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Laws of the state of Delaware.

FOURTH: That the capital of said corporation shall not be reduced under or by reason of said amendment.

IN WITNESS WHEREOF, said UDC Corporation has caused this certificate to be signed by Max B. Johnson, an Authorized Officer, this 18^th day of November, A.D. 2003.

By:
	Max B. Johnson, Vice President

CERTIFICATE OF RESTORATION AND REVIVAL OF

CERTIFICATE OF INCORPORATION

OF

SHEA COMMUNITIES MARKETING COMPANY

Shea Communities Marketing Company (hereinafter called the “corporation”), a corporation organized under the laws of Delaware, the Certificate of Incorporation which was voided for failure to [set forth reason for being voided], now desires to procure a restoration, renewal and revival of its Certificate of Incorporation, and hereby certifies as follows:

1. The name of the corporation is Shea Communities Marketing Company

2. The address of the registered office of the corporation in the State of Delaware and the name of the registered agent at such address are as follows: National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent.

3. The date of filing the corporation’s original Certificate of Incorporation in the State of Delaware was on December 28, 1984.

4. The corporation hereby procures a restoration and revival of its certificate of incorporation, which became inoperative by law on March 1, 2008, pursuant to the General Corporation Law of the State of Delaware.

5. The certificate of incorporation of the corporation, which provides for and will continue to provide for, perpetual duration, shall, upon the filing of this Certificate of Restoration and Revival of the Certificate of Incorporation in the Department of State of the State of Delaware, be restored and revived and shall become fully operative on August 12, 2008.

6. This Certificate of Restoration and Revival of the Certificate of Incorporation is filed by authority of the duly elected directors as prescribed by Section 312 of the General Corporation Law of the State of Delaware.

Executed on this 12^th day of August, 2008

Max B Johnson, Vice President

Delaware Certificate of Restoration, Renewal & Revival 5/05

CERTIFICATE OF RESTORATION AND REVIVAL OF

CERTIFICATE OF INCORPORATION

OF

SHEA COMMUNITIES MARKETING COMPANY

SHEA COMMUNITIES MARKETING COMPANY (hereinafter called the “corporation”), a corporation organized under the laws of Delaware, the Certificate of Incorporation which was voided for failure to file annual reports in 2008 and 2009, now desires to procure a restoration, renewal and revival of its Certificate of Incorporation, and hereby certifies as follows:

1. The name of the corporation is SHEA COMMUNITIES MARKETING COMPANY

2. The address of the registered office of the corporation in the State of Delaware and the name of the registered agent at such address are as follows: National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent.

3. The date of filing the corporation’s original Certificate of Incorporation in the State of Delaware was on December 28, 1984.

4. The corporation hereby procures a restoration and revival of its certificate of incorporation, which became inoperative by law on March 1, 2010, pursuant to the General Corporation Law of the State of Delaware.

5. The certificate of incorporation of the corporation, which provides for and will continue to provide for, perpetual duration, shall, upon the filing of this Certificate of Restoration and Revival of the Certificate of Incorporation in the Department of State of the State of Delaware, be restored and revived and shall become fully operative on March 1, 2010.

6. This Certificate of Restoration and Revival of the Certificate of Incorporation is filed by authority of the duly elected directors as prescribed by Section 312 of the General Corporation Law of the State of Delaware.

Executed on this 20^th day of October, 2010

Paul Mosley, Vice President

EX-3.22

Exhibit 3.22

August 20, 1986

AMENDED AND RESTATED

BY-LAWS

OF

UDC CORPORATION

ARTICLE I

OFFICES

The corporation shall continuously maintain in the State of Delaware, a registered office and a registered agent whose office is identical with such registered office and may have other offices within or without the state.

ARTICLE II

STOCKHOLDERS

SECTION 1. ANNUAL MEETING. An annual meeting of the stockholders shall be held on the third Thursday in May of each year for the purpose of electing directors and for the transaction of such other business, as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day.

SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders may be called either by the chairman of the board, the president, by the board of directors or by the holders of not less than one-fifth (1/5) of all the outstanding shares of the corporation, for the purpose or purposes stated in the call of the meeting.

SECTION 3. PLACE OF MEETINGS. Each meeting of the stockholders for the election of directors shall be held at the offices of the corporation at 4800 Three First National Plaza, Chicago, Illinois 60602, unless the board of directors shall by resolution, designate any place, within or without the State of Delaware, as the place of such meeting. Meetings of stockholders for any other purpose may be held at such place, within or without the State of Delaware, and at such time as shall be determined pursuant to Section 2 and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date and hour of the meeting and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10), but not more than forty (40) days before the date of the meeting, or in the case of a merger or consolidation not less than twenty (20) but no more than forty (40) days before the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, the secretary or any other officer or persons thereunto authorized by the board of directors to call the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address, as it appears on the books and records of the corporation, with postage thereon prepaid. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.

SECTION 5. FIXING OF RECORD DATE. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing, without a meeting, or to receive payment of any dividend, or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the board of directors of the corporation may fix in advance, a record date which shall not be more than sixty (60) days and, for a meeting of stockholders, not less than ten (10) days, or in the ease of a merger or consolidation not less than twenty (20) days before the date of such meeting. If no record date is fixed, the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be the date on which notice of the meeting is mailed, and the record date for the determination of stockholders for any other purpose shall be the date on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting.

SECTION 6. STOCKHOLDER LIST. The officer or agent having charge of the transfer books for shares of the corporation shall make, at least ten (10) days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, showing the address of and the number of shares registered in

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the name of the stockholder, which list shall be kept on file at the registered office of the corporation for a period of ten (10) days prior to such meeting, and then shall be open to inspection by any stockholder for any purpose germane to the meeting, at any time during normal business hours. Such list shall also be produced and kept open at the time and place of the meeting and may be inspected by any stockholder during the whole time of the meeting. The original stock ledger or transfer book, or a duplicate thereof kept in this state, shall be prima facie evidence as to who are the stockholders entitled to examine such list, or share ledger, or transfer book or to vote at any meeting of stockholders.

SECTION 7. QUORUM. The holders of a majority of the outstanding shares of the corporation, present in person, or represented by proxy, shall constitute a quorum at any meeting of stockholders; provided, that if less than a majority of the outstanding shares are represented at said meeting, a majority of the shares so represented may adjourn the meeting at any time without further notice. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by the Delaware General Corporation Law, the certificate of incorporation or these by-laws. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting. Withdrawal of stockholders from any meeting shall not cause failure of a duly constituted quorum at that meeting.

SECTION 8. PROXIES. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing, without a meeting, may authorize any person or persons to act for him by proxy, but no such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.

SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of class, shall be entitled to one (1) vote upon each matter submitted to vote at a meeting of stockholders.

SECTION 10. VOTING OF CERTAIN SHARES. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy, as the by-laws of the corporation may prescribe, or in the absence of such provision, as the board of directors of such corporation may determine.

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Shares standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by his administrator, executor, court appointed guardian or conservator, either in person or by proxy, without a transfer of such shares into the name of such administrator, executor, court appointed guardian or conservator. Shares standing in the name of a trustee may be voted by him, either in person or by proxy.

A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter, the pledgee shall be entitled to vote the shares so transferred.

Any number of stockholders may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period not to exceed ten (10) years, by entering into a writ-ten voting trust agreement specifying the terms and conditions of the voting trust, and by transferring their shares to such trustee or trustees for the purpose of the voting trust agreement. Any such voting trust agreement shall not become effective until a counterpart of the agreement is deposited with the corporation at its registered office. The counterpart of the voting trust agreement so deposited with the corporation shall be subject to the same right of examination by a stockholder of the corporation, in person or by agent or attorney, as are the books and records of the corporation, and shall be subject to examination by any holder of a beneficial interest in the voting trust, either in person or by agent or attorney, at any reasonable time for any proper purpose.

SECTION 11. TREASURY STOCK. Shares of its own stock belonging to this corporation shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time, but shares of its own stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares at any given time.

SECTION 12. CUMULATIVE VOTING. In all elections for directors, every stockholder shall have the right to vote, in person or by proxy, the number of shares owned by him, for as many persons as there are directors to be elected, or to cumulate said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares equal, or to distribute them on the same principle among as many candidates as he shall see fit.

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SECTION 13. INSPECTORS. At any meeting of stockholders, the presiding officer may, or upon the request of any stockholder shall, appoint one or more persons as inspectors for such meeting.

Such inspectors shall ascertain and report the number of shares represented at the meeting, based upon their determination of the validity and effect of proxies; count all votes and report the results; and do such other acts as are proper to conduct the election and voting with impartiality and fairness to all the stockholders.

Each report of an inspector shall be in writing and signed by him or by a majority of them if there be more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

SECTION 14. INFORMAL ACTION BY STOCKHOLDERS. Any action required to be taken at a meeting of the stockholders, or any other action which may be taken at a meeting of the stockholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the stockholders entitled to vote with respect to the subject matter thereof.

SECTION 15. VOTING BY BALLOT. Voting on any question or in any election may be by voice unless the presiding officer shall order or any stockholder shall demand that voting be by ballot.

ARTICLE III

DIRECTORS

SECTION 1. GENERAL POWERS. The business of the corporation shall be managed by its board of directors.

SECTION 2. NUMBER, TENURE AND QUALIFICATIONS.

(a) The number of directors of the corporation shall be nine (9). Each director elected shall hold office until the next annual meeting of stockholders or until his successor shall have been duly elected and qualified. Directors need not be residents of the State of Delaware or stockholders of the corporation. Subject to the provisions of Section 2(b) of this Article III, the number of directors may be increased or decreased from time to time by an amendment of this section; but no decrease shall have the effect of shortening the term of any incumbent director.

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(b) Nominations for the election of directors or any of them, any proposal for the interim removal of the directors or any of them, or any action which will otherwise cause or result in the removal of the incumbent directors or any of them may be taken by the stockholders of the corporation, whether at an annual or a special meeting thereof, or by a consent in lieu of such a meeting, only upon thirty (30) days notice to the board of directors of this corporation of the intent to vote upon or take any such action, unless the board of directors, by majority vote in accordance with these by-laws, waive the requirements contained in this Section 2(b).

SECTION 3. VACANCIES. Any vacancy occurring in the board of directors and any directorship to be filled by reason of an increase in the number of directors, may be filled by election at an annual meeting or at a special meeting of stockholders called for that purpose.

SECTION 4. DIVIDENDS. The board of directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its certificate of incorporation.

SECTION 5. ANNUAL MEETINGS. An annual meeting of the board of directors shall be held without other notice than this by-law, immediately after the annual meeting of stockholders. The board of directors may provide, by resolution, the time and place for the holding of additional meetings without other notice than such resolution.

SECTION 6. SPECIAL MEETINGS. Special meetings of the board of directors may be called by or at the request of the chairman of the board, president or a majority of the directors. The person or persons authorized to call special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors called by them.

SECTION 7. NOTICE OF SPECIAL MEETINGS. Notice of any special meeting shall be given at least ten (10) days previous thereto by prior written notice to each director at his principal place of business. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegram

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company. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business, because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any annual or special meeting of the board of directors need be specified in the notice of waiver of notice of such meeting.

SECTION 8. QUORUM. A majority of the number of directors fixed by these by-laws shall constitute a quorum for transaction of business at any meeting of the board of directors; provided, that if less than a majority of such number of directors are present at said meeting, a majority of the directors present may adjourn the meeting at any time without further notice.

SECTION 9. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by statute, these by-laws or the certificate of incorporation.

SECTION 10. PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken, unless his dissent shall be entered in the minutes of the meeting, or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof, or shall forward such dissent by certified or registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

SECTION 11. ACTION WITHOUT A MEETING. Unless specifically prohibited by the certificate of incorporation or these by-laws, any action required to be taken at a meeting of the board of directors, or any other action which may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all the directors entitled to vote with respect to the subject matter thereof, or. by all the members or such committee, as the case may be. Any such consent signed by all the directors or all the members of the committee shall have the same effect as a unanimous vote, and may be stated as such in any document filed with the Secretary of State or with anyone else.

SECTION 12. EXECUTIVE COMMITTEE. The board of directors, by resolution adopted by a majority of the number

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of directors fixed by the by-laws or otherwise, may designate two or more directors to constitute an executive committee, which committee, to the extent provided in such resolution, shall have and exercise all of the authority of the board of directors in the management of the corporation, except as otherwise required by law. vacancies in the membership of the committee shall be filled by the board of directors at an annual or at a special meeting of the board of directors. The executive committee shall keep minutes of its proceedings and report the same to the directors when required.

SECTION 13. COMPENSATION. The board of directors, by the affirmative vote of a majority of directors then in office and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise. By resolution of the board of directors, the directors may be paid their expenses, if any, of attendance at each meeting of the directors. No such payment previously mentioned in this Section 13 shall preclude any director from serving the corporation in any other individual or personal capacity and receiving compensation therefor.

ARTICLE IV

WAIVER OF NOTICE

Whenever any notice is required to be given under the provisions of these bylaws or under the provisions of the certificate of incorporation or under the provisions of The General Corporation Law of the State of Delaware; a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the given of such notice.

ARTICLE V

OFFICERS

SECTION 1. NUMBER. The officers of the corporation shall be the chairman of the board, the president, one or more vice presidents (the number thereof to be determined by the board of directors), the secretary, the treasurer and such assistant vice presidents, assistant secretaries and assistant treasurers or any other officers thereunto authorized or elected by the board of directors. Any two or more offices may be held by the same person.

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SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation shall be elected by the board of directors at their first meeting and thereafter at each annual meeting of the board of directors held after each annual meeting of stockholders. If the election of officers shall not be held at such meeting of the board of directors, such election shall be held as soon thereafter as may be convenient. Vacancies may be filled or new offices created and filled at any meeting of the board of directors. Each officer shall hold office until his successor shall have been duly elected and qualified, or until his death or disability, or until he shall resign or shall have been removed from his duties in the manner hereinafter provided. Election by an officer shall not of itself create contract rights.

SECTION 3. REMOVAL. Any officer elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

SECTION 4. CHAIRMAN OF THE BOARD. The chairman of the board of the corporation shall be the chief executive officer of the corporation. The chairman of the board shall preside at all meeting of the board of directors, and at all stockholders’ meetings, whether annual or special, at which he is present and shall exercise such other powers and perform such other duties as the board of directors may from time to time assign to him or as may be prescribed by these by-laws. In the event that the chairman of the board is not present at a directors meeting or stockholders meeting, the president of the corporation shall serve in his place and stead.

SECTION 5. PRESIDENT. The president shall be the chief operating officer of the corporation. Subject to the direction and control of the board of directors, the president shall be in charge of the business operations of the corporation; he shall see that the resolutions and directions of the board of directors are carried into effect, except in those instances in which that responsibility is specifically assigned to some other person by the board of directors; and in general, he shall discharge all duties incident to the office of president and such other duties as may be prescribed by the board of directors or the chairman of the board from time to time. He shall preside at all annual meetings of the stockholders and at special meetings of the board of directors if the chairman of the board is not present. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation, or a different mode of execution is expressly

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prescribed by the board of directors or these by-laws, he may execute for the corporation, certificates for its shares, and any contracts, deeds, mortgages, or other instruments which the board of directors have authorized to be executed, and he may accomplish such execution either under or without the coal of the corporation, or either individually or with the secretary, any assistant secretary or any other officer thereunto authorized by the board of directors, according to the requirements of the form of the instrument. He may vote all securities which the corporation is entitled to vote, except as and to the extent such authority shall be vested in a different officer or agent of the corporation by the board of directors.

SECTION 6. VICE PRESIDENT. The vice president (or in the event there be more than one vice president, each of the vice presidents), if one shall be elected, shall assist the president in the discharge of his duties, as the president may direct and shall perform such other duties as from time to time may be assigned to him by the president or by the board of directors. In the absence of the president or in the event of his inability or refusal to act, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated by the board of directors, or by the president if the board of directors have not made such a designation, or in the absence of any designation, then in the order of seniority of tenure as vice president) shall perform the duties of the president, and when so acting, shall have the powers of and be subject to all the restrictions upon the president. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation, or a different mode of execution is expressly prescribed by the board of directors or these by-laws, the vice president (or each of them if there are more than one) may execute for the corporation, certificates for its shares and any contracts, deeds, mortgages, bonds or other instruments which the board of directors have authorized to be executed, and he may accomplish such execution either under or without the seal of the corporation, and either individually or with the secretary, any assistant secretary or any other officer thereunto authorized by the board of directors, according to the requirements of the form of the instrument. The executive vice president - finance shall, unless otherwise designated by the board of directors, be the chief financial officer. The vice president of information and control shall, unless otherwise designated by board of directors, be the chief accounting officer.

SECTION 7. ASSISTANT VICE PRESIDENT. The assistant vice president (or in the event there be more than one

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assistant vice president, each of the assistant vice presidents), if one shall be elected, shall assist the chairman of the board, the president or a vice president in the discharge of his duties, as the chairman of the board, the president or a vice president may direct. and shall perform such other duties as from time to time may be assigned to him by the chairman of the board, the president, or a vice president, or by the board of directors.

SECTION 8. TREASURER. The treasurer shall: (i) have charge of and be responsible for the maintenance of the adequate books and records for the corporation; (ii) have charge and custody of all funds and securities of the corporation, and be responsible therefor and for the receipt and disbursement thereof; and (iii) perform all the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the board of directors. If required by the board of directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the board of directors may determine. The treasurer shall not be the chief financial officer or chief accounting officer, unless otherwise designated by the board of directors.

SECTION 9. SECRETARY. The secretary shall: (i) record the minutes of the stockholders and of the board of directors meetings in one or more books provided for that purpose; (ii) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (iii) be custodian of the corporate books and records and of the seal of the corporation; (iv) keep a register of the post-office address of each stockholder which shall be furnished to the secretary by such stockholder; (v) sign with the president, or a vice president or any other officer thereunto authorized by the board of directors, certificates for its shares of the corporation, the issue of which shall have been authorized by the board of directors and contracts, deeds, mortgages, bonds or other instruments which the board of directors have authorized to be executed, according to the requirements of the form of the instrument, except when a different mode of execution is expressly prescribed by the board of directors or these by-laws; (vi) have general charge of the stock transfer books of the corporation; (vii) perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the board of directors.

SECTION 10. ASSISTANT TREASURERS AND ASSISTANT, SECRETARIES. The assistant treasurers and assistant secretaries

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shall perform such duties as shall be assigned to them by the board of directors. When the secretary is unavailable, any assistant secretary may sign with the president, or a vice president, or any other officer thereunto authorized by the board of directors, any contracts, deeds, mortgages, bonds or other instruments according to the requirements of the form of the instrument, except when a different mode of execution is expressly prescribed by the board of directors or these by-laws. The assistant treasurers shall, respectively, if required by the board of directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the board of directors shall determine.

SECTION 11. SALARIES. The salaries of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation.

ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1. CONTRACTS. The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation and such authority may be generator confined to specific instances.

SECTION 2. LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name, unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances.

SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued by the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board of directors.

SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the board of directors may select.

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ARTICLE VII

CERTIFICATES OF STOCK AND THEIR TRANSFER

SECTION 1. CERTIFICATES OF STOCK. Certificates representing stock of the corporation shall be signed by the president or a vice president, or by such officer as shall be designated by resolution of the board of directors and by the secretary or an assistant secretary, and shall be sealed with the seal or a facsimile of the seal of the corporation. If both of the signatures of the officers be by facsimile, the certificate shall be manually signed by or on behalf of a duly authorized transfer agent or clerk. Each certificate representing shares shall be consecutively numbered or otherwise identified, and shall also state the name of the person to whom issued, the number and class of shares (with designation of series, if any), the date of issue that the corporation is organized under the laws of the State of Delaware and the par value or a statement that the shares are without par value. If the corporation is authorized and does issue shares of more than one class or of series within a class, the certificate shall contain such information or statement as may be required by law.

The name and address of each stockholder, the number and class of shares held and the date on which the certificates for the shares were issued shall be entered on the books and records of the corporation. The person in whose name shares stand on the books of the corporation shall be deemed to the owner thereof for all purposes as regards the corporation.

SECTION 2. LOST CERTIFICATES. If a certificate representing shares has allegedly been lost or destroyed, the board of directors may, in its discretion, except as may be required by law, direct that a new certificate be issued upon such indemnification and other reasonable requirements as it may impose.

SECTION 3. TRANSFERS OF STOCK. Transfer of stock of the corporation shall be recorded on the books of the corporation and, except in the case of a lost or destroyed certificate, on surrender for cancellation of the certificate for such shares. A certificate presented for transfer must be duly endorsed and accompanied by proper guaranty of signature and other appropriate assurances that the endorsement is effective.

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ARTICLE VIII

FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the board of directors.

ARTICLE IX

SEAL

The corporate seal shall have inscribed thereon the name of the corporation and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

ARTICLE X

INDEMNIFICATION OF OFFICERS,

DIRECTORS, EMPLOYEES AND AGENTS

SECTION 1. The corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a director, officer, employee or agent of the corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in such a manner which he reasonably believed to be in, or not opposed to, the best interest of the corporation, and with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his conduct was unlawful.

SECTION 2. The corporation shall have the power to indemnify any person who was or is a party, or is threatened

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to be made a party, to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not Opposed to the best interests of the corporation, provided, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem necessary and proper.

SECTION 3. To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

SECTION 4. Any indemnification under Sections 1 and 2 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is necessary and proper in the circumstances, because he has met the applicable standard of conduct set forth in Sections 1 and 2 above. Such determination shall be made (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding; or (b) if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or (c) by the stockholders.

SECTION 5. The indemnification provided by this Article X shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any contract, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as

15

to action in another capacity while holding each office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the exclusive benefit of the representatives, heirs, executors, administrators and assigns of such a person.

SECTION 6. The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or who is or was serving at the request of the corporation as a director, officer, employee or agent of other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article X.

ARTICLE XI

AMENDMENTS

The power to make, alter, amend or repeal the by-laws of the corporation shall be vested in the board of directors, as provided by the certificate of incorporation. The by-laws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with the Delaware General Corporation Law or the certificate of incorporation.

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EX-3.23

Exhibit 3.23

2473221

ARTICLES OF INCORPORATION

OF

SHEA FINANCIAL SERVICES, INC.

I

The name of this corporation is Shea Financial Services, Inc.

II

The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporation Code.

III

The name and address in the State of California of this corporation’s initial agent for service of process is: Max B. Johnson, 655 Brea Canyon Road, Walnut, California 91788-0487.

IV

This corporation is authorized to issue only one class of shares of stock, and the total number of shares that this corporation is authorized to issue is 100,000.

Dated: October 29,2002

Vicki R. Stump, Incorporator

EX-3.24

Exhibit 3.24

Bylaws

of

SHEA FINANCIAL SERVICES, INC.

a California corporation

TABLE OF CONTENTS

			Page
Section	1.	Offices		1
	1.1	Principal Office		1
	1.2	Other Offices		1
Section	2.	Directors		1
	2.1	Exercise of Corporate Powers		1
	2.2	Number		1
	2.3	Compensation		1
	2.4	Election and Term of Office		1
	2.5	Vacancies		2
	2.6	Removal		2
Section	3.	Officers		2
	3.1	Election and Qualifications		2
	3.2	Term of Office and Compensation		3
	3.3	Removal and Vacancies		3
Section	4.	Chairman of the Board		3
	4.1	Powers and Duties		3
Section	5.	President		3
	5.1	Powers and Duties		3
	5.2	President pro tem		4
Section	6.	Vice President		4
	6.1	Power and Duties		4
Section	7.	Secretary		4
	7.1	Powers and Duties		4
Section	8.	Chief Financial Officer		5
	8.1	Powers and Duties		5
Section	9.	Committees of the Board		6
	9.1	Appointment and Procedure		6
	9.2	Powers		6

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TABLE OF CONTENTS

			Page
	9.3	Executive Committee		6
Section	10.	Meeting of Shareholders		6
	10.1	Place of Meetings		6
	10.2	Time of Annual Meeting		6
	10.3	Special Meeting		7
	10.4	Notice of Meeting		7
	10.5	Delivery of Notice		7
	10.6	Adjourned Meetings		8
	10.7	Consent to Shareholders’ Meeting		8
	10.8	Quorum		8
	10.9	Actions Without Meeting		9
	10.10	Revocation of Consent		9
	10.11	Voting Rights		9
	10.12	Determination of Holders of Record		10
	10.13	Elections for Directors		10
	10.14	Proxies		11
	10.15	Inspection of Election		11
Section	11.	Meetings of Directors		12
	11.1	Place of Meetings		12
	11.2	Regular Meetings		12
	11.3	Special Meetings		12
	11.4	Notice of Meetings		12
	11.5	Quorum		13
	11.6	Adjourned Meetings		13
	11.7	Waiver of Notice and Consent		13
	11.8	Action Without a Meeting		13
	11.9	Conference Telephone Meetings		13
	11.10	Meetings of Committees		13

ii

TABLE OF CONTENTS

			Page
Section	12.	Indemnification and Advancement		13
	12.1	Right to Indemnification		13
	12.2	Right of Advancement		14
	12.3	Right of Claimant to Bring Suit		14
	12.4	Non-Exclusivity of Rights		15
	12.5	Insurance		15
Section	13.	Additional Provisions		15
	13.1	Instruments in Writing		15
	13.2	Fiscal Year		15
	13.3	Shares Held by the Corporation		15
	13.4	Certificate of Stock		16
	13.5	Lost Certificates		16
	13.6	Certification and Inspection of Bylaws		16
	13.7	Notices		16
	13.8	Reports to Shareholders		16
Section	14.	Construction of Bylaws with Reference to Provisions of Laws		17
	14.1	Definitions		17
	14.2	Bylaw Provisions Additional and Supplemental to Provisions		17
	14.3	Bylaw Provisions Contrary to or Inconsistent with Provisions of Laws		17
Section	15.	Adoption, Amendment or Repeal of Bylaws		17
	15.1	By Shareholders		17
	15.2	By the Board of Directors		17

iii

Bylaws

of

Shea Financial Services, Inc.

a California corporation

Section 1. Offices

1.1 Principal Office. The principal office for the transaction of the business of the corporation, which may be within or outside the State of California, shall be determined from time to time by the Board of Directors of any officers authorized by the Board of Directors to make this determination.

1.2 Other Offices. One or more branch or other subordinate offices may be located from time to time, within or outside the State of California, by the Board of Directors or any officer authorized by the Board of Directors to make this determination.

Section 2. Directors

2.1 Exercise of Corporate Powers. Except as otherwise provided by the Articles of Incorporation of the corporation or by the laws of the State of California now or hereafter in force, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operation of the business of the corporation as permitted by law, provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board.

2.2 Number. The number of the corporation’s directors shall be four (4) until changed by an amendment of the Articles of Incorporation or by an amendment to this Section 2.2 duly adopted by the shareholders. The directors of the corporation need not be shareholders of the corporation.

2.3 Compensation. Directors shall receive such compensation for their services as directors and such reimbursement for their expenses of attendance at meetings as may be determined from time to time by resolution of the Board. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefore.

2.4 Election and Term of Office. At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting, provided that, if for any reason, said annual meeting or an adjournment thereof is not held or the directors are not elected thereat, then the directors may be elected at any special meeting of the shareholders called and held for that purpose. The term of office of the directors shall begin immediately after their election and shall continue until the expiration of the term for which elected and until their respective successors have been elected and qualified.

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2.5 Vacancies. A vacancy or vacancies in the Board of Directors shall exist when any authorized position of director is not then filled by a duly elected director, whether caused by death or resignation, removal, change in the authorized number of directors (by the Board of the shareholders) or otherwise. The Board of Directors may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony. Except for a vacancy created by the removal of a director, vacancies on the Board may be filled by approval of the Board or, if the number of directors then in office is less then quorum, by (1) the unanimous written consent of the directors then in office, (2) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice, or (3) a sole remaining director. A vacancy created by the removal of a director may be filled only the approval of the shareholder. The shareholders may elect a director any time to fill any vacancy not filled by the directors, but any such election by written consent other than to fill a vacancy created by removal require the consent of a majority of the outstanding shares entitled to vote. Any director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

2.6 Removal.

(a) Any or all of the directors may be removed without cause if such removal is approved by the affirmative vote of a majority of the outstanding shares entitled to vote at an election of directors, subject of the following:

(1) No director may be removed (unless the entire Board is removed) when the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time if the director’s most recent election were then being elected; and

(2) When by the provisions of the Articles the holders of the shares of any class or series, voting as a class or series, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series.

(b) Any reduction of the authorized number of directors does not remove any director prior to the expiration of such director’s term of office.

Section 3. Officers

3.1 Election and Qualifications. The officers of this corporation shall consist of a President, a Secretary and a Chief Financial Officer who shall be chosen by the Board of Directors and such other officers, including a Chairman of the Board, as the Board of Directors shall deem expedient, all of whom shall be chosen in such manner and hold their offices for such terms as the Board of Directors may prescribe. Any two or more of such offices may be held by

2

the same person. Any Vice President, Assistant Treasurer or Assistant Secretary, respectively, my exercise any of the powers of the President, the Chief Financial Offices or the Secretary, respectively, as directed by the Board of Directors and shall perform such other duties as are imposed upon such officer by the Bylaws or the Board of Directors.

3.2 Term of Office and Compensation. The term of office and salary of each of said officers and the manner and time of the payment of such salaries shall be fixed and determined by the Board of Directors and may be altered by said Board from time to time at its pleasure, subject to the rights, if any, of said officers under any contract of employment.

3.3 Removal and Vacancies. Any officer of the corporation may be removed at the pleasure of the Board of Directors at any meeting or by vote of shareholders entitled to exercise the majority of voting power of the corporation at any meeting or at the pleasure of any officer who may be granted such power by a resolution of the Board of Directors. Any officer may resign at any time upon written notice to the corporation with prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. If any vacancy occurs in any office of the corporation, the Board of Directors may elect a successor to fill such vacancy for the remainder of the unexpired term and until a successor is duly chosen and qualified.

Section 4. Chairman of the Board

4.1 Powers and Duties. The Chairman of the Board of Directors, if there is one, shall have the power to preside at all meetings of the Board of Directors, and to call meetings of the shareholders and of the Board of Directors to be held within the limitations prescribed by law or by these Bylaws, at such times and at such places as the Chairman of the Board shall be deem proper. The Chairman of the Board shall have such other powers and shall be subject to such other duties as the Board of Directors may from time to time prescribe.

Section 5. President

5.1 Powers and Duties. The powers and duties of the President are:

(a) To act as the chief executive officers of the corporation and, subject to the control of the Board of Directors, to have general supervision, direction and control of the business and affairs of the corporation.

(b) To preside at all meetings of the shareholders and, in the absence of the Chairman of the Board, or if there is none, all meetings of the Board of Directors.

(c) To call meetings of the shareholders and also of the Board of Directors to be held, subject to the limitations prescribed by law or by these Bylaws, at such times and at such places as the President shall deem proper.

(d) To affix the signature of the corporation to all deeds, conveyances, mortgages, leases, obligation, bonds, certificates and other papers and instruments in writing which have been authorized by the Board of Directors or which, in the judgment of the President shall be executed

3

on behalf of the corporation, to sign certificates for shares of stock of the corporation and, subject to the direction of the Board of Directors, to have general charge of the property of the corporation and to supervise and control all officers, agents and employees of the corporation.

5.2 President pro tem. If neither the Chairman of the Board, the President, nor any Vice President is present at any meeting of the Board of Directors, a President pro tern may be chosen to preside and act at such meeting. If neither the President nor any Vice President is present at any meeting of the shareholders, a President pro tern may be chosen to preside at such meeting.

Section 6. Vice President

6.1 Power and Duties. In case of the absence, disability or death of the President, the Vice President, or one of the Vice Presidents, if there is one, shall exercise all the powers and perform all the duties of the President. If there is more than one Vice President, the order in which the Vice Presidents shall succeed to the powers and duties of the President shall be as fixed by the Board of Directors. The Vice President or Vice Presidents shall have such other powers and perform such other duties as may be granted or prescribed by the Board of Directors.

Section 7. Secretary

7.1 Power and Duties. The powers and duties of the Secretary are:

(a) To keep a book of minutes at the principal office of the corporation, or such other place as the Board of Directors may order, of all meetings of its directors and shareholders with the time and place holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors meetings, the number of shares present or represented at shareholders’ meetings and the proceedings thereof.

(b) To keep the seal of the corporation and to affix the same to all instruments which may require it.

(c) To keep or cause to be kept at the principal office of the corporation, or at the office of the transfer agent or agents, a share register, or duplicate share registers, showing the names of the shareholders and their addresses, the number and classes of share held by each, the number and date of certificates issued for shares, and the number and date of cancellation of every certificate surrendered for cancellation.

(d) To keep a supply of certificates for shares of the corporation, to fill in all certificates issued, and to make a proper record of each such issuance; provided, that so long as the corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares, of the corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents.

(e) To transfer upon the share books of the corporation any and all shares of the corporation; provided, that so long as the corporation shall have one or more duly appointed and

4

acting transfer agents of the shares, or any class or series of shares, of the corporation, such duties with respect to such share shall be performed by such transfer agent or transfer agents, and the method of transfer of each certificate shall be subject to the reasonable regulations of the transfer agent to which the certificate is presented for registration; and provided, further, that no certificate for shares of stock shall be issued or delivered or, if issued or delivered, shall have am validity whatsoever until and unless it has been signed for authenticated in the manner provided in Section 13.4 hereof.

(f) To make service and publication of all notices that may be necessary or proper, and without command or direction from anyone. In case of the absence, disability, refusal or neglect of the Secretary to make service or publication of any notices, then such notices may be served an/or published by the President or a Vice President, or by any person thereunto authorized by either of them or by the Board of Directors or by the holders of a majority of the outstanding shares of the corporation.

(g) Generally to do and perform all such duties as pertain to the office of the Secretary and as may be required by the Board of Directors.

Section 8. Chief Financial Officer

8.1 Powers and Duties. The powers and duties of the Chief Financial Officer are:

(a) To supervise and control the keeping and maintain of adequate and correct accounts of the corporation’s properties and business transaction, including accounts of its assets liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director.

(b) To have the custody of all funds, securities, evidence of indebtedness and other valuable documents of the corporation and, at the Chief Financial Officer’s discretion, to cause any or all thereof to be deposited for the account of the corporation with such depositary as may be designated from time to time by the Board of Directors.

(c) To receive or cause to be received, and to give or cause to be given, receipts and acquaintances for moneys paid in for the account of the corporation.

(d) To disburse, or cause to be disbursed, all funds of the corporation as may be directed by the Board of Directors, taking proper vouchers for such disbursements.

(e) To render to the President and to the Board of Directors, whenever they may require, accounts of all transactions and of the financial condition of the corporation.

(f) Generally to do and perform all such duties as pertain to the office of Chief Financial Officer and as may be required by the Board of Directors.

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Section 9. Committees of the Board

9.1 Appointment and Procedure. The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate member of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate member of a committee requires the vote of a majority of the authorized number of directors.

9.2 Powers. Any committee appointed by the Board of Directors, to the extent provided in the resolution of the Board or in these Bylaws, shall have all the authority of the Board except with respect to:

(a) the approval of any action, which requires the approval or vote of the shareholders;

(b) the filling of vacancies on the Board or on any committee;

(c) the fixing of compensation of the directors for serving on the Board or on any committee;

(d) the amendment or repeal of Bylaws or the adoption of new Bylaws;

(e) the amendment or repeal of any resolution of the Board, which by its express terms is not so amendable, or repeal able;

(f) a distribution to the shareholders of the corporation, except at a rate, in a periodic amount or within a price range set forth in the articles or determined by the Board;

(g) the appointment of other committees of the Board or the member thereof.

9.3 Executive Committee. In the event that the Board of Directors appoints an Executive Committee, such Executive Committee, in all cases in which specific direction to the contrary shall not have been given by the Board of Directors, shall have an my exercise, during the intervals between the meetings of the Board of Directors, all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation (except as provided in Section 9.2 hereof) in such manner as the Executive Committee may deem in the best interests of the corporation.

Section 10. Meetings of Shareholders

10.1 Place of Meetings. Meetings (whether regular, special or adjourned) of the shareholders of the corporation shall be held at the principal office for the transaction of business as specified in accordance with Section 1.1 hereof, or any place within or without the State which may be designated by written consent of all the shareholders entitled to vote thereat, or which may be designated by the Board of Directors.

10.2 Time of Annual Meetings. The annual meeting of the shareholders shall be held at the time and date determined by the Board of Directors.

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10.3 Special Meetings. Special meetings of the shareholders may be called by the Board of Directors, the Chairman of the Board, the President or the holders of shares entitled to cast not less then 10 percent of the vote at the meeting.

10.4 Notice of Meetings.

(a) Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than 10 (or, if sent by third class mail, 30) nor more then 60 days before the day of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (1) in the case of a special meeting, the general nature of the business to be transacted, and that no other business may be transacted, or (2) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to resent for action by the shareholders but subject to the provisions of subdivision (b) any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the Board for election.

(b) Any shareholder approval at a meeting, other than unanimous approval by those entitled to vote, on any of the matters listed below, shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice.

(1) a proposal to approve a contract or other transaction between the corporation and one or more of its directors, or between the corporation and any corporation, firm or association in which one or mo

(2) a proposal to amend the Articles of Incorporation;

(3) a proposal regarding a reorganization, merger or consolidation involving the corporation;

(4) a proposal to wind up and dissolve the corporation;

(5) a proposal to adopt a plan of distribution of the shares, obligation or securities of any other corporation, domestic or foreign, or assets other than money which is not in accordance with the liquidation rights of any referred shares as specified in the Articles of Incorporation.

10.5 Delivery of Notice. Notice of a shareholders’ meeting or any report shall be given either personally or by first class mail or in the case of a corporation with outstanding shares held of record by 500 or more persons (determined as provided in Section 605 of the California General Corporation Law) on the record date for the shareholders’ meeting, notice may be sent third class mail, or other means of written communication, addresses to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation of the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by

7

publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of this Section, executed by the Secretary, Assistant Secretary or any transfer agent, shall be prima facie evidence of the giving of the notice or report.

If any notice or report addressed to the shareholder at the address of such shareholder appearing on the books of the corporation is returned to the corporation by United States Postal Service is unable to deliver the notice or report to the shareholder at such address, all future notices or report shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice or report to all other shareholders.

10.6 Adjourned Meetings. When a shareholders’ meeting is adjourned to another time or place, unless the Bylaws otherwise require and except as provided in the Section, notice need not be given of the adjourned meeting if the time and place there are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business, which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

10.7 Consent to Shareholders’ Meeting. The transactions of any meeting of shareholders, however called and noticed, and whenever held, are as valid as through had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of an presence at such meeting, except when the person object, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the California General Corporation Law to be included in the notice but not so included in the notice if such objection is expressly made at the meeting. Neither the business to be transacted at, nor the purpose of any regular or special meeting of shareholder need to specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the Articles of Incorporation or Bylaws, except as provided in Section 10.4(b).

10.8 Quorum.

(a) The presence in person or by proxy of the persons entitled to vote the majority of the voting shares at any meeting shall constitute a quorum for the transaction of business. Excepts as provided in subdivision (b), the affirmative vote of a majority of the shares represented and

8

voting at a duly held meeting at which quorum is present (which shares voting affirmatively also constitute at lease a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by laws or the Articles of Incorporation of these Bylaws.

(b) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of the number of enough shareholders to leave less then a quorum, if any action taken (other then adjournment) is approved by at least a majority of the shares required to constitute a quorum.

(c) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (b).

10.9 Actions Without Meeting.

(a) Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so take, shall be signed by the holders of outstanding shares having not less then the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted; provided that, subject to the provisions of Section 2.6, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors.

(b) Unless the consents of all shareholders entitled to vote have been solicited in writing,

(1) notice of any shareholder approval on matters described in Section 10.4(1), Section 10.4(3) or Section 10.4(5) or respecting indemnification of agents of the corporation without a meeting by less then unanimous written consent shall be given at least ten (10) days before the consummation of the action authorized by such approval, and

(2) prompt notice shall be given of the taking of any other corporate action approved by shareholders without a meeting by less then unanimous written consent, to those shareholder entitled to vote who have not consented in writing, the provisions of Section 10.5 shall apply to such notice.

10.10 Revocation of Consent. Any shareholder giving a written consent, or the shareholder’s proxy holders, or a transferee of the shares of a personal representative of the shareholder or their respective proxy holders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation.

10.11 Voting Rights. Except as provided in Section 10.13 or in the Articles of Incorporation or in any statute relating to the election of directors or to other particular matters, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted

9

to a vote of shareholders. Any holder of shares entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, other then elections to office, but, if the shareholder fails to specify the number of shares such shareholder is voting affirmatively, it will be conclusively presumed that the shareholder’s approving vote is with respect to all shares such shareholders is entitled to vote.

10.12 Determination of Holders of Record

(a) In order that the corporation may determine the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more then 60 nor less then 10 days prior to the date of such meeting nor more then 60 days prior to any other action.

(b) In the absence of any record date set by the Board of Directors pursuant to subdivision (a) above, then:

(1) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board has been taken, shall be the day on which the first written consent is given.

(3) The record date of determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the 60^th day prior to the date of such other action, whichever is later.

(c) A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board fixes a new record date for the adjourned meeting, but the Board shall fix a new record date if the meeting is adjourned for more then 45 days from the date set for the original meeting.

(d) Shareholders at the close of business on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer or any shares on the books of the corporation after the record date, except as otherwise provided in the Articles or by agreement or applicable law.

10.13 Election for Directors.

(a) Every shareholder complying with subdivision (b) and entitled to vote at any election of directors may cumulate such shareholder’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder’s shares are normally entitled, or distribute the shareholder’s votes on the same principle among as many candidates as the shareholder thinks fit.

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(b) No shareholder shall be entitled to cumulate votes (i.e., cast for any candidates a number of votes greater then the number of votes which such shareholder normally is entitled to cast) unless such candidate or candidates’ names have been placed in nomination prior to the voting and the shareholder has given written notice to the chairman of the meeting at the meeting prior to the voting of the shareholder’s intention to cumulate the shareholder’s votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination.

(c) In any election of directors, the candidates receiving the highest number of affirmative votes of the share entitled to be voted for them up to the number of directors to be elected by such share are elected; votes against the director and votes withheld shall have not legal effect.

(d) Elections for directors need not be by ballot unless a shareholder demands election by ballot at the meeting and before the voting begins or unless the Bylaws so require.

10.14 Proxies.

(a) Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to such shares. Any proxy purporting to be executed in accordance with the provisions of the General Corporation Law of the State of California shall be presumptively valid.

(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in the Section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determined the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

(c) A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.

10.15 Inspectors of Election.

(a) In advance of any meeting of shareholders the Board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear to refuse to act, the chairman of any meeting of shareholders may, and on the request of any shareholder or shareholder’s proxy shall, appoint inspectors of election (or person to replace those who so fail or refuse) at the meeting.

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The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed.

(b) The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders.

(c) The inspectors of election shall perform their duties impartially, in good faith to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

Section 11. Meetings of Directors

11.1 Place of Meetings. Unless otherwise specified in the notice thereof, meetings (whether regular, special or adjourned) of the Board of Directors of this corporation shall be held the principal office of the corporation for the transaction of business, as specified in accordance with Section 1.1 hereof, which is hereby designated as an office for such purpose in accordance with the laws of the State of California, or at any other place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board.

11.2 Regular Meetings. Regular meetings of the Board of Directors, of which no notice need to be given except as required by the laws of the State of California, shall be held after the adjournment of each annual meeting of the shareholders (which meeting shall be designated the Regular Annual Meeting) and at such other times as may be designated from time to time by resolution of the Board of Directors.

11.3 Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President or by a Vice President or the Secretary or by any two or more of the directors.

11.4 Notice of Meetings. Except in the cases of regular meetings, notice of which has been dispensed with, the meetings of the Board of Directors shall be held upon four (4) days’ notice by mail or forty-eight (48) hours’ notice delivered personally or by telephone, telegraph, or other electronic or wireless means. If the address of a director is not shown on the records and is not readily ascertainable, notice shall be addressed to the director at the city or place in which the meetings of the directors are regularly held. Except as set forth in Section 11.6, notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned.

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11.5 Quorum. A majority of the authorized number of directors constitutes a quorum of the Board for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors except as otherwise provided by law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum of such meeting.

11.6 Adjourned Meetings. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more then 24 hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

11.7 Waiver of Notice and Consent. Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting or who attends the meeting without protesting prior thereto or at its commencement, the lack of notice to such director. All such waivers, consent and approval shall be filed with the corporate records or made a part of the minutes of the meeting.

11.8 Action Without a Meeting. Any action required or permitted to be taken by the Board may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filled with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors

11.9 Conference Telephone Meetings. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Participation in a meeting pursuant to this Section constitutes presence in person at such meeting.

11.10 Meetings of Committees. The provisions of this Article apply also to committees of the Board and incorporators and action by such committees and incorporators.

Section 12. Indemnification and Advancement

12.1 Right to Indemnification. Each person who was or is made a party to or witness or other participant in or is threatened to be made a party to or witness or other participant in or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative, investigative or other (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an “agent”), whether the basis of the proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be

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indemnified and held harmless by the corporation to the fullest extent authorized by the California General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expenses, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement and all interest, assessments and other charges paid or payable in connection with or in respect of such expense, liability and loss) (hereinafter collectively “expenses,” which expenses shall also include without limitation any expenses of establishing a right to indemnification or advancement under this Section) reasonably incurred or suffered by such agent in connection therewith and such indemnification shall continue as to an agent who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the corporation shall indemnify any such agent seeking indemnification in connection with a proceeding (or part thereof) initiated by such agent only if such proceeding (or part thereof) was authorized by the board of directors of the corporation.

The corporation may, by action of the board of directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.

12.2 Right of Advancement.

Expenses incurred by or on behalf of any person in defending any proceeding by reason of the fact that such person is or was an agent of the corporation shall be advanced by the corporation prior to the final disposition of such proceeding; provided, however, that if the California General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or here capacity as a director or officers (and not in any other capacity in which service as or is rendered by such person while a director or officers, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding shall be made only upon delivery to the corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined that such director or officers is not entitled to be indemnified under this Section or otherwise.

12.3 Right of Claimant to Bring Suit. If a claim under either Section 12.1 or Section 12.2 is not paid in full by the corporation within thirty (30) days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending to any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the California General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including the board of directors, independent legal counsel, or the stockholders) to

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have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the California General Corporation Law, nor an actual determination by the corporation (including the board of directors, independent legal counsel, or the stockholders) that the claimant has not me such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

12.4 Non-Exclusivity of Rights. The indemnification and advancement provided by this Section shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, to the extent such additional rights to indemnification or advancement may seek either or both at his or her discretion and the pursuit of one shall neither be deemed a waiver of such person’s rights to pursue the other, nor shall it have any effect on the outcome of such person’s pursuit of the other. Nothing contained in this Section shall affect any right to indemnification to which persons other than agents may be entitled by contract or otherwise. Nothing in this Section shall restrict the power of the may be entitled by contract or otherwise. Nothing in this Section shall restrict the power of the corporation to indemnify its agents under any provision of the California General Corporation Law, as amended from time to time, or under any other provision of law from time to time applicable to the corporation, nor shall anything in this Section authorize the corporation to indemnify its agents in situations prohibited by the California General Corporation Law other applicable law.

12.5 Insurance. The corporation may maintain insurance, at its expense, to protect itself and any person who is or was a director, officer, employee, agent or fiduciary of the corporation who is or was serving at the request of the corporation as a director, officer, employee agent, or fiduciary of another corporate or of a partnership, joint venture, trust or other enterprise against any expenses incurred in a proceeding, whether or not the corporation would have the power to indemnify such person against such expenses under the California General Corporation Law.

Section 13. Additional Provisions

13.1 Instruments in Writing. All checks, drafts, demands for money and notes of the corporation, and all written contracts of the corporation, shall be signed by such officer or officers, agent or agents as the Board of Directors my from time to time by resolution designate. No officer, agent, or employee of the corporation shall have power to bind the corporation by contract or otherwise unless authorized to do so by these Bylaws or by the Board of Directors.

13.2 Fiscal Year. The fiscal year of this corporation shall be as determined by the Board of Directors.

13.3 Shares Held by the Corporation. Shares in other corporations standing in the name of this corporation may be voted or represented and all rights incident thereto may be exercised on behalf of this corporation by the President or by any other officers of this corporation authorized so to do by resolution of the Board of Directors.

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13.4 Certificates of Stock. There shall be issued to each holder a fully paid shares of the capital stock of the corporation a certificate or certificates for such shares. Every holder of shares in the corporation shall be entitled to have a certificate signed in the name of the corporation by the Chairman or Vice Chairman of the Board or the President or a Vice President and by the Chief Financial Officer or an Assistant Treasurer or the Secretary or any Assistant Secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.

13.5 Lost Certificates. The corporation may issue a new share certificate or a new certificate for any other security in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate or the owner’s legal representative to give the corporation a bond (or other adequate security) sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. The Board of Directors may adopt such other provisions and restrictions with reference to lost certificate, not inconsistent with applicable law, as it shall in its discretion deem appropriate.

13.6 Certification and Inspection of Bylaws. The corporation shall keep at its principal executive office in this state, or if its principal executive office is not in this state at its principal business office in this state, the original or a copy of these Bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If this principal executive office of the corporation is outside this state and the corporation has no principal business office in this state, it shall upon the written request of any shareholder furnish to such shareholder a copy of the Bylaws as amend to date.

13.7 Notices. Any reference in these Bylaws to the time a notice is given or sent means, unless otherwise expressly provided, the time a written notice by mail is deposited in the United States mails, postage prepaid; or the time any other written notice is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or the time any oral notice is communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient.

13.8 Reports to Shareholders. Except as may otherwise be required by law, the rendition of an annual report to the shareholders is waived so long as there are less then 100 holders of record of the shares of the corporation (determined as provided in Section 605 of the California General Corporation Law). At such time or times, if any, that the corporation has 100 or more holders of record of its shares, the Board of Directors shall cause an annual report to be sent to the shareholders not later than 120 days after the close of the fiscal year or within such

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shorter time period as may be required by applicable law, and such annual report shall contain such information and be accompanied by such other documents as may be required by applicable law.

Section 14. Construction of Bylaws with Reference to Provisions of Law

14.1 Definitions. Unless defined otherwise in these Bylaws or unless the context otherwise requires, terms used herein shall have the same meaning, if any, ascribed thereto in the California General Corporation Law, as amended from time to time.

14.2 By-Law Provisions Additional and Supplemental to Provisions of Law. All restrictions, limitations, requirements and other provisions of these Bylaws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal.

14.3 By-Law Provisions Contrary to or Inconsistent with Provision of Law. Any article, Section, subsection, subdivision, sentence, clause or phase of these Bylaws which upon being constructed in the manner provided in Section 14.2 hereof, shall be contrary to or inconsistent with any applicable provision of law, shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these Bylaws, it being hereby declared that these Bylaws would have been adopted and each article, Section, subsection, subdivision, sentence, clause or phrase thereof, irrespective of the fact that any one or more articles, Sections, subsections, subdivisions, sentence clauses or phrases is or are illegal.

Section 15. Adoption, Amendment or Repeal of Bylaws

15.1 By Shareholders. Bylaws may be adopted, amended or repealed by the approval of the affirmative vote of a majority of the outstanding shares of the corporation entitled to vote.

15.2 By the Board of Directors. Subject to the right of shareholders to adopt, amend or repeal Bylaws, other then a By-Law or amendment thereof changing the authorized number of directors, the Bylaws may be adopted, amended or repealed by the Board of Directors. A By-Law adopted by the shareholders may restrict or eliminate the power of the Board of Directors to adopt, amend or repeal any or all Bylaws.

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Certificate of Secretary

The undersigned certifies that the undersigned is the Secretary of Shea Financial Services, Inc., a California corporation, that the above Bylaws were duly adopted as such by the Board of Directors of said corporation; and that the above Bylaws are in full force and effect on the date of this certificate.

Dated: November 7, 2002.

James G. Shontere, Vice President & Secretary

EX-3.25

Exhibit 3.25

RESTATED CERTIFICATE OF INCORPORATION

OF

UDC HOMES, INC.

The undersigned, Richard C. Kraemer, certifies that he is the President and Chief Executive Officer of UDC Homes, Inc. a corporation organized and existing under the laws of Delaware (the “Corporation”), and hereby further certifies as follows:

1. The name of the Corporation is UDC Homes, Inc.

2. The name under which the Corporation was originally incorporated was “UDC Homes, Inc.,” and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 11, 1992.

3. Pursuant to Sections 242, 245 and 303 of the General Corporation Law of the State of Delaware and the order, dated October 3, 1995, confirming the Second Amended Reorganization Plan of UDC Homes, Inc., as modified, of the United States Bankruptcy Court for the District of Delaware which has jurisdiction over the Corporation in a case under Chapter 11 of Title 11 of the united States Code which commenced on May 17, 1995, this Restated Certificate of Incorporation amends, restates and integrates the provisions of the Restated Certificate of Incorporation of the Corporation.

4. The text of the Restated Certificate of Incorporation as heretofore amended or supplemented is hereby further amended and restated to read as follows:

FIRST: The name of the Corporation is UDC Homes, Inc. (hereinafter the “Corporation”).

SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may now or hereafter be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the “GCL”).

FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 1,000 shares of common stock, par value $.01 per share (the “Common Stock”), and 1,000 shares of preferred stock, par value $.01 per share (the “Preferred Stock”).

Shares of the Preferred Stock of the Corporation may be issued from time to time in one or more classes or series, each of which class or series shall have such distinctive designation or title as shall be fixed by the Board of Directors of the Corporation (the “Board of Directors”) prior to the issuance of any shares thereof. Each such class or series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class of series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it, all in accordance with the laws of the State of Delaware.

Notwithstanding the foregoing, the Corporation shall not issue any non-voting equity securities.

FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation and of the powers of the Corporation and of its directors and stockholders:

(1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(2) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation.

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(3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide.

(4) No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article SIXTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

(5) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.

SIXTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.

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SEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

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IN WITNESS WHEREOF, UDC Homes, Inc. has caused its corporate seal to be hereunto affixed and this Restated Certificate of Incorporation to be signed by Richard C. Kraemer, its President and Chief Executive Officer, this 14^th day of November, 1995.

UDC HOMES, INC.
By:
	Richard C. Kraemer
	President and Chief Executive Officer

[Seal]

5

STATE OF DELAWARE

CERTIFICATE OF AMENDMENT

OF RESTATED CERTIFICATE OF INCORPORATION

UDC Homes, Inc, a corporation organized and existing under the General Corporation Law of the State of Delaware, CERTIFIES;

FIRST: That resolutions were duly adopted by a Unanimous Written Consent of the Directors of the Corporation duly adopting the proposed amendment of the Certificate of Incorporation. The resolution setting forth the proposed amendments is as follows:

RESOLVED, that the Restated Certificate of Incorporation of this corporation be amended by changing the Article numbered “FIRST” so that, as amended, the First Article shall read as follows:

The name of the Corporation is Shea Homes, Inc. (referred to as the “Corporation”).

SECOND: That subsequently, the sole shareholder of the corporation approved the proposed amendment of the Certificate of Incorporation.

THIRD: That the amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

FOURTH: That the capital of the Corporation shall not be reduced under or by reason of the amendment.

IN WITNESS WHEREOF, UDC Homes, Inc. has caused this certificate to be signed by James G. Shontere, an Authorized Officer, this 7th day of August 1998.

By:
Title: Secretary

CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE

AND OF REGISTERED AGENT

It is hereby certified that:

1. The name of the corporation (hereinafter called the “Corporation”) is SHEA HOMES, INC.

2. The registered office of the Corporation within the State of Delaware is hereby changed to 9 East Loockerman Street, Suite IB, City of Dover 19901, County of Kent.

3. The registered agent of the Corporation within the State of Delaware is hereby changed to National Registered Agents, Inc., the business office of which is identical with the registered office of the corporation as hereby changed.

4. The Corporation has authorized the changes hereinbefore set forth by resolution of its Board of Directors.

Executed on Jan 8, 2003.

Max B. Johnson, Vice President

CERTIFICATE OF RESTORATION AND REVIVAL OF

CERTIFICATE OF INCORPORATION

OF

SHEA HOMES, INC.

SHEA HOMES, INC. (hereinafter called the “corporation”), a corporation organized under the laws of Delaware, the Certificate of Incorporation which was voided for failure to file annual reports in 2006 and 2007, now desires to procure a restoration, renewal and revival of its Certificate of lncorporation, and hereby certifies as follows:

1. The name of the corporation is SHEA HOMES, INC.

2. The address of the registered office of the corporation in the State of Delaware and the name of the registered agent at such address are as follows: National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent.

3. The date of filing the corporation’s original Certificate of Incorporation in the State of Delaware was on February 11, 1992.

4. The corporation hereby procures a restoration and revival of its certificate of incorporation, which became inoperative by law on February 29, 2008, pursuant to the General Corporation Law of the State of Delaware.

5. The certificate of incorporation of the corporation, which provides for and will continue to provide for, perpetual duration, shall, upon the filing of this Certificate of Restoration and Revival of the Certificate of Incorporation in the Department of State of the State of Delaware, be restored and revived and shall become fully operative on March 1, 2008.

6. This Certificate of Restoration and Revival of the Certificate of lncorporation is filed by authority of the duly elected directors as prescribed by Section 312 of the General Corporation Law of the State of Delaware.

Executed on this 20th day of March 8, 2008

Ronald L. Lakey, Vice President

EX-3.26

Exhibit 3.26

AMENDED AND RESTATED

BY-LAWS

OF

SHEA HOMES, INC.

(A DELAWARE CORPORATION)

TABLE OF CONTENTS

		Page
ARTICLE I
OFFICES
Section 1.01.	Registered Office		1
Section 1.02.	Other Offices		1
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.01.	Time and Place		1
Section 2.02.	Annual Meeting		1
Section 2.03.	Notice of Annual Meeting		1
Section 2.04.	Special Meeting		1
Section 2.05.	Notice of Special Meeting		2
Section 2.06.	Quorum		2
Section 2.07.	Voting		2
Section 2.08.	Proxies		2
Section 2.09.	Action Without Meeting		2
ARTICLE III
DIRECTORS
Section 3.01.	Number of Directors		2
Section 3.02.	Vacancies and Newly Created Directorships ,		3
Section 3.03.	Powers		3
Section 3.04.	Place of Meetings		3
Section 3.05.	Annual Meeting		3
Section 3.06.	Regular Meetings		3
Section 3.07.	Special Meetings		3
Section 3.08.	Committees		3
Section 3.09.	Quorum		4
Section 3.10.	Action Without Meeting		4
Section 3.11.	Telephonic Meetings		4
Section 3.12.	Compensation of Directors		4
Section 3.13.	Removal of Directors		4

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ARTICLE IV

NOTICES

Section 4.01.	Form of Notice	4
Section 4.02.	Waiver	5

ARTICLE V

OFFICERS

Section 5.01.	In General	5
Section 5.02.	Election	5
Section 5.03.	Other Officers and Agents	5
Section 5.04.	Compensation of Officers and Agents	5
Section 5.05.	Term of Office and Removal	5
Section 5.06.	Powers and Duties	5
ARTICLE VI
CERTIFICATES FOR SHARES
Section 6.01.	Form of Certificates	6
Section 6.02.	Facsimile Signatures	6
Section 6.03.	Lost Certificates	6
Section 6.04.	Registration of Transfers	6

ARTICLE VII

GENERAL PROVISIONS

Section 7.01.	Dividends	6
Section 7.02.	Reserves	7
Section 7.03.	Checks	7
Section 7.04.	Fiscal Year	7
Section 7.05.	Seal	7
Section 7.06.	Indemnification	7

ARTICLE VIII

AMENDMENTS

Section 8.01.  Amendments 7

ii

*  *  *  *  *

AMENDED AND RESTATED

BY-LAWS (“By-Laws”)

*  *  *  *  *

ARTICLE I

OFFICES

Section 1.01. Offices. The Corporation may have offices at such places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETING OF STOCKHOLDERS

Section 2.01. Time and Place. All meetings of the stockholders of the Corporation shall be held on such date and at such time and place, within or without the State of Delaware and within or without the United States of America, as shall be designated from time to time by the Board of Directors and as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2.02. Annual Meeting. An Annual Meeting of the stockholders shall be held on such date and at such time and place, within or without the State of Delaware and within or without the United States of America, as shall be designated from time to time by the Board of Directors.

Section 2.03. Notice of Annual Meeting. Written notice of the Annual Meeting stating the place, date and hour of the meeting shall be given personally or by mail to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.

Section 2.04. Special Meeting. Special Meetings of the stockholders, for any purpose or purposes unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the President and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of

stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

Section 2.05. Notice of Special Meeting. Written notice of a Special Meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting.

Section 2.06. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation.

Section 2.07. Voting. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question.

Section 2.08. Proxies. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

Section 2.09. Action Without Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any Annual or Special Meeting of stockholders of the Corporation, or any action which may be taken at any Annual or Special Meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

ARTICLE III

DIRECTORS

Section 3.01. Number of Directors. The Board of Directors of the Corporation shall initially consist of four persons until such number is modified as determined by resolution of the Board of Directors or the stockholders at the Annual Meeting or any Special Meeting called for such purpose. The Directors shall be elected at the Annual Meeting of the stockholders, except as provided in Section 3.02 of this Article, and each Director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders.

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Section 3.02. Vacancies and Newly Created Directorships. Vacancies and newly created Directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the directors then in the office, even if less than a quorum, or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, or until such Directors’ earlier death, resignation or removal. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute unless the stockholders act by unanimous consent.

Section 3.03. Powers. The business of the Corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.

Section 3.04. Place of Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 3.05. Annual Meeting. The first Annual Meeting of each newly elected Board of Directors shall be held without further notice immediately following the Annual Meeting of stockholders, and at the same place, unless by the unanimous consent of the newly elected Directors such time and place shall be changed.

Section 3.06. Regular Meetings. Regular Meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board.

Section 3.07. Special Meetings. Special Meetings of the Board may be called by the Chairman of the Board or by the President on two (2) days notice to each Director, either personally, by mail, telex, telecopy, or telegram; Special Meetings shall be called by the Chairman of the Board, the President or Secretary in like manner and on like notice on the written request of two Directors.

Section 3.08. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the Directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or

3

disqualified member. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required.

Section 3.09. Quorum. At all meetings of the Board or any committee thereof the presence of a majority of the authorized number of Directors or members of such committee shall constitute a quorum for the transaction of business and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors or the committee, except as may be otherwise specifically provided by statute, the Certificate of Incorporation, these By-Laws or a duly approved resolution of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 3.10. Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting, if the members of the Board or committee, as the case may be, consent thereto in writing.

Section 3.11. Telephonic Meetings. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, members of the Board of Directors or any committee may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

Section 3.12. Compensation of Directors. No compensation shall be paid to Directors as such, for their services, but by resolution of the Board, a fixed sum and expenses for actual attendance may be authorized for attendance at each Regular or Special Meeting of the Board. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor.

Section 3.13. Removal of Directors. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any Director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of Directors.

ARTICLE IV

NOTICES

Section 4.01. Form of Notice. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these By-Laws, notice is required to be

4

given to any Director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, telegram, telex, or telecopy addressed to such Director or stockholder, at his address as it appears on the records of the Corporation, such notice to be deemed given at the time when the same shall be dispatched.

Section 4.02. Waiver. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

ARTICLE V

OFFICERS

Section 5.01. In General. The Officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. The Board of Directors may also choose one or more Vice Presidents, and one or more Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person, unless the statutes, Certificate of Incorporation or these By-Laws otherwise provide.

Section 5.02. Election. The Board of Directors at its first meeting after each Annual Meeting of stockholders shall choose a President, a Secretary and a Treasurer.

Section 5.03. Other Officers and Agents. The Board may also elect or appoint such other officers and agents as it may deem necessary or advisable, such officers and agents to serve for such terms and to exercise such powers and perform such duties as shall be determined at any time or from time to time by the Board.

Section 5.04. Compensation of Officers and Agents. Except as otherwise provided by these By-Laws, the compensation of all Officers and agents of the Corporation shall be fixed by the Board.

Section 5.05. Term of Office and Removal. Each Officer of the Corporation shall hold office for such term as may be prescribed by the Board and until a successor is elected and qualified, or until such Officer’s earlier death, resignation or removal. Any Officer elected or appointed by the Board may be removed by the Board at any time, with or without cause. The election or appointment of an officer shall not of itself create contract rights.

Section 5.06. Powers and Duties. (a) The Officers of the Corporation shall each have such powers and authority and perform such duties in the management of the property and affairs of the Corporation as from time to time may be prescribed by the Board and, to the extent not so prescribed, they shall each have such powers and authority and perform such duties in the management of the affairs and property of the Corporation, subject to the control of the Board, as generally pertain to their respective offices.

5

(b) Securities of other corporations held by the Corporation may be voted by any officer designated by the Board and, in the absence of any such designation, by the President, any Vice President, the Secretary or the Treasurer.

ARTICLE VI

CERTIFICATES FOR SHARES

Section 6.01. Form of Certificates. The certificates for stock of the Corporation shall be in such form as shall be determined by the Board. Certificates shall be signed by, or in the name of the Corporation by, the President or a Vice-President and by the Secretary or an Assistant Secretary, of the Corporation, and shall be sealed with the seal of the Corporation or a facsimile thereof.

Section 6.02. Facsimile Signatures. Any or all of the signatures on a certificate may be by facsimile. In case any Officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such Officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such individual were such Officer, transfer agent or registrar at the date of issue.

Section 6.03. Lost Certificates. The Board of Directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 6.04. Registration of Transfers. Stock of the Corporation shall be transferable only upon the books of the Corporation by the person specified by the certificate representing such stock, the person specified by special endorsement to be entitled to such stock, or the duly authorized attorney or legal representative of either such person.

ARTICLE VII

GENERAL PROVISIONS

Section 7.01. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any Regular or Special Meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

6

Section 7.02. Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Directors shall think conducive to the interest of the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.

Section 7.03. Checks. All checks or demands for money and notes of the Corporation shall be signed by any such Officer or Officers or such other person or persons as the Board of Directors may from time to time designate.

Section 7.04. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 7.05. Seal. The Corporate Seal shall have inscribed thereon the name of the Corporation and the year of its organization. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 7.06. Indemnification. The Corporation shall indemnify its past, present and future Officers, directors, employees and agents to the full extent permitted by the General Corporation Law of Delaware. The Corporation may purchase and maintain a policy of Directors and Officers liability insurance in such amount and subject to such conditions as the Board of Directors approves by resolution.

ARTICLE VIII

AMENDMENTS

Section 8 01. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors, as permitted by the Certificate of Incorporation, (a) at any Regular Meeting of the stockholders or of the Board of Directors or (b) at any Special Meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such Special Meeting.

*    *    *

7

WRITTEN CONSENT OF

MAJORITY SHAREHOLDERS OF

SHEA HOMES, INC.

FEBRUARY 15, 2005

THE UNDERSIGNED, being the majority shareholders entitled to vote for SHEA HOMES, INC. a Delaware corporation (the “Corporation”) in accordance the bylaws of the undersigned and the laws governing said Corporation, do hereby consent to the adoption of the following resolution:

WHEREAS, there has been presented to and considered a form of amendment to the Bylaws to this Corporation (the “Bylaw Amendment”) attached hereto as Exhibit “A”; and

WHEREAS, the Bylaw Amendment increases the number of Corporation’s directors from at least four (4) to not more than nine (9); and

NOW, THERFORE, BE IT RESOLVED, that the proposed Bylaw Amendment be, and it hereby is, adopted and approved.

RESOLVED FURTHER, that the Secretary of this Corporation is hereby instructed to certify to the adoption and approval of the Bylaw amendment and to insert a copy of the Bylaws Amendment in this Corporation’s minute book.

Dated and effected as of Friday, February 15, 2005

Shea Homes Limited Partnership (Sole Shareholder)

By: J.F. Shea Co., Inc.

Its: General Partner

By:
	James G. Shontere
Its:	Secretary

EXHIBIT “A”

AMENDMENT TO

BYLAWS

OF

SHEA HOMES, INC.

The Bylaws (the “Bylaws”) of SHEA HOMES, INC. a Delaware corporation (the “Corporation”), are amended as follows:

Article III the Bylaws regarding Directors is hereby replaced in its entirety to read as follows:

“Section 3.01 Number of Directors. The Board of Directors of the Corporation shall consist of at least four (4) and not more than nine (9) until such number is modified as determined by resolution of the Board of Directors or the stockholders at the Annual Meeting or any Special Meeting called for such purpose. The Directors shall be elected at the Annual Meeting of the stockholders, except as provided in Section 3.02 of this Article, and each Director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders.”

EX-3.27

Exhibit 3.27

2712019 out

			LLC-1A	File # 200836510031
	LIMITED LIABILITY COMPANY ARTICLES OF ORGANIZATION - CONVERSION
	IMPORTANT — Read all instructions before completing this form.			This Space For Filing Use Only
CONVERTED ENTITY INFORMATION
1.	NAME OF LIMITED LIABILITY COMPANY (End the name with the words “Limited Liability Company,” or the abbreviations “LLC” or “L.L.C.” The words “Limited and “Company” may be abbreviated to “Ltd.” And “Co.” respectively.) SHEA HOMES AT MONTAGE, LLC
2.	THE PURPOSE OF THE LIMITED LIABILITY COMPANY IS TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY FOR WHICH A LIMITED LIABILITY COMPANY MAY BE ORGANIZED UNDER THE BEVERLY-KILLEA LIMITED LIABILITY COMPANY ACT.
3.	THE LIMITED LIABILITY COMPANY WILL BE MANAGED BY (Check only one)
	¨ ONE MANAGER	x MORE THAN ONE MANAGER		¨  ALL LIMITED LIABILITY COMPANY MEMBER(S)
4.	MAILING ADDRESS OF THE CHIEF EXECUTIVE OFFICE			CITY	STATE	ZIP CODE
	655 Brea Canyon Road			Walnut	CA	91761
5.	NAME OF AGENT FOR SERVICE OF PROCESS (Item 5: Enter the name of the agent for service of process. The agent may be an individual residing in California or a corporation that has filed a certificate pursuant to California Corporations Code section 1505. Item 6: If the agent is an individual, enter the agent’s business or residential address in California. Item 7: If the converting entity is a California limited partnership, enter the mailing address of the individual or corporate agent. Check the box and omit the mailing address if the agent’s mailing address is the same as the address in Item6.) Max B. Johnson
6.	IF AN INDIVIDUAL, ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CA			CITY	STATE	ZIP CODE
	655 Brea Canyon Road			Walnut	CA	91761
7.	MAILING ADDRESS OF AGENT FOR SERVICE OF PROCESS			CITY	STATE	ZIP CODE
	¨       THE MAILING ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IS THE SAME AS THE AGENT’S BUSINESS OR RESIDENTIAL ADDRESS IN ITEM 6.
CONVERTING ENTITY INFORMATION
8.	NAME OF CONVERTING ENTITY Shea Homes at Montage, Inc.
9.	FORM OF ENTITY	10. JURISDICTION		11.    CA SECRETARY OF STATE FILE NUMBER, IF ANY
	Corporation	California		C2712019
12.	THE PRINCIPAL TERMS OF THE PLAN OF CONVERSION WERE APPROVED BY A VOTE OF THE NUMBER OF INTERESTS OR SHARES OF EACH CLASS THAT EQUALED OR EXCEEDED THE VOTE REQUIRED. IF A VOTE WAS REQUIRED, PROVIDE THE FOLLOWING FOR EACH CLASS:
	STATE THE CLASS AND NUMBER OF OUTSTANDING INTERESTS ENTITLED TO VOTE			AND	THE PERCENTAGE VOTE REQUIRED OF EACH CLASS
	1,000,000 Common Shares				51%
ADDITIONAL INFORMATION
13.	ADDITIONAL INFORMATION SET FORTH ON THE ATTACHED PAGES, IF ANY, IS INCORPORATED HEREIN BY THIS REFERENCE AND MADE A PART OF THIS CERTIFICATE.
14.	I CERTIFY UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT OF MY OWN KNOWLEDGE, I DECLARE I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
	December 22, 2008
	DATE
				PETER O. SHEA, JR. EXECUTIVE VICE PRESIDENT
	SIGNATURE OF AUTHORIZED PERSON			TYPE OR PRINT NAME AND TITLE OF AUTHORIZED PERSON
				JAMES G. SHONTERE, SECRETARY
	SIGNATURE OF AUTHORIZED PERSON			TYPE OR PRINT NAME AND TITLE OF AUTHORIZED PERSON
LLC-1A (REV 01/2008)				APPROVED BY SECRETARY OF STATE

EX-3.28

Exhibit 3.28

OPERATING AGREEMENT

OF

SHEA HOMES AT MONTAGE, LLC,

a California Limited Liability Company

TABLE OF CONTENTS

			Page
SECTION 1. DEFINITIONS				1
	1.1	Capitalized Terms		1
	1.2	Other Terms		9
SECTION 2. FORMATION OF THE LIMITED LIABILITY COMPANY				9
	2.1	Formation		9
	2.2	Name		9
	2.3	Purpose; Powers		9
	2.4	Principal Place of Business		10
	2.5	Term		10
	2.6	Title to Assets		10
	2.7	Payments of Individual Obligations		10
	2.8	Independent Activities; Transactions with Affiliates		10
	2.9	Filings; Agent for Service of Process		11
SECTION 3. CAPITAL CONTRIBUTIONS				12
	3.1	Initial Capital Contribution		12
	3.2	Additional Contributions		12
	3.3	Other Matters		12
SECTION 4. ALLOCATIONS				13
	4.1	Profits and Losses		13
	4.2	Special Allocations		13
	4.3	Curative Allocations		15
	4.4	Loss Limitation		15
	4.5	Other Allocation Rules		15
	4.6	Tax Allocations: Code Section 704(c)		16
SECTION 5. DISTRIBUTIONS				16
	5.1	Amounts Distributed		16
	5.2	Amounts Withheld		16
	5.3	Limitations on Distributions		17
	5.4	Distributions and Payments to the Member		17
SECTION 6. EXECUTIVE COMMITTEE				17
	6.1	Authority of the Executive Committee		17
	6.2	Composition and Election of the Executive Committee; Decisions		18
	6.3	Meetings of the Executive Committee		18
	6.4	Duties and Obligations of the Executive Committee		18
	6.5	Major Decisions		19
	6.6	Appointment of Administrator		19
	6.7	“Authorized Person” under the Act		20
SECTION 7. OFFICERS; ADMINISTRATOR				20
	7.1	Designation; Qualifications		20
	7.2	Removal and Resignation		20
	7.3	Vacancies		20
	7.4	Compensation		20
	7.5	Conflicting Authority		21
	7.6	Execution of Documents; Reliance by Third Parties		21

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SECTION 8. ROLE OF THE MEMBERS			21
	8.1	Rights or Powers	21
	8.2	Voting Rights	21
	8.3	Meetings and Consents of the Members	21
	8.4	Standard for Vote or Consent	22
	8.5	Withdrawal/Resignation	22
	8.6	Member Compensation	22
	8.7	Indemnification	22
	8.8	Members’ Liability	23
	8.9	Partition	23
	8.10	Transactions Between a Member and the Company	23
	8.11	Other Instruments	24
SECTION 9. REPRESENTATIONS AND WARRANTIES			24
SECTION 10. ACCOUNTING, BOOKS, AND RECORDS			24
	10.1	Accounting, Books, and Records	24
	10.2	Tax Matters	25
SECTION 11. TRANSFERS			26
	11.1	Restrictions on Transfers	26
	11.2	Permitted Transfers	26
	11.3	Conditions to Permitted Transfers	26
	11.4	Prohibited Transfers	27
	11.5	Rights of Unadmitted Assignees	27
	11.6	Admission of Substituted Members	27
	11.7	Distributions and Allocations in Respect of Transferred Member Interests	28
SECTION 12. DISSOLUTION AND WINDING UP			28
	12.1	Liquidating Events	28
	12.2	Winding Up	29
	12.3	Compliance With Certain Requirements of Regulations; Deficit Capital Accounts	30
	12.4	Deemed Contribution and Distribution	31
	12.5	Rights of Members	31
	12.6	Notice of Dissolution	31
	12.7	Allocations and Distributions During Period of Liquidation	31
	12.8	Character of Liquidating Distributions	32
	12.9	The Liquidator	32
	12.10	Mark-to-Market Methodology	32
SECTION 13. MISCELLANEOUS PROVISIONS			33
	13.1	Notices	33
	13.2	Amendment	33
	13.3	Binding Effect	33
	13.4	Construction	34
	13.5	Time	34
	13.6	Headings	34
	13.7	Severability	34
	13.8	Governing Law	34
	13.9	Consent to Jurisdiction	34
	13.10	WAIVER OF JURY TRIAL	35

ii

13.11	Entire Agreement	35
13.12	No Third-Party Beneficiaries	35
13.13	Counterpart Execution	35

iii

OPERATING AGREEMENT

OF

SHEA HOMES AT MONTAGE, LLC

This OPERATING AGREEMENT of Shea Homes at Montage, LLC a California limited liability company (the “Company”), is entered into and shall be effective as of the 30^th day of December, 2008 (as further amended, supplemented or otherwise modified and in effect from time to time, this “Agreement”), by and among the parties listed on Schedule 3.1 attached hereto, pursuant to the provisions of the Act (as defined below), on the following terms and conditions:

SECTION 1.

DEFINITIONS

1.1 Capitalized Terms.

For all purposes of this Agreement, the following terms shall have the meanings set forth below:

“Act” means the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California, as amended from time to time (or any corresponding provisions of succeeding law).

“Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Allocation Year, after giving effect to the following adjustments:

(i) Credit to such Capital Account any amounts that such Member is deemed obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(l) and 1.704-2(i)(5); and

(ii) Debit to such Capital Account the items described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5), and 1.704-l(b)(2)(ii)(d)(6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently with such Section.

“Administrator” has the meaning set forth in Section 6.6.

“Affiliate” means, with respect to any specified Person, (i) any Person directly or indirectly controlling, controlled by, or under common control with such specified Person, (ii) any Person directly or indirectly owning or controlling 10% or more of the outstanding voting interests or other ownership interests of such specified Person, (iii) any Person 10% of the outstanding voting stock or other ownership interests of which is directly or indirectly owned or controlled by such specified Person, or (iv) any Person who is an officer, director, general

partner, member or trustee of, or Person serving in a similar capacity with respect to, such specified Person, or who holds 10% or more of the voting interests or other ownership interests of any Person described in clauses (i), (ii) or (iii) of this sentence. For purposes of this definition, the terms “controlling”, “controlled by,” or “under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person or entity, whether through the ownership of voting securities, by contract, or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Allocation Year” means (i) the period commencing on the date of this Agreement and ending on December 31, 2008, (ii) any subsequent 12-month period commencing on January 1 and ending on December 31, or (iii) any portion of the period described in clauses (i) or (ii) for which the Company is required to allocate Profits, Losses, and other items of Company income, gain, loss, or deduction pursuant to Section 4 of this Agreement.

“Bankruptcy” means, with respect to any Person, a “Voluntary Bankruptcy” or an “Involuntary Bankruptcy.” A “Voluntary Bankruptcy” means, with respect to any Person (i) the inability of such Person generally to pay its debts as such debts become due, or an admission in writing by such Person of its inability to pay its debts generally or a general assignment by such Person for the benefit of creditors, (ii) the filing of any petition or answer by such Person seeking to adjudicate itself as bankrupt or insolvent, or seeking for itself any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of such Person or its debts under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors, or seeking, consenting to, or acquiescing in the entry of an order for relief or the appointment of a receiver, trustee, custodian, or other similar official for such Person or for any substantial part of its property, or (iii) action taken by such Person to authorize any of the actions set forth above. An “Involuntary Bankruptcy” means, with respect to any Person, without the consent or acquiescence of such Person, the entering of an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or other similar relief under any present or future bankruptcy, insolvency, or similar statute, law, or regulation, or the filing of any such petition against such Person, which petition shall not be dismissed within 90 days, or without the consent or acquiescence of such Person, the entering of an order appointing a trustee, custodian, receiver, or liquidator of such Person or of all or any substantial part of the property of such Person, which order shall not be dismissed within 90 days. The foregoing is intended to supersede and replace the events listed in Sections 18-101 and 18-304 of the Act.

“Business Day” means any day that is not a Saturday, a Sunday or a legal holiday or a day on which banking institutions located in Los Angeles, California are authorized or obligated by law to close.

“Capital Account” means, with respect to any Member of the Company, the Capital Account maintained for such Member in accordance with the following provisions:

(i) To each Member’s Capital Account there shall be credited (A) such Member’s Capital Contributions and (B) such Member’s distributive share of Profits and any items in the nature of income or gain that are specially allocated to such Interest pursuant to Sections 4.2 or 4.3:

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(ii) To each Member’s Capital Account there shall be debited (A) the amount of cash and the Gross Asset Value of any Company Property distributed to such Member pursuant to any provision of this Agreement and (B) such Member’s distributive share of Losses and any items in the nature of expenses or losses which are specially allocated to such Interest pursuant to Sections 4.2 or 4.3; and

(iii) In the event an Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred Interest.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-l (b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the Executive Committee shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto are computed in order to comply with such Regulations, the Executive Committee may make such modification. The Executive Committee also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the aggregate Capital Accounts of the Members and the amount of capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-l(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-l(b). In determining the amount of any liability for purposes of subparagraphs (i) and (ii) there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

“Capital Contributions” means, with respect to any Member of the Company, the amount of cash and the initial Gross Asset Value of any asset (other than cash) contributed to the Company by such Member.

“Certificate” means the Articles of Organization - Conversion filed on December 30, 2008 with the Secretary of State of the State of California pursuant to the Act to form the Company, as originally executed and as amended, modified, supplemented, or restated from time-to-time, as the context requires.

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time or any successor legislation.

“Company” has the meaning set forth in the preamble.

“Company Minimum Gain” has the same meaning as “partnership minimum gain” set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

“Damages” means, without duplication, claims, demands, damages, costs, and expenses (including reasonable fees and disbursements of counsel), liabilities or obligations of any nature, liens, losses, fines, penalties, charges and administrative, judicial and arbitration awards, judgments, settlement payments, and deficiencies or other charges.

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“Debt” means, with respect to any Person, (i) any indebtedness of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments; (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services which are recorded as liabilities under GAAP; (v) all obligations of such Person as lessee under leases of any property which, in conformity with GAAP, are required to be capitalized on the balance sheet of such Person; (vi) all Debt of other Persons guaranteed by such Person to the extent so guaranteed, either directly or indirectly; including, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (x) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (y) entered into for purposes of assuring in any other manner the payment to the obligee of such Debt or other obligation or to protect such obligee against loss in respect of the Debt or other obligation, in whole or in part; provided that the term “guarantee” does not include endorsements for collection or deposit in the ordinary course of business; (vii) all Debt of other Persons secured by a lien, security interest or other encumbrance on any asset of such Person, whether or not such Debt is assumed by such Person; and (viii) all obligations of such Person under (x) any interest rate swap agreement, interest rate cap agreement or other agreement designed to protect against fluctuations in interest rates or (y) any foreign exchange forward contract, currency swap agreement or other agreement designed to protect against fluctuations in foreign exchange rates or (z) any commodity or raw material futures contract or any other agreement designed to protect against fluctuations in raw material prices.

“Depreciation” means, for each Allocation Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Allocation Year for federal income tax purposes, except that, with respect to any asset whose Gross Asset Value differs from its adjusted tax basis for federal income tax purposes at the beginning of such Allocation Year, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Allocation Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Allocation Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Executive Committee.

“Executive Committee” means the management committee described in Section 6.

“Expenses” means any and all costs, obligations, losses, Damages, penalties, interest, Taxes, claims (including negligence, strict or absolute liability, liability in tort and any other liabilities arising out of violation of laws or regulatory requirements of any kind), actions, suits, costs, expenses, and disbursements (including reasonable legal fees and expenses).

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“Fiscal Year” means the year the Executive Committee determines unless otherwise determined pursuant to the requirements of the Code.

“GAAP’ means generally accepted accounting principles in the United States in effect from time to time.

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(i) The initial Gross Asset Value of any Property contributed by a Member to the Company shall be the gross fair market value of such asset as determined by the Executive Committee in its commercially reasonable judgment; provided that the initial Gross Asset Values of the Property contributed to the Company pursuant to Section 3.1 shall be as set forth in such Section;

(ii) The Gross Asset Values of all items of Property shall be adjusted to equal their respective gross fair market values (taking Code Section 770 l(g) into account) as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution, (B) the distribution by the Company to a Member of more than a de minimis amount of Property as consideration for an interest in the Company, and (C) the liquidation of the Company within the meaning of Regulations Section 1.704-1 (b)(2)(ii)(g); provided that an adjustment described in clauses (A) and (B) of this subparagraph shall be made only if the Executive Committee reasonably determines that such adjustment is necessary to reflect the relative economic interests of the Members in the Company;

(iii) The Gross Asset Value of any item of Property distributed to any Member shall be adjusted to equal the gross fair market value (taking Code Section 770l (g) into account) of such item on the date of distribution; and

(iv) The Gross Asset Values of each item of Property shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Sections 734(b) or 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-l(b)(2)(iv)(m)and subparagraph (vi) of the definition of “Profits” and “Losses”; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the extent that an adjustment pursuant to subparagraph (ii) is required in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (iv).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraph (i), (ii) or (iv), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset, for purposes of computing Profits and Losses.

“Indemnitee” has the meaning set forth in Section 8.7(a).

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“Interest” means any interest in the Company representing the Capital Contributions made by a Member or its predecessors in interest, including any and all benefits to which the holder of such an interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. Such Interests include, individually or collectively, the membership interests issued to the Members. Each Interest and a certificate, if any, representing such Interest shall constitute a “security” within the meaning of (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15)) as in effect from time to time in the States of California, and (ii) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws (as amended in 1999 by the American Law Institute and the National Conference of Commissioners on Uniform State Laws). California law shall constitute the local law of the Company’s jurisdiction in its capacity as issuer of the Interests.

“Investment Company Act” means the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.

“Issuance Items” has the meaning set forth in Section 4.2(h).

“Liquidating Event” has the meaning set forth in Section 12.1 (a).

“Liquidator” has the meaning set forth in Section 12.9.

“Material Adverse Effect” means, with respect to any Person, any change in or effect on the business of such Person or any of its Affiliates that is (i) materially adverse to the business, operations, properties, or financial condition of such Person and its subsidiaries taken as a whole or (ii) materially adverse to the ability of such Person or any of its Affiliates to perform its obligations under this Agreement.

“Member” or “Members” means (i) the Members signatory to this Agreement and (ii) any Person who has become a substituted Member pursuant to the terms of this Agreement, who, in each case, has not ceased to be a Member. A Member is a “member” of the Company for purposes of the Act.

“Member Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” set forth in Regulations Section 1.704-2(b)(4).

“Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

“Member Nonrecourse Deductions” has the same meaning as the term “partner nonrecourse deductions” set forth in Regulations Sections 1.704-2(i)(l) and 1.704-2(i)(2).

“Nonrecourse Deductions” has the meaning set forth in Regulations Sections 1.704-2(b)(l) and l.704-2(c).

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“Nonrecourse Liability” has the meaning set forth in Regulations Section 1.704-2(b)(3).

“Officer” means an officer of the Company, as appointed pursuant to Section 7.1.

“Percentage Interest” means, with respect to any Member, as of any date, the ratio (expressed as a percentage) of the balance in such Member’s Capital Account on such date to the aggregate balances in the Capital Accounts of all Members on such date, such balances to be determined after giving effect to all contributions, distributions, and allocations for all periods ending on or prior to such date. In the event that any Interest is Transferred in accordance with the provisions of this Agreement, the transferee of such Interest shall succeed to the Percentage Interest of his transferor to the extent it relates to the Transferred Interest.

“Permitted Transfer” has the meaning set forth in Section 11.2(b).

“Permitted Transferee” has the meaning set forth in Section 11.2(b).

“Person” means any individual, partnership (whether general or limited), limited liability company, corporation, trust, estate, association, nominee, or other entity.

“President” means the president of the Company, as appointed pursuant to Section 7.1.

“Profits” and “Losses” mean, for each Allocation Year, an amount equal to the Company’s taxable income or loss for such Allocation Year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(l) shall be included in taxable income or loss), with the following adjustments (without duplication):

(i) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition of “Profits” and “Losses” shall be added to such taxable income or loss;

(ii) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-l(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this definition of “Profits” and “Losses” shall be subtracted from such taxable income or loss;

(iii) In the event the Gross Asset Value of any items of Company Property is adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Gross Asset Value, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of the item of Property) or an item of loss (if the adjustment decreases the Gross Asset Value of the item of Property) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses;

(iv) Gain or loss resulting from any disposition of any Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the item of Property disposed of, notwithstanding that the adjusted tax basis of such Property differs from its Gross Asset Value;

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(v) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Allocation Year, computed in accordance with the definition of “Depreciation”;

(vi) To the extent an adjustment to the adjusted tax basis of any item of a Company Property pursuant to Code Section 734(b) is required, pursuant to Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the item of Property) or loss (if the adjustment decreases such basis) from the disposition of such item of Property and shall be taken into account for purposes of computing Profits or Losses; and

(vii) Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to Sections 4.2 or 4.3 of this Agreement shall not be taken into account in computing Profits or Losses.

The amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Sections 4.2 and 4.3 of this Agreement shall be determined by applying rules analogous to those set forth in subparagraphs (i) through (vii) above.

“Property” means all real and personal property acquired by the Company, including cash, and any improvements thereto, and shall include both tangible and intangible property.

“Reconstitution Period” has the meaning set forth in Section 12.1(b).

“Regulations” means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations are amended from time to time.

“Regulatory Allocations” has the meaning set forth in Section 4.3.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Tax Matters Member” has the meaning set forth in Section 10.2.

“Transfer” means, as a noun, any voluntary or involuntary transfer, sale, any instrument that seeks to transfer an economic interest, and any other disposition, and, except when used in reference to any Interest, any hypothecation, pledge or other encumbrance, and, as a verb, voluntarily or involuntarily to transfer, sell, enter into any instrument that seeks to transfer an economic interest, or otherwise dispose of, and, except when used in reference to any Interest, to hypothecate, pledge or otherwise encumber.

“Voluntary Bankruptcy” has the meaning set forth in the definition of “Bankruptcy.”

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1.2 Other Terms.

Unless the context shall require otherwise:

(a) Words importing the singular number or plural number shall include the plural number and singular number respectively;

(b) Words importing the masculine gender shall include the feminine and neuter genders and vice versa; and

(c) Reference to “include,” “includes,” and “including” shall be deemed to be followed by the phrase “without limitation.”

SECTION 2.

FORMATION OF THE LIMITED LIABILITY COMPANY

2.1 Formation.

The Members hereby agree to form the Company as a limited liability company under and pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. The fact that the Certificate is on file in the office of the Secretary of State of the State of California shall constitute notice that the Company is a limited liability company. Simultaneously with the execution of this Agreement, each of the Members shall be admitted as members of the Company. The rights and liabilities of the Members shall be as provided under the Act, the Certificate and this Agreement.

2.2 Name.

The name of the Company shall be “Shea Homes at Montage, LLC” and all business of the Company shall be conducted in such name or, with the approval of the Executive Committee, under any other name.

2.3 Purpose; Powers.

(a) The purposes of the Company are:

(i) to acquire and to own, hold, vote, manage, protect, conserve, assign, sell or otherwise dispose of, the Company’s Property, all in accordance with this Agreement, including that certain residential project presently known as “Shea Homes at Montage”;

(ii) to receive and, subject to Section 5, distribute to the Members (A) the proceeds of any sale, lease, license, loan, or any other disposition of the Company’s Property received by the Company or (B) any other distributions or payments received by the Company;

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(iii) to do such other things and engage in any other activities which the Executive Committee determines to be necessary, appropriate, proper, advisable, incidental or convenient to and in furtherance of the foregoing purposes.

(b) The Company has the power to do any and all acts necessary, appropriate, proper, advisable, incidental or convenient to and in furtherance of the purposes of the Company set forth in this Section 2.3.

2.4 Principal Place of Business.

The principal place of business of the Company shall be at 655 Brea Canyon Road, Walnut, CA 91789. The Executive Committee may change the principal place of business of the Company to any other place within or without the State of California. The initial registered office of the Company in the State of California is at 655 Brea Canyon Road, Walnut, California 91789.

2.5 Term.

This Agreement shall be effective as of the date it is fully executed by the Members. The term of the Company shall continue until the Company is dissolved in accordance with the Act and this Agreement. The existence of the Company as a separate legal entity and this Agreement shall continue until the cancellation of the Certificate in accordance with the Act.

2.6 Title to Assets.

All Property owned by the Company shall be owned by the Company as an entity and no Member shall have any ownership interest in such assets in its individual name. Each Member’s Interest in the Company shall be personal property for all purposes. The Company shall hold title to all of its assets in the name of the Company and not in the name of any Member.

2.7 Payments of Individual Obligations.

The Company’s credit and assets shall be used solely for the benefit of the Company, and no asset of the Company shall be Transferred in satisfaction of, or encumbered for, or in payment of, any individual obligation of any Member.

2.8 Independent Activities; Transactions with Affiliates.

(a) Each member of the Executive Committee shall use his best efforts to devote such time to the affairs of the Company as he determines, in his sole discretion, to be necessary to manage and operate the Company, and shall be free to serve any other Person in any capacity that it may deem appropriate in its discretion.

(b) Insofar as permitted by applicable law, neither this Agreement nor any activity undertaken pursuant hereto shall prevent any Member or its Affiliates from engaging in whatever activities they choose, whether the same are competitive with the Company or otherwise, and any such activities may be undertaken without having or incurring any obligation to offer any interest in such activities to the Company or any Member, or require any Member to permit the

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Company or any other Member or its Affiliates to participate in any such activities, and as a material part of the consideration for the execution of this Agreement by each Member, each Member hereby waives, relinquishes, and renounces any such right or claim of participation.

(c) To the extent permitted by applicable law, and subject to the provisions of this Agreement, in furtherance of the purposes of the Company set forth in Section 2.3, the Executive Committee is hereby authorized to cause the Company to purchase, lease, and license Property (whether real, personal or mixed) from, and sell, lease, and license Property to, any Member, acting on its own behalf, or any Affiliate of any Member; provided that any such purchase, sale, lease, or license or other transaction shall be made on terms and conditions that are no less favorable to the Company than if the sale, purchase, or other transaction had been made with an unaffiliated third party.

2.9 Filings; Agent for Service of Process.

(a) On December 30, 2008, the Certificate was filed in the office of the Secretary of State of the State of California by an authorized person within the meaning of, and otherwise in accordance with, the Act. The Executive Committee shall take any and all other actions reasonably necessary to perfect and maintain the status of the Company as a limited liability company under the laws of the State of California, including the preparation, execution, and filing of such amendments to the Certificate and such other assumed name certificates, documents, instruments, and publications as may be required by law, including action to reflect:

(i) A change in the Company name;

(ii) A correction of false or erroneous statements in the Certificate or the desire of the Members to make a change in any statement in the Certificate in order that it shall accurately represent the agreement among the Members; or

(iii) A change in the time for dissolution of the Company as stated in the Certificate and in this Agreement.

(b) The Executive Committee shall execute and cause to be filed original or amended certificates and shall take any and all other actions as may be reasonably necessary to perfect and maintain the status of the Company as a limited liability company or similar type of entity under the laws of any other jurisdictions in which the Company engages in business.

(c) The registered agent for service of process on the Company in the State of California shall be Paul Mosley or any successor as appointed by the Members in accordance with the Act.

(d) Upon the dissolution and completion of the winding up of the Company in accordance with Section 12, the Liquidator, as an authorized person within the meaning of the Act, shall promptly execute and cause to be filed a Certificate of Dissolution in accordance with Section 17356 of the Act and the laws of any other jurisdictions in which the Liquidator deems such filing or any similar filing to be necessary or advisable.

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SECTION 3.

CAPITAL CONTRIBUTIONS

3.1 Initial Capital Contribution.

The name, address, and initial Percentage Interest of each Member are as set forth on Schedule 3.1 attached hereto. The initial Capital Account of each Member shall be equal to the capital account such Member held in Shea Homes at Montage, Inc. immediately prior to the filing of the Certificate.

3.2 Additional Contributions.

The Executive Committee may call for additional capital from the Members, as and when determined by the Executive Committee in its sole discretion (the “Additional Capital Contribution”). Each Member shall contribute its Percentage Interest of the Additional Capital Contribution in readily available funds within ten (10) Business Days days after receipt of the call for contributions. If any Member fails to make an Additional Capital Contribution within the 10-Business Day period, the Executive Committee may send a written delinquency notice to that Member (the “Delinquency Notice”). The failure of the Member to make the Additional Capital Contribution within five (5) Business Days after receipt of the Delinquency Notice shall be a failure to contribute for purposes of Section 3.3.

3.3 Failure to Contribute. No Member shall any obligation to contribute its Percentage Interest of an Additional Capital Contribution. However, if a Member fails to contribute its Percentage Interest of any Additional Capital Contribution within five (5) Business Days after receipt of a Delinquency Notice, then the Executive Committee may send a second notice to all Members who did contribute their Percentage Interest of the Additional Capital Contribution (the “Second Notice”) setting forth the amount of the Additional Capital Contribution that remain outstanding and allowing such Members the right to contribute a portion of the outstanding Additional Capital Contribution. All Members who desire to contribute a portion of the outstanding Additional Capital Contribution shall provide written notice to the Executive Committee of their desire to contribute within five (5) Business Days of receipt of the Second Notice and the Executive Committee shall divide the outstanding Additional Capital Contribution equally among all Members who have so elected by making a new call for capital to just those Members in the amount of the outstanding Additional Capital Contribution. Following receipt of the Additional Capital Contribution, the Percentage Interests of the Members shall be adjusted to reflect all contributions of capital, including the Additional Capital Contribution. The right of Members to contribute a portion of another Members’ Percentage Interest of an Additional Capital Contribution, in the manner set forth in this Section 3.3, shall be the sole remedy of the Company and the Members against a Member who fails to timely contribute its Percentage Interest of an Additional Capital Contribution.

3.4 Other Matters.

(a) Except as otherwise provided in Section 12 or in the Act, no Member shall demand or receive a return of such Member’s Capital Contributions or withdraw from the

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Company without the consent of the Executive Committee. Under circumstances requiring a return of any Capital Contributions, no Member shall have the right to receive property other than cash, except as may be specifically provided in this Agreement.

(b) No Member shall receive any interest or draw with respect to its Capital Contributions or its Capital Account, except as otherwise provided in this Agreement.

(c) The Members shall not be liable for the debts, liabilities, contracts or any other obligations of the Company. Except as otherwise provided by mandatory provisions of applicable state law, no Member shall be liable to make any Capital Contribution beyond the initial Capital Contribution set forth on Schedule 3.1 and no Members shall be required to lend any funds to the Company or, after its Capital Contribution has been made, to make any additional Capital Contributions to the Company. No Member shall have any personal liability for the repayment of any Capital Contributions of any other Member.

SECTION 4.

ALLOCATIONS

4.1 Profits and Losses.

After giving effect to the special allocations set forth in Sections 4.2 and 4.3, Profits and Losses for any Allocation Year shall be allocated to the Members in accordance with their Percentage Interests.

4.2 Special Allocations.

The following special allocations shall be made in the following order:

(a) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding any other provision of this Section 4, if there is a net decrease in Company Minimum Gain during any Allocation Year, each Member shall be specially allocated items of Company income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Regulations Section 1.704- 2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4.2(a) is intended to comply with the minimum gain chargeback requirement in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

(b) Member Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(i)(4), notwithstanding any other provision of this Section 4, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Allocation Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such Allocation Year (and, if necessary, subsequent Allocation

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Years) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 4.2 (b) is intended to comply with the minimum gain chargeback requirement in Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(c) Qualified Income Offset. In the event that any Member unexpectedly receives any adjustments, allocations, or distributions described in Regulations Sections 1.704- l(b)(2)(ii)(d)(4), 1.704-1 (b)(2)(ii)(d)(5), or 1.704-1 (b)(2)(ii)(d)(6), items of Company income and gain shall be allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible; provided that an allocation pursuant to this Section 4.2(c) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 4 have been tentatively made as if this Section 4.2(c) were not in this Agreement.

(d) Gross Income Allocation. In the event that any Member has an Adjusted Capital Account Deficit at the end of any Allocation Year that is in excess of the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(l) and 1.704-2(i)(5), each such Member shall be allocated items of Company income and gain in the amount of such deficit as quickly as possible; provided that an allocation pursuant to this Section 4.2(d) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit in excess of such amount after all other allocations provided for in this Section 4 have been tentatively made as if Section 4.2(c) and this Section 4.2(d) were not in this Agreement.

(e) Nonrecourse Deductions. Nonrecourse Deductions for any Allocation Year shall be specially allocated among the Members in proportion to their Percentage Interests.

(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Allocation Year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i)(l).

(g) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m)(2) or 1.704-l(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s Interest, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company in the event Regulations Section 1.704-l(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Regulations Section 1.704-l(b)(2)(iv)(m)(4) applies.

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(h) Allocations Relating to Taxable Issuance of Interests. Any income, gain, loss, or deduction realized as a direct or indirect result of the issuance of an Interest by the Company to a Member other than pursuant to Section 707(a)(2) of the Code (the “Issuance Items”) shall be allocated among the Members so that, to the extent possible, the net amount of such Issuance Items, together with all other allocations under this Agreement to each Member shall be equal to the net amount that would have been allocated to each such Member if the Issuance Items had not been realized.

4.3 Curative Allocations.

The allocations set forth in Sections 4.2(a), 4.2(b), 4.2(c), 4.2(d), 4.2(e), 4.2(f) and 4.2(g) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Regulations. It is the intent of the Members that, to the extent possible, the Regulatory Allocations shall be offset either with special allocations of other items of Company income, gain, loss, or deduction pursuant to this Section 4.3. Therefore, notwithstanding any other provision of this Section 4 (other than the Regulatory Allocations), the Executive Committee shall make such offsetting special allocations of Company income, gain, loss, or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of this Agreement and all Company items were allocated pursuant to Sections 4.1 and 4.2 (other than the Regulatory Allocations).

4.4 Loss Limitation

Losses allocated to any Member pursuant to Section 4.1 shall not exceed the maximum amount of Losses that can be allocated without causing such Member to have an Adjusted Capital Account Deficit at the end of any Allocation Year.

4.5 Other Allocation Rules.

(a) Profits, Losses, and any other items of income, gain, loss, or deduction shall be allocated to the Members pursuant to this Section 4 as of the last day of each Allocation Year; provided that Profits, Losses, and such other items shall also be allocated at such times as are required by Section 11.7 and at such other times as the Gross Asset Values of the Company’s assets are adjusted as set forth in Section 12.10.

(b) For purposes of determining the Profits, Losses, or any other items allocable to any period, Profits, Losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Executive Committee (except to the extent otherwise provided in Section 11.7) using any permissible method under Code Section 706 and the Regulations thereunder.

(c) The Members are aware of the income tax consequences of the allocations made by this Section 4 and hereby agree to be bound by the provisions of this Section 4 in reporting their shares of Company income and loss for income tax purposes, except as otherwise required by law.

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(d) Solely for purposes of determining a Member’s proportionate share of the “excess nonrecourse liabilities” of the Company within the meaning of Regulations Section 1.752-3(a)(3), the Members’ interest in the Company’s Profits are in proportion to their Percentage Interests.

4.6 Tax Allocations: Code Section 704(c).

In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any Property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such Property to the Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of Gross Asset Value).

In the event the Gross Asset Value of any Property is adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value, subsequent allocations of income, gain, loss, and deduction with respect to such Property shall take account of any variation between the adjusted basis of such Property for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the Regulations thereunder.

Any elections or other decisions relating to such allocations shall be made by the Executive Committee in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 4.6 are solely for purposes of federal, state, and local Taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses, other items, or distributions pursuant to any provision of this Agreement.

SECTION 5.

DISTRIBUTIONS

5.1 Amounts Distributed.

(a) Except as otherwise provided in Section 5.1(b) and Section 12, the Executive Committee shall cause the Company to distribute cash at such time as the Executive Committee shall determine to the Members in accordance with their respective Percentage Interests.

(b) Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to a Member on account of such Member’s Interests in the Company if such distribution would (i) violate the Act or other applicable law, (ii) constitute an event of default under any loan or revolving credit agreement to which the Company or any Affiliate is a party or a guarantor or (iii) cause such Member to have an Adjusted Capital Account Deficit.

5.2 Amounts Withheld.

All amounts withheld pursuant to the Code or any provision of any state, local, or foreign tax law with respect to any payment, distribution, or allocation to the Company or the Members shall be treated as amounts paid or distributed, as the case may be, to the Members with respect

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to which such amount was withheld pursuant to this Section 5.2 for all purposes under this Agreement. The Company is authorized to withhold from payments and distributions, or with respect to allocations, to the Members, and to pay over to any federal, state, local or foreign government, any amounts required to be so withheld pursuant to the Code or any provisions of any other federal, state, local or foreign law, and shall allocate any such amounts to the Members with respect to which such amount was withheld.

5.3 Limitations on Distributions.

The Company shall make no distributions to the Members except (i) as provided in this Section 5 and Section 12, or (ii) to the extent not inconsistent with this Section 5 and Section 12, as approved by the Executive Committee.

5.4 Distributions and Payments to the Member.

It is the intent of the Members that no distribution or payment to any Member (including distributions under Sections 5.1 and 12.2) shall be deemed a return of money or other property in violation of the Act. The payment or distribution of any such money or property to a Member shall be deemed to be a compromise within the meaning of Section 17201(b) of the Act, and the Member receiving any such money or property shall not be required to return any such money or property to the Company, any creditor of the Company or any other Person, except as required by the Act. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to return such money or property, such obligation shall be the obligation of such Member and not of any other Member. Any amounts required to be paid under such obligation shall be treated as a permitted additional Capital Contribution and shall not require the approval of the Executive Committee.

SECTION 6.

EXECUTIVE COMMITTEE

6.1 Authority of the Executive Committee.

The Members acknowledge that the Company shall be managed by or under the direction of an Executive Committee, in accordance with Section 17151 of the Act. Subject to any restrictions set forth in the Certificate, this Agreement or the Act, all powers to control and manage the business and affairs of the Company and to bind the Company shall be exclusively vested in the Executive Committee, and the Executive Committee may exercise all powers of the Company and do all such lawful acts not inconsistent with the foregoing. In exercising its powers, the Executive Committee shall have the right and authority to take all actions that it deems necessary, useful or appropriate for the management and conduct of the Company’s business and affairs and in the pursuit of the purposes of the Company, including delegating the right and authority to take such actions to the Administrator and such Officers as are designated by the Executive Committee. The Executive Committee, in addition to the Administrator, shall be considered a manager for purposes of the Act.

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6.2 Composition and Election of the Executive Committee; Decisions.

The Executive Committee shall consist of 5 Members, each to be elected by the affirmative vote of the Members holding a majority of the Percentage Interests. The initial members of the Executive Committee shall be Edmund H. Shea, Jr., Ronald L. Lakey, Peter O. Shea, Jr., Peter O. Shea and John F. Shea. Any member of the Executive Committee may be removed as such, with or without cause, by the affirmative vote of the Members holding a majority of the Percentage Interests.

6.3 Meetings of the Executive Committee.

(a) Meetings of the members of the Executive Committee may be called upon the request of any Member or any member of the Executive Committee. Members of the Executive Committee may vote in person, by proxy or by telephone at such meeting and may waive advance notice of such meeting. Each member of the Executive Committee shall have one vote. The vote or consent of 3 of the 5 members of the Executive Committee shall be required to constitute the act of the Executive Committee. Meetings may be conducted, in whole or in part, by telephone. Meetings are not required and the Executive Committee may conduct its business informally.

(b) The Executive Committee may act without a meeting and without a vote if at least 3 members consent to the proposed action in writing or by electronic transmission.

(c) Each member of the Executive Committee may authorize any Person or Persons to act for him on all matters in which he is entitled to participate, including voting at or participating in a meeting of the Executive Committee or consenting to actions of the Executive Committee as provided in Section 6.3(b). An Executive Committee member’s authorization of his representative shall be delivered to the other members of the Executive Committee in writing or by electronic transmission. The Executive Committee member may revoke the authority of his representative or appoint another representative at his sole discretion by the same means.

(d) Each meeting of the Executive Committee shall be conducted by such individual as the Executive Committee deems appropriate, pursuant to such rules for the conduct of the meeting as the Executive Committee or such individual deems appropriate.

6.4 Duties and Obligations of the Executive Committee.

(a) The Executive Committee, by its own action or through the Officers or the Administrator, shall take all actions that may be necessary or appropriate for the (i) continuation of the Company’s valid existence as a limited liability company under the laws of the State of California and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Members or to enable the Company to conduct the business in which it is engaged, (ii) accomplishment of the Company’s purposes, including the acquisition, development, maintenance, preservation and operation of Property in accordance with the provisions of this Agreement and applicable laws and regulations, (iii) provision or arrangement for all of the Company’s management, reporting, financial, legal, tax and other services, and (iv) availability of the books and records of the Company for the Members’ inspection.

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(b) The Executive Committee shall be under a fiduciary duty to conduct the affairs of the Company in the best interests of the Company and of the Members, including the safekeeping and use of all of the Property for the exclusive benefit of the Company.

6.5 Major Decisions.

Notwithstanding any other provision of this Agreement, only the Executive Committee, shall have the authority to authorize and approve the following acts with regard to the Company:

(a) any transfer or assignment of rights in the Company’s Property for other than a Company purpose;

(b) the incurrence, assumption, or other liability for any Debt or the creation of any liens on the Property of the Company other than (i) expenditures in the ordinary course of business, (ii) capital expenditures that are consistent with the Company’s strategic business plans and (iii) additional capital expenditures not in excess of $1,000,000;

(c) any loan or other advance of money to any Person or any guarantee of obligations of any Person in excess of $100,000 per occurrence and $1,000,000 in the aggregate;

(d) any act of Voluntary Bankruptcy;

(e) any distribution to any Member of any Property, other than as provided in this Agreement;

(f) any merger, consolidation, or sale of all or substantially all of the Company’s Property;

(g) the admission of any Member other than in accordance with Section 11;

(h) discretionary distributions to the Members;

(i) any change in the Company’s independent accountants;

(j) an adoption of or change in a significant tax or accounting practice or principle of the Company, any significant tax or accounting election, or the adoption of any position for purposes of any tax return that will have a Material Adverse Effect on any Member (unless the making of such election is expressly contemplated by this Agreement); or

(k) a change in the Company’s Fiscal Year.

6.6 Appointment of Administrator.

The Executive Committee shall have the authority, exercisable in its discretion, to hire a third party (the “Administrator”) to provide such services and management to the Company as the Executive Committee deems necessary or convenient, and authorize the Administrator to perform. The services may include management, reporting, financial, legal, tax and other services. The Administrator shall perform the services pursuant to a written contract, which will

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contain such terms and conditions as the Executive Committee deems appropriate. The Administrator may be an Affiliate of a Member. The Administrator shall report directly to the President of the Company, if such officer has been appointed, and ultimately to the Executive Committee. The Administrator, in addition to the Executive Committee, shall be considered a manager for purposes of the Act.

6.7 “Authorized Person” under the Act.

Each member of the Executive Committee and the Administrator shall be an “authorized person” to file with the California Secretary of State certificates and other documents on behalf of the Company, as required or permitted by the Act.

SECTION 7.

OFFICERS; ADMINISTRATOR

7.1 Designation; Qualifications.

The Executive Committee may, from time to time, designate one or more individuals to be officers of the Company (the “Officers”). The Officers of the Company shall include a President (the “President”) and may include such other officers as the Executive Committee or the President may, from time to time, deem necessary. Any Officer so designated shall have all authority necessary to implement the decisions of the Executive Committee, and such further authority as the Executive Committee may deem necessary or convenient to delegate to him or her. Any Person may hold any number of offices. No Officer need be a Member, a California resident or a United States citizen.

7.2 Removal and Resignation.

Any Officer may be removed as such, with or without cause, by the Executive Committee or the President, at any time. Any Officer may resign as such at any time upon written notice to the Executive Committee or the President. Such resignation shall be made in writing and shall take effect at the time specified or, if no time is specified, at the time of its receipt by the Executive Committee or the President.

7.3 Vacancies.

Any vacancy occurring in any office of the Company may be filled by the Executive Committee or the President.

7.4 Compensation.

The compensation, if any, of the officers of the Company shall be fixed from time to time by the Executive Committee.

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7.5 Conflicting Authority.

When in this Agreement the Executive Committee, the Administrator, the President, an Officer or any other Person are each given the right to act, the right of the Administrator, the President, such Officer or Person to act shall at all times be subject to the right, but not the obligation, of the Executive Committee to approve the act. If the acts of the Administrator, the President, the Officer or Person and the Executive Committee should conflict, the act of the Executive Committee shall govern. If the acts of the President, the Officer or Person and the Administrator should conflict, the act of the Administrator shall govern.

7.6 Execution of Documents; Reliance by Third Parties.

The execution of any document shall be authorized in accordance with the preceding provisions and the document may be signed by any two of the members of: the Executive Committee and/or the Officers. The preceding sentence notwithstanding, any third party may rely upon any document signed by any two of the members of the Executive Committee and/or the Officers as duly authorized and binding on the Company without any duty of inquiry.

SECTION 8.

ROLE OF THE MEMBERS

8.1 Rights or Powers.

The Members, in their capacities as members of the Company, hereby agree not to exercise any right or power to take part in the management or control of the Company or its business and affairs, except as set forth in this Agreement, the Certificate or the Act, and shall not have any right or power to act for or bind the Company in any way. Without limiting the generality of the foregoing, the Members, in such capacities, have all of the rights and powers specifically set forth in this Agreement and, to the extent not inconsistent with this Agreement, in the Act.

8.2 Voting Rights.

No Member has any voting right except with respect to those matters specifically reserved for a Member vote which are set forth in this Agreement and as required in the Act.

8.3 Meetings and Consents of the Members.

(a) Meetings of the Members may be called by the Executive Committee or upon the written request of any Member. Members may vote in person, by proxy or by telephone at such meeting and may waive advance notice of such meeting. The affirmative vote of the Members holding a majority of the Percentage Interests shall be required to constitute the act of the Members. Meetings may be conducted, in whole or in part, by telephone.

(b) The Members may act without a meeting and without a vote if Members holding a majority of the Percentage Interests consent to the proposed action in writing or by electronic transmission.

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(c) For the purpose of determining the Members entitled to vote on, or to vote at, any meeting of the Members or any adjournment, the Executive Committee or the Member requesting such meeting may fix in advance a date as the record date for any such determination.

(d) Each Member may authorize any Person or Persons to act for it on all matters in which it is entitled to participate, including voting at or participating in a meeting of the Members or consenting to actions of the Members as provided in Section 8.3(b). A Member’s authorization of its representative may be delivered to the other Members in writing or by electronic transmission. The Member may revoke the authority of its representative or appoint another representative in its sole discretion by the same means.

(e) Each meeting of Members shall be conducted by such individual as the Members deem appropriate, pursuant to such rules for the conduct of the meeting as the Executive Committee, the Members or such individual deem appropriate.

8.4 Standard for Vote or Consent.

In any circumstances requiring the agreement, approval, or consent of the Members specified in this Agreement, such agreement, approval, or consent may, except where a standard for such agreement, approval, or consent is provided for expressly in this Agreement and notwithstanding any provisions of law or in equity to the contrary, be given or withheld in the sole and absolute discretion of the Members, and each Member shall be entitled to consider only such factors and interests as it desires, including its own interests, and shall have, to the fullest extent permitted by applicable law, no duty or obligation to give any consideration to any interest of or factors affecting the Company or any other Person.

8.5 Withdrawal/Resignation.

Except as otherwise provided in Sections 5 and 12, no Member shall demand or receive a return on or of its Capital Contributions or withdraw or resign from the Company without the approval of the Executive Committee. If any Member resigns or withdraws from the Company in breach of this Section 8.5, such resigning or withdrawing Member shall not be entitled to receive any distribution under this Agreement. Under circumstances requiring a return of any Capital Contribution, no Member has the right to receive any Company asset other than cash, except as may be specifically provided in this Agreement.

8.6 Member Compensation.

No Member shall receive any salary or draw with respect to its Capital Contributions or its Capital Account or for services rendered on behalf of the Company, or otherwise, in its capacity as a Member (for the avoidance of doubt, it being understood that a return of capital or distribution pursuant to Sections 3.4(a) or 5 shall not be deemed a salary or draw).

8.7 Indemnification.

(a) Subject to Section 8.7(b), the Company, its receiver or its trustee (in the case of its receiver or trustee, to the extent of Property) shall indemnify, save harmless, and pay all Expenses of each member of the Executive Committee, each Member, each Officer, and any

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members, managers, partners, stockholders, officers, directors, employees, agents, successors or assigns of any member of the Executive Committee or any Member (each, an “Indemnitee”) relating to any Damages incurred by reason of any act performed or omitted to be performed by such Indemnitee in connection with the business of the Company, including attorneys’ fees incurred by such Indemnitee, in connection with the defense of any action based on any such act or omission, which attorneys’ fees may be paid as incurred, and including all Damages arising under federal and state securities laws (including the Securities Act).

(b) Section 8.7(a) shall be enforced only to the maximum extent permitted by law. No Indemnitee shall be indemnified from any liability for its own fraud, bad faith, willful misconduct, gross negligence, or breach of any representation, warranty or covenant of such Indemnitee in this Agreement.

8.8 Members’ Liability.

(a) Except as otherwise provided in this Agreement and by applicable law, no Member shall be personally liable under a judgment, decree, or order of a court, or in any other manner for any other obligations or liabilities of the Company solely by reason of being a Member. A Member shall be liable only to make its Capital Contribution pursuant to Section 3.1 and shall not be required to restore a deficit balance in its Capital Account (other than pursuant to Section 12.3), to lend any funds to the Company or, after its Capital Contribution has been made pursuant to Section 3.1, to make any additional contributions, assessments, or payments to the Company; provided that a Member may be required to repay distributions made to it as provided in the Act.

(b) Notwithstanding anything to the contrary in this Agreement, in no event will any indemnification obligation of the Company or a receiver or trustee to indemnify, save harmless, or pay all Expenses set forth in Section 8.7 subject any Member to personal liability.

8.9 Partition.

While the Company remains in effect or is continued, each Member agrees not to have any Property partitioned or file a complaint or institute any suit, action, or proceeding at law or in equity to have any Property partitioned, and each Member, on behalf of itself, its successors, and its assigns hereby waives any such right.

8.10 Transactions Between a Member and the Company.

(a) Except as otherwise provided by applicable law, any Member may, but shall not be obligated to, transact business with the Company or an Affiliate of the Company, and shall have the same rights and obligations when transacting such business with the Company or Affiliate as a Person who is not a Member. An employee, stockholder, agent, director, manager or officer of a Member or an Affiliate of a Member may also be an employee or a manager of the Company.

(b) No Member shall, or shall permit its Affiliates to, guarantee any Debts or other liabilities of the Company or become obligated on or hold itself out as being obligated or available to satisfy any Debts or other liabilities of the Company, except as approved by the Executive Committee.

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8.11 Other Instruments.

Each Member hereby agrees to execute and deliver to the Company within five (5) Business Days after receipt of a written request therefor, such other and further documents and instruments, statements of interest and holdings, designations, powers of attorney, and other instruments and to take such other action as the Executive Committee reasonably deems necessary, useful, or appropriate to comply with any laws, rules, or regulations to enable the Company to fulfill its responsibilities under this Agreement.

SECTION 9.

REPRESENTATIONS AND WARRANTIES

As of the date of this Agreement, each of the Members hereby represents and warrants as to itself only, as follows. Such representations and warranties shall survive the execution of this Agreement.

(a) Investment Company Act; Public Utility Holding Company Act. Such Member is not an “investment company,” nor, as a result of the Member’s ownership of its Interests, is the Company an “investment company,” within the meaning of the Investment Company Act, as amended. Such Member is not a “holding company,” “an affiliate of a holding company” or a “subsidiary of a holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act.

(b) Investigation; Intent. Such Member is acquiring its Interest based upon its own investigation, and the exercise by such Member of its rights and the performance of its obligations under this Agreement will be based upon its own investigation, analysis and expertise. Such Member’s acquisition of its Interest is being made for its own account for investment, and not with a view to the sale or distribution thereof.

SECTION 10.

ACCOUNTING, BOOKS, AND RECORDS

10.1 Accounting, Books, and Records.

(a) The Company shall keep on site at its principal place of business each of the following:

(i) Separate books of account for the Company which shall show a true and accurate record in United States dollars of all costs and Expenses incurred, all charges made, all credits made and received, and all income derived in connection with the conduct of the Company and the operation of its business, all in accordance with GAAP;

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(ii) Separate books of account that reflect the Capital Accounts of the Members as maintained pursuant to the provisions of this Agreement;

(iii) A current list of the full name and last known business, residence, or mailing address of each Member;

(iv) A copy of the Certificate, this Agreement and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any of the foregoing has been executed;

(v) Complete information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each Member and which each Member has agreed to contribute in the future, and the date on which each became a Member;

(vi) A copy of the Company’s federal, state, and local income tax returns and reports, if any, for each year;

(vii) The minute book of the Executive Committee, including any written consents in lieu of a meeting; and

(viii) A record of the actions of the Members, including any written consents in lieu of a meeting.

(b) Any Member or its designated representative has the right at its own cost and expense, upon reasonable notice, to have access to and inspect and copy the contents of the books or records of the Company and to make inquiries with regard to the contents of the books or records. The Company shall be reimbursed by such Member for reasonable costs incurred as a result of such inspection.

(c) The books of account and records of the Company shall be audited as of the end of each Fiscal Year by a nationally recognized independent certified public accounting firm designated from time to time by the Executive Committee.

10.2 Tax Matters.

Ronald L. Lakey is specifically authorized to act as the “Tax Matters Member” under the Code and in any similar capacity under state or local law. The Tax Matters Member shall have the authority, without any further consent of the Members, to make any and all elections for federal, state, local, and foreign tax purposes, including any election, if permitted by applicable law: (i) to make the election provided for in Code Section 6231(a)(l)(B)(ii); (ii) to adjust the basis of the Company’s assets pursuant to Code Sections 754, 734(b), and 743(b), or comparable provisions of state, local, or foreign law, in connection with Transfers of Interests and Company distributions; (iii) to extend the statute of limitations for assessment of tax deficiencies against the Members with respect to adjustments to the Company’s federal, state, local, or foreign tax returns; and (iv) to the extent provided in Code Sections 6221 through 6231 and similar provisions of federal, state, local, or foreign law, to represent the Company and the Members before taxing authorities or courts of competent jurisdiction in tax matters affecting the Company

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or the Members in their capacities as Members and to file any tax returns and execute any agreements or other documents relating to or affecting such tax matters, including agreements or other documents that bind the Members with respect to such tax matters or otherwise affect the rights of the Company and the Members.

SECTION 11.

TRANSFERS

11.1 Restrictions on Transfers.

Except as otherwise permitted by this Agreement, no Member shall Transfer, hypothecate, pledge, or otherwise encumber all or any portion of its Interest.

11.2 Permitted Transfers.

(a) Subject to the conditions and restrictions set forth in Section 11.3, any Member may at any time pledge or Transfer all or any portion of its Interest to any Person approved in advance by the Executive Committee.

(b) Any Transfer permitted by this Section 11.2 shall be referred to in this Agreement as a “Permitted Transfer,” and the Person to whom the Interest is transferred shall be a “Permitted Transferee.”

11.3 Conditions to Permitted Transfers.

A Transfer shall not be treated as a Permitted Transfer under Section 11.2 unless and until the following conditions are satisfied:

(a) The transferor and transferee shall execute and deliver to the Company such documents and instruments of conveyance, including such representations, warranties and certifications as the Company may reasonably request, as may be necessary or appropriate to effect such Transfer and to confirm the agreement of the transferee to be bound by the provisions of this Agreement;

(b) The Transfer will not cause the Company to terminate its partnership status for federal income tax purposes, and the transferor shall provide the Company an opinion of counsel to such effect if the Company reasonably requests. Such counsel and opinion shall be reasonably satisfactory to the Executive Committee, and the Members shall provide to such counsel any information available to the Members and relevant to such opinion;

(c) The transferor and transferee shall furnish the Company with the transferee’s taxpayer identification number, sufficient information to determine the transferee’s initial tax basis in the Interest Transferred, and any other information reasonably necessary to permit the Company to file all required federal and state tax returns and other legally required information statements or returns. Without limiting the generality of the foregoing, the Company shall not be required to make any distribution otherwise provided for in this Agreement with respect to any Transferred Interest until it has received such information;

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(d) Such Transfer will be exempt from all applicable federal securities registration requirements and will not violate any applicable laws regulating the Transfer of securities; and

(e) Such Transfer will not cause the Company to be deemed to be an “investment company” or to be controlled by an “investment company” under the Investment Company Act, and the transferor shall provide an opinion of counsel to such effect if the Company reasonably requests. Such counsel and opinion shall be reasonably satisfactory to the Executive Committee, and the Members shall provide to such counsel any information available to the Members and relevant to such opinion.

11.4 Prohibited Transfers.

(a) Any purported Transfer of an Interest that is not a Permitted Transfer shall be null and void and of no force or effect whatever; provided that, if the Company is required by a court of competent jurisdiction to recognize a Transfer that is not a Permitted Transfer, the rights with respect to the Transferred Interest shall be strictly limited to the transferor’s rights to allocations and distributions as provided by this Agreement with respect to the Transferred Interest, which allocations and distributions may be applied (without limiting any other legal or equitable rights of the Company) to satisfy any Debts or liabilities for Damages that the transferor or transferee of such Interest may have to the Company.

(b) In the case of a Transfer or attempted Transfer of an Interest that is not a Permitted Transfer, the parties engaging or attempting to engage in such Transfer shall indemnify and hold harmless the Company and the other Members from all liability and Damages that the Company or any of such indemnified Members may incur (including incremental tax liabilities, lawyers’ fees, and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby.

11.5 Rights of Unadmitted Assignees.

A Person who acquires one or more Interests but who is not admitted as a substituted Member pursuant to Section 11.6 shall be entitled only to allocations and distributions with respect to such Interests in accordance with this Agreement, but shall have no right to any information or accounting of the affairs of the Company, shall not be entitled to inspect the books or records of the Company, and shall not have any of the rights of a Member under the Act or this Agreement.

11.6 Admission of Substituted Members.

Subject to the other provisions of this Section 11, a transferee of Interests may be admitted to the Company as a substituted Member only upon satisfaction of the conditions set forth below in this Section 11.6:

(a) The Interests with respect to which the transferee is being admitted were acquired by means of a Permitted Transfer;

(b) The transferee becomes a party to this Agreement as a Member and executes such documents and instruments as the Executive Committee may reasonably request (including

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amendments to the Certificate) as may be necessary or appropriate to confirm such transferee as a Member in the Company and such transferee’s agreement to be bound by the terms and conditions of this Agreement;

(c) The transferee pays or reimburses the Company for all reasonable legal, filing, and publication costs that the Company incurs in connection with the admission of the transferee as a Member with respect to the Transferred Interests;

(d) The transferee provides the Company with evidence satisfactory to counsel for the Company that such transferee has made representations and warranties equivalent to those contained in Section 9 as of the date of the Transfer; and

(e) In the event that the transferee of an Interest from any Member is admitted under this Agreement, such transferee shall be deemed admitted to the Company as a substituted Member immediately prior to the Transfer.

11.7 Distributions and Allocations in Respect of Transferred Member Interests.

If any Interest is Transferred during any Allocation Year in compliance with the provisions of this Section 11, each item of Profits and Losses, and all other items attributable to the Transferred Interest for such Allocation Year shall be divided and allocated between the transferor and the transferee by taking into account their respective Interests during the Fiscal Year in accordance with Code Section 706(d), using any conventions permitted by law and agreed to by the transferor and transferee. All distributions attributable to periods prior to the date of such Transfer shall be made to the transferor, and all distributions attributable to periods thereafter shall be made to the transferee. Solely for purposes of making such allocations and distributions, the Company shall recognize such Transfer not later than the end of the calendar month during which it is given notice of such Transfer; provided that, if the Company is given notice of a Transfer at least 10 Business Days prior to the Transfer, the Company shall recognize such Transfer as of the date of such Transfer; and provided, further, that if the Company does not receive a notice stating the date such Interest was Transferred and such other information as the Executive Committee may reasonably require within 30 days after the end of the Allocation Year during which the Transfer occurs, then all such items shall be allocated, and all distributions shall be made, to the Person who, according to the books and records of the Company, was the owner of the Interest on the last day of such Allocation Year. Neither the Company nor any other Person shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 11.7, whether or not the Company or such Person has knowledge of any Transfer of ownership of any Interest.

SECTION 12.

DISSOLUTION AND WINDING UP

12.1 Liquidating Events.

(a) The Company shall dissolve and shall commence winding up and liquidating upon the first to occur of any of the following (each, a “Liquidating Event”):

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(i) The Bankruptcy of the Company;

(ii) The unanimous vote or consent of the Members to dissolve, wind up and liquidate the Company;

(iii) At any time there are no Members of the Company, unless the business of the Company is continued in a manner permitted by this Agreement or the Act;

(iv) The happening of any other event which makes it unlawful, impossible or impractical to carry on the business of the Company; and

(v) The entry of a decree of judicial dissolution under Section 17351 of the Act.

The Members hereby agree that, notwithstanding any provision of the Act, the Company shall not dissolve prior to the occurrence of a Liquidating Event.

(b) If it is determined, by a court of competent jurisdiction, that the Company has dissolved prior to the occurrence of a Liquidating Event, then within an additional 90 days after such determination (the “Reconstitution Period”), all of the Members may elect to reconstitute the Company and continue its business on the same terms and conditions set forth in this Agreement by forming a new limited liability company on terms identical to those set forth in this Agreement. Unless such an election is made within the Reconstitution Period, the Company shall dissolve and wind up its affairs in accordance with Section 12.2. If such an election is made within the Reconstitution Period, then:

(i) The reconstituted limited liability company shall continue until the occurrence of a Liquidating Event as provided in Section 12.1 (a);

(ii) Unless otherwise agreed to by all of the Members, the Certificate and this Agreement shall, subject to any requirement under the Act to file a new Certificate, automatically constitute the Certificate and Agreement of such new Company. All of the assets and liabilities of the dissolved Company shall be deemed to have been automatically assigned, assumed, conveyed, and transferred to the new Company. No bond, collateral, assumption, or release of any Member’s or the Company’s liabilities shall be required; provided that the right of the Members to select successor managers and to reconstitute and continue the business of the Company shall not exist and may not be exercised unless the Company has received an opinion of counsel that the exercise of the right would not result in the loss of limited liability of any Member and neither the Company nor the reconstituted limited liability company would cease to be treated as a partnership for federal income tax purposes upon the exercise of such right to continue.

12.2 Winding Up.

Upon the occurrence of a (a) Liquidating Event or (b) the determination by a court of competent jurisdiction that the Company has dissolved prior to the occurrence of a Liquidating Event (unless the Company is reconstituted pursuant to Section 12. (b)), the Company shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its

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Property, and satisfying the claims of its creditors and Members, and no Member shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Company’s business and affairs; provided that, to the extent not inconsistent with the foregoing, all covenants contained in this Agreement and obligations provided for in this Agreement shall continue to be fully binding upon the Members until such time as the Properly has been distributed pursuant to this Section 12.2 and the Certificate has been canceled pursuant to the Act. The Liquidator shall be responsible for overseeing the winding up and dissolution of the Company, which winding up and dissolution shall be completed within 90 days of the occurrence of the Liquidating Event and within 90 days after the last day on which the Company may be reconstituted pursuant to Section 12.1(b). The Liquidator shall take full account of the Company’s liabilities and Property and shall cause the Property or the proceeds from the sale of the Property (as determined pursuant to Section 12.10), to the extent sufficient for this purpose, to be applied and distributed, to the maximum extent permitted by law, in the following order:

(a) First, to creditors in satisfaction of all of the Company’s Debts and other liabilities (whether by payment or the making of reasonable provision for payment to the extent required by the Act), other than the liabilities for distribution to Members under the Act;

(b) Second, to the Members and former Members of the Company in satisfaction of liabilities for distribution under Section 17353(a)(l) of the Act; and

(c) Third, the balance, if any, to the Members in accordance with the positive balance in their Capital Accounts, after giving effect to all contributions, distributions, and allocations for all periods.

No Member shall receive additional compensation for any services performed pursuant to this Section 12.

12.3 Compliance With Certain Requirements of Regulations; Deficit Capital Accounts.

In the event the Company is “liquidated” within the meaning of Regulations Section 1.704-l(b)(2)(ii)(g), distributions shall be made pursuant to this Section 12 to the Members who have positive Capital Accounts in compliance with Regulations Section 1.704-1 (b)(2)(ii)(b)(2). If any Member has a deficit balance in such Member’s Capital Account, determined after debiting and crediting such Member’s Capital Account for all income, gain and loss allocations and distributions occurring prior to dissolution, such Member shall have no obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever. In the discretion of the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Members pursuant to this Section 12 may be:

(a) distributed to a trust established for the benefit of the Members for the purposes of liquidating Company assets, collecting amounts owed to the Company, and paying any contingent or unforeseen liabilities or obligations of the Company. The assets of any such trust shall be distributed to the Members from time to time, in the reasonable discretion of the Liquidator, in the same proportions as the amount distributed to such trust by the Company would otherwise have been distributed to the Members pursuant to Section 12.2; or

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(b) withheld to provide a reasonable reserve for Company liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Company; provided that such withheld amounts shall be distributed to the Members as soon as practicable.

12.4 Deemed Contribution and Distribution.

Notwithstanding any other provision of this Section 12, in the event the Company is liquidated within the meaning of Regulations Section 1.704-l(b)(2)(ii)(g)but no Liquidating Event has occurred, the Property shall not be liquidated, the Company’s liabilities shall not be paid or discharged, and the Company’s affairs shall not be wound up. Instead, solely for federal income tax purposes, the Company shall be deemed to have contributed all its Property and liabilities to a new limited liability company in exchange for an interest in such new company and, immediately thereafter, the Company will be deemed to liquidate by distributing interests in the new company to the Members.

12.5 Rights of Members.

Except as otherwise provided in this Agreement, each Member shall look solely to the assets of the Company for the return of its Capital Contributions. If the assets of the Company remaining after payment or discharge of the Debt of the Company are insufficient to return such Capital Contributions, the Members shall have no recourse against the Company, any member of the Executive Committee or any other Member.

12.6 Notice of Dissolution.

In the event a Liquidating Event occurs or an event occurs that would, but for provisions of Section 12.1, result in a dissolution of the Company, the Executive Committee shall, within 30 days thereafter, provide written notice of such dissolution to each of the Members and to all other parties with whom the Company regularly conducts business (as determined in the discretion of the Executive Committee) and shall publish notice of such dissolution in a newspaper of general circulation in each place in which the Company regularly conducts business (as determined in the discretion of the Executive Committee).

12.7 Allocations and Distributions During Period of Liquidation.

During the period commencing on the first day of the Fiscal Year during which a Liquidating Event occurs and ending on the date on which all of the assets of the Company have been distributed to the Members pursuant to Section 12.2, the Members shall continue to share Profits, Losses, gain, loss, and other items of Company income, gain, loss, or deduction in the manner provided in Section 4, but no distributions shall be made pursuant to Section 5.

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12.8 Character of Liquidating Distributions.

(a) All payments made in liquidation of the Interests of a Member in the Company shall be made in exchange for the Interests of such Member in the Company’s Property pursuant to Code Section 736(b)(l), including the interest of such Member in Company goodwill.

(b) For purposes of making distributions required by Section 12.2, the Liquidator may determine whether to distribute all or any portion of the Property in-kind or to sell all or any portion of such assets and distribute the proceeds therefrom.

12.9 The Liquidator.

(a) The “Liquidator” shall be the Tax Matters Member or any other Person appointed by the Tax Matters Member, unless (i) such liquidation arises as a result of the Bankruptcy of the Tax Matters Member or (ii) final liquidating distributions have not been made by the 90^th day following the date of the Liquidating Event, in which case, the Members may appoint the Liquidator.

(b) The Company is authorized to pay such reasonable compensation to the Liquidator for its services performed pursuant to this Section 12 as shall be agreed upon by the Liquidator and the Executive Committee and to reimburse the Liquidator for its reasonable costs and Expenses incurred in performing those services.

12.10 Mark-to-Market Methodology.

For purposes of determining the amount of any adjustment to the Gross Asset Value of Company assets, the value of each such asset shall be determined in good faith by the Executive Committee; provided that such determination shall be based on the same valuation methodology that was used to determine the Gross Asset Value of such asset at the time such asset was contributed to the Company or, in the case of any asset purchased by the Company, the same valuation methodology used to determine the purchase price of such asset on the date of purchase. If the Members holding a majority of the Percentage Interests do not consent to such determination, then such Gross Asset Value shall be determined by a written appraisal of Houlihan Lokey Howard & Zukin or such other Person similarly qualified to determine the fair market value of such assets, using the same valuation methodology that was used to determine the Gross Asset Value of such assets at the time such assets were contributed to the Company or, in the case of any asset purchased by the Company, the same valuation methodology used to determine the purchase price of such asset on the date of purchase. Where the appraisal process provided by this Section 12.10 is invoked, the parties and the appraisers shall all act promptly and diligently so as to determine the value of the relevant assets in a commercially reasonable period.

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SECTION 13.

MISCELLANEOUS PROVISIONS

13.1 Notices.

Except as expressly set forth to the contrary in this Agreement, all notices, requests, or consents provided for or permitted to be given under this Agreement shall be in writing and shall be given either by depositing such writing in the United States mail, addressed to the recipient, postage paid, and registered or certified with return receipt requested or by delivering such writing to the recipient in person, by courier, or by electronic or facsimile transmission; and a notice, request, or consent given under this Agreement shall be effective on receipt by the Person to whom sent or 3 Business Days after deposit in the United States mail, registered or certified, postage prepaid and properly addressed.

All notices, requests, and consents shall be sent to the following addresses (or such other address as may be specified by notice to the Company):

If to a Member, to it at:

655 Brea Canyon Road

Walnut, CA 91789

Tel: (909) 594-9500

Fax: (909) 869-0849

Attn: Ronald L. Lakey

If to Company, to it at:

655 Brea Canyon Road

Walnut, CA 91789

Tel: (909) 594-0941

Fax: (909) 869-1512

Attn: Ronald L. Lakey

Whenever any notice is required to be given by law or this Agreement, a written waiver of notice, signed by the Person entitled to notice, whether before or after the time stated in the notice, shall be deemed equivalent to the giving of such notice.

13.2 Amendment.

This Agreement may be modified, altered, supplemented or amended, in writing, with the consent of all of the Members.

13.3 Binding Effect.

Except as otherwise provided in this Agreement, every covenant, term, and provision of this Agreement shall be binding upon and inure to the benefit of a Member and its respective successors, transferees, and assigns. In addition, the Persons entitled to indemnity pursuant to this agreement shall be intended beneficiaries of this Agreement.

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13.4 Construction.

It is the intent of the parties hereto that every covenant, term, and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against a Member. The terms of this Agreement shall not be subject to modification by, or be conformed with, any actions by the U.S. Internal Revenue Service except as this Agreement may be explicitly so amended and except as may relate specifically to the filing of tax returns.

13.5 Time.

In computing any period of time pursuant to this Agreement, the day of the act, event, or default from which the designated period of time begins to run shall be included, unless it is not a Business Day, in which event the period shall begin on the next day which is a Business Day, and the last day of the period so computed shall not be included.

13.6 Headings.

Section and other headings contained in this Agreement are for reference purposes only and are not intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision of this Agreement.

13.7 Severability.

Except as otherwise provided in the succeeding sentence, every provision of this Agreement is intended to be severable, and, if any term or provision of this Agreement is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement.

13.8 Governing Law.

The laws of the State of California, without application of its conflicts of laws principles, shall govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties arising under this Agreement.

13.9 Consent to Jurisdiction.

The Members (i) irrevocably submit to the non-exclusive jurisdiction of any California State court or Federal court sitting in Los Angeles County, California in any action arising out of this Agreement, (ii) agrees that all claims in such action may be decided in such court, (iii) waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum and (iv) consents, to the fullest extent it may effectively do so, to the service of process by mail in accordance with Section 13.1. A final judgment in any such action shall be conclusive and may be enforced in other jurisdictions. Nothing in this Agreement shall affect the right of any party to serve legal process in any manner permitted by law or affect its right to bring any action in any other court.

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13.10 WAIVER OF JURY TRIAL.

THE MEMBER IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY AND ALL RIGHTS TO IMMUNITY BY SOVEREIGNTY OR OTHERWISE IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

13.11 Entire Agreement.

This Agreement constitutes the entire agreement among the parties hereto and their respective Affiliates and contains all of the agreements among such parties with respect to the subject matter of this Agreement. This Agreement supersedes any and all other agreements, either oral or written, between such parties with respect to the subject matter of this Agreement.

13.12 No Third-Party Beneficiaries.

None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of any Member. Nothing in this Agreement shall be deemed to create any right in any Person (other than Persons indemnified pursuant to this Agreement) not a party hereto, and this Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third Person.

13.13 Counterpart Execution.

This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original of the same document. Counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which facsimile copies or counterparts shall be the equivalent of originals signed in ink and shall be binding upon the parties.

*                    *                     *

[SIGNATURES FOLLOW ON SEPARATE PAGES]

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IN WITNESS WHEREOF, this Operating Agreement is hereby executed by the undersigned as of the date first written above.

JOHN F. SHEA, as Trustee of the John F. Shea

Family Trust dated November 5, 1986, as amended

EDMUND H. SHEA, JR., as Trustee of The E &

M RP Trust dated October 3, 1985, as amended

PETER O. SHEA, as Trustee of the Peter O. and

Carolyn H. Shea Revocable Trust dated January 11,

1995, as amended on April 9, 1998

JOHN F. SHEA, JR., as Trustee of the John F.

Shea, Jr. Trust dated 1979

ANNE SHEA DAVISON, formerly Anne Therese

Shea, as Trustee of the Anne Therese Shea Trust dated January 1, 1979, as amended on December 24,

1983 and March 1, 2005

JAMES W. SHEA, as Trustee of the James

William Shea Trust dated December 24, 1983, as amended on March 1, 2005

CARRIE SHEA TILTON, formerly Carrie E.

Shea, as Trustee of the Carrie Shea Tilton

Revocable Trust dated June 13, 1994

ALISON SHEA KNOLL, formerly Alison

Brannen Shea, as Trustee of the Alison Brannen

Shea Trust dated May 10, 2005

MAURA SHEA FLANNAGAN, formerly Maura

Babbitt Shea, as Trustee of the Maura Babbitt Shea

Trust dated July 19, 1989, as amended on

December 18, 2003

MATTHEW G. SHEA., as Trustee of the Matthew

G. Shea Trust dated August 9, 1992, as amended on

March 1, 2005

DOROTHY SHEA HOBIN, formerly Dorothy

Lucille Shea, as Trustee of the Dorothy Lucille

Hobin Trust dated August 9, 1993, as amended on

June 22, 2004

COLLEEN SHEA MORRISSEY, formerly

Colleen M. Shea, as Trustee of the Colleen M. Shea

Trust dated January 1, 1979, as amended.

EDMUND H. SHEA III, as Trustee of the Edmund

H. Shea III Trust dated January 1, 1979, as amended

on April 6, 1981 and November 1, 1989

MARY SHEA MCCONNELL, formerly Mary

Shea, as Trustee of the Mary Shea McConnell Trust

dated November, 1997

Timothy T. Shea

TIMOTHY T. SHEA, as Trustee of the Timothy

T. Shea Trust 12/23/08

KATHLEEN SHEA HOLT, formerly Kathleen

M. Shea, as Trustee of the Kathleen Shea Holt Trust

dated September 21, 1995, as amended on

December 17, 1999

ELLEN SHEA DIETRICK, formerly Ellen M.

Shea, as Trustee of the Ellen Shea Trust dated

June 13, 1997

PETER O. SHEA, JR., as Trustee of the Peter O.

Shea, Jr. Trust dated March 1, 1985

RONALD L. LAKEY, as Trustee of the Catherine

Nicol Shea Trust dated November 13, 1984, as

amended on March 1, 1989, July 22, 1993 and

September 30, 2004

SARAH SHEA WYLDER, former Sarah H. Shea,

as Trustee of the Sarah H. Shea Trust dated 1987

Schedule 3.1

Name and Address	Percentage Interests
John F. Shea 655 Brea Canyon Road Walnut, CA 91789		46.07	%
Edmund H. Shea, Jr. 655 Brea Canyon Road Walnut, CA 91789		25.54	%
Peter O. Shea 655 Brea Canyon Road Walnut, CA 91789		16.49	%
John F. Shea, Jr. 655 Brea Canyon Road Walnut, CA 91789		0.49	%
Anne Shea Davison 655 Brea Canyon Road Walnut, CA 91789		0.49	%
James W. Shea 655 Brea Canyon Road Walnut, CA 91789		0.49	%
Carrie Shea Tilton. 655 Brea Canyon Road Walnut, CA 91789		0.49	%
Alison Shea Knoll 655 Brea Canyon Road Walnut, CA 91789		0.49	%
Maura Shea Flannagan 655 Brea Canyon Road Walnut, CA 91789		0.49	%
Matthew G. Shea 655 Brea Canyon Road Walnut, CA 91789		0.49	%

Dorothy Shea Hobin 655 Brea Canyon Road Walnut, CA 91789	0.49	%
Colleen Shea Morrissey 655 Brea Canyon Road Walnut, CA 91789	0.74	%
Edmund H. Shea III 655 Brea Canyon Road Walnut, CA 91789	0.74	%
Mary Shea McConnel 655 Brea Canyon Road Walnut, CA 91789	0.74	%
Timothy T. Shea 655 Brea Canyon Road Walnut, CA 91789	0.74	%
Kathleen Shea Holt 655 Brea Canyon Road Walnut, CA 91789	0.74	%
Ellen Shea Dietrick 655 Brea Canyon Road Walnut, CA 91789	0.74	%
Peter O. Shea Jr. 655 Brea Canyon Road Walnut, CA 91789	1.17	%
Ronald L. Lakey 655 Brea Canyon Road Walnut, CA 91789	1.17	%
Sarah Shea Wylder 655 Brea Canyon Road Walnut, CA 91789	1.17	%

AMENDMENT TO OPERATING AGREEMENT OF SHEA HOMES AT

MONTAGE, LLC

THIS AMENDMENT TO OPERATING AGREEMENT OF SHEA HOMES AT MONTAGE, LLC (this “Amendment”) is entered into as of             , 2011, by and among JOHN F. SHEA, as Trustee of the John F. Shea Family Trust dated November 5, 1986, as amended, JOHN C. MORRISSEY, as Successor Trustee of The E&M Shea Revocable Trust, PETER O. SHEA, as Trustee of the Peter O. and Carolyn H. Shea Revocable Trust dated January 11, 1995, as amended on April 9, 1998, JOHN F. SHEA, JR., as Trustee of the John F. Shea, Jr. Trust dated 1979, ANNE SHEA DAVISON, formerly Anne Therese Shea, as Trustee of the Anne Therese Shea Trust dated January 1, 1979, as amended on December 24, 1983 and March 1, 2005, JAMES W. SHEA, as Trustee of the James William Shea Trust dated December 24, 1983, as amended on March 1, 2005, CARRIE SHEA TILTON, formerly Carrie E. Shea, as Trustee of the Carrie Shea Tilton Revocable Trust dated June 13, 1994, ALISON SHEA KNOLL, formerly Alison Brannen Shea, as Trustee of the Alison Brannen Shea Trust, dated May 10, 2005, MAURA SHEA FLANNAGAN, formerly Maura Babbitt Shea, as Trustee of the Maura Babbitt Shea Trust dated July 19, 1989, as amended on December 18, 2003, MATTHEW G. SHEA, as Trustee of the Matthew G. Shea Trust dated August 9, 1992, as amended on March 1, 2005, DOROTHY SHEA HOBIN, formerly Dorothy Lucille Shea, as Trustee of the Dorothy Lucille Hobin Trust dated August 9, 1993, as amended on June 22, 2004, COLLEEN SHEA MORRISSEY, formerly Colleen M. Shea, as Trustee of the Colleen M. Shea Trust dated January 1, 1979, as amended, EDMUND H. SHEA III, as Trustee of the Edmund H. Shea III Trust dated January 1, 1979, as amended on April 6, 1981 and November 1, 1989, MARY SHEA MCCONNELL, formerly Mary Shea, as Trustee of the Mary Shea McConnell Trust dated November 1997, TIMOTHY T. SHEA, as Trustee of the Timothy T. Shea Trust, KATHLEEN SHEA HOLT, formerly Kathleen M. Shea, as Trustee of the Kathleen Shea Holt Trust dated September 21, 1995, as amended on December 17, 1999, ELLEN SHEA DIETRICK, formerly Ellen M. Shea, as Trustee of the Ellen Shea Trust dated June 13, 1997, PETER O. SHEA, JR., as Trustee of the Peter O. Shea, Jr. Trust dated March 1, 1985, RONALD L. LAKEY, as Trustee of the Catherine Nicol Shea Trust dated November 13, 1984, as amended on March 1, 1989, July 22, 1993 and September 30, 2004, SARAH SHEA WYLDER, formerly Sarah H. Shea, as Trustee of the Sarah H. Shea Trust dated 1987 (individually, “Original Member” and collectively, “Original Members”), J.F. SHEA CO., INC., a Nevada corporation (“JFSC”), and Shea Homes, Inc., a Delaware corporation (“SHI”), with reference to the following facts:

R E C I T A L S

A. Original Members were parties to that certain Operating Agreement of Shea Homes at Montage, LLC, a California limited liability company (the “Company”), dated as of December 30, 2008 (as amended from time to time, the “Operating Agreement”).

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B. Pursuant to that certain Agreement Regarding Contribution and Assignment of Membership Interest of even date herewith (the “Contribution and Assignment Agreement”) between Original Members and JFSC, each Original Member, as a shareholder in JSFC, contributed its entire Interest in the Company to JFSC in exchange for capital account credit in JFSC.

C. Pursuant to the certain Agreement Regarding Purchase and Sale of Membership Interest of even date herewith (the “Purchase and Sale Agreement”) between JFSC and SHI, JFSC sold the entire Interest in the Company to SHI in exchange for a reduction in the principal amount outstanding under the Loan (as defined in the Purchase and Sale Agreement) previously made by SHI, as lender, to JFSC, as borrower.

D. Original Members, JFSC and SHI wish to enter into this amendment to further memorialize the assignment of the Interests pursuant to the Contribution and Assignment Agreement and the sale and assignment of the Interest pursuant to the Purchase and Sale Agreement, to recognize SHI as the sole Member of the Company and to make certain other changes to the Operating Agreement. Unless otherwise noted, capitalized terms used in this Amendment shall have the meanings given to them in the Operating Agreement. Any references in the Operating Agreement to this “Agreement” shall mean and refer to the Operating Agreement as amended by this Amendment.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Original Members, JFSC and SHI do hereby amend the Operating Agreement in the following particulars only:

1. SHI. SHI is hereby admitted to the Company as a Member and Permitted Transferee and agrees to be bound by the terms of the Operating Agreement. The consent of the Executive Committee to the foregoing and to the transfer of the Interests from the Original Members to JFSC and JFSC to SHI is attached hereto as Exhibit A and incorporated herein by this reference.

2. Certificate of Limited Liability Interests. The following is hereby to the Operating Agreement as a new Section 14:

SECTION 14

RIGHTS OF SECURED PARTY

Section 14.1 Rights and Remedies Under Security Documents.

Notwithstanding anything to the contrary contained in this Agreement, if any if Interests have been pledged or are subject to the granting of a security

2

interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Interests, then, at such time, the Secured Party shall have all of the rights associated with such Interests under this Agreement and applicable law.

Section 14.2 Transfer Restrictions Inapplicable

Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Interests shall be inapplicable, and of no force and effect, as to any transfer of any Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

Section 14.3 Certificates.

All of the Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Interests held by that Member. Each Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

Section 14.3 UCC Security

Each of the Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

Section 14.4 Amendment Prior to Termination Date

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At all times prior to the termination of any Pledge of the Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor the Executive Committee will, without the prior written consent of the Secured Party, (A) amend this Agreement to provide that any Interests (i) shall not be evidenced by a certificate or (ii) shall not be securities governed by Article 8 of the Uniform Commercial Code or (B) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

Section 14.5 Successors and Assigns

The provisions of this Section 14 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members or Executive Committee members and their respective successors and assigns.

Section 14.6 No Adverse Amendment

At all times prior the Termination Date, none of the provisions of this Section 14 or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Operating Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Operating Agreement shall remain in full force and effect without modification.

b. Counterparts; Email; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic mail or facsimile copies of the signed counterparts, which email or facsimile counterparts shall be binding upon the parties.

c. Authorization. Each party hereto represents and warrants to the other parties hereto that each person executing this Amendment on its behalf is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings,

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representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

e. Recitals. The Recitals above are incorporated into this Amendment and the Operating Agreement by reference and are hereby verified by the Original Members, JFSC and SHI.

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date and year first above written.

	/s/ JOHN F. SHEA
ORIGINAL MEMBERS:	JOHN F. SHEA, as Trustee of the John F. Shea Family Trust dated November 5, 1986, as amended
	JOHN C. MORRISSEY, as Successor Trustee of The E&M Shea Revocable Trust
	/s/ PETER O. SHEA
	PETER O. SHEA, as Trustee of the Peter O. and Carolyn H. Shea Revocable Trust dated January 11, 1995, as amended on April 9, 1998
	JOHN F. SHEA, JR., as Trustee of the John F. Shea, Jr. Trust dated 1979
	ANNE SHEA DAVISON, formerly Anne Therese Shea, as Trustee of the Anne Therese Shea Trust dated January 1, 1979, as amended on December 24, 1983 and March 1, 2005
	JAMES W. SHEA, as Trustee of the James William Shea Trust dated December 24, 1983, as amended on March 1, 2005
	CARRIE SHEA TILTON, formerly Carrie E. Shea, as Trustee of the Carrie Shea Tilton Revocable Trust dated June 13, 1994

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above stated.

MEMBERS:	JOHN F. SHEA, as Trustee of the John F. Shea Family Trust dated November 5, 1986, as amended
	JOHN C. MORRISSEY, as Successor Trustee of The E&M Shea Revocable Trust
	PETER O. SHEA, as Trustee of the Peter O. and Carolyn H. Shea Revocable Trust dated January 11, 1995, as amended on April 9, 1998
	/s/ JOHN F. SHEA, JR
	JOHN F. SHEA, JR., as Trustee of the John F. Shea, Jr. Trust dated 1979
	ANNE SHEA DAVISON, formerly Anne Therese Shea, as Trustee of the Anne Therese Shea Trust dated January 1, 1979, as amended on December 24, 1983 and March 1, 2005
	JAMES W. SHEA, as Trustee of the James William Shea Trust dated December 24, 1983, as amended on March 1, 2005
	CARRIE SHEA TILTON, formerly Carrie E. Shea, as Trustee of the Carrie Shea Tilton Revocable Trust dated June 13, 1994

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above stated.

MEMBERS:	JOHN F. SHEA, as Trustee of the John F. Shea Family Trust dated November 5, 1986, as amended
	JOHN C. MORRISSEY, as Successor Trustee of The E&M Shea Revocable Trust
	PETER O. SHEA, as Trustee of the Peter O. and Carolyn H. Shea Revocable Trust dated January 11, 1995, as amended on April 9, 1998
	JOHN F. SHEA, JR., as Trustee of the John F. Shea, Jr. Trust dated 1979
	/s/ ANNE SHEA DAVISON
	ANNE SHEA DAVISON, formerly Anne Therese Shea, as Trustee of the Anne Therese Shea Trust dated January 1, 1979, as amended on December 24, 1983 and March 1, 2005
	JAMES W. SHEA, as Trustee of the James William Shea Trust dated December 24, 1983, as amended on March 1, 2005
	CARRIE SHEA TILTON, formerly Carrie E. Shea, as Trustee of the Carrie Shea Tilton Revocable Trust dated June 13, 1994

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above stated.

MEMBERS:	JOHN F. SHEA, as Trustee of the John F. Shea Family Trust dated November 5, 1986, as amended
	JOHN C. MORRISSEY, as Successor Trustee of The E&M Shea Revocable Trust
	PETER O. SHEA, as Trustee of the Peter O. and Carolyn H. Shea Revocable Trust dated January 11, 1995, as amended on April 9, 1998
	JOHN F. SHEA, JR., as Trustee of the John F. Shea, Jr. Trust dated 1979
	ANNE SHEA DAVISION, formerly Anne Therese Shea, as Trustee of the Anne Therese Shea Trust dated January 1, 1979, as amended on December 24, 1983 and March 1, 2005
	/s/ JAMES W. SHEA
	JAMES W. SHEA, as Trustee of the James William Shea Trust dated December 24, 1983, as amended on March 1, 2005
	CARRIE SHEA TILTON, formerly Carrie E. Shea, as Trustee of the Carrie Shea Tilton Revocable Trust dated June 13, 1994

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above stated.

MEMBERS:	JOHN F. SHEA, as Trustee of the John F. Shea Family Trust dated November 5, 1986, as amended
	JOHN C. MORRISSEY, as Successor Trustee of The E&M Shea Revocable Trust
	PETER O. SHEA, as Trustee of the Peter O. and Carolyn H. Shea Revocable Trust dated January 11, 1995, as amended on April 9, 1998
	JOHN F. SHEA, JR., as Trustee of the John F. Shea, Jr. Trust dated 1979
	ANNE SHEA DAVISON, formerly Anne Therese Shea, as Trustee of the Anne Therese Shea Trust dated January 1, 1979, as amended on December 24, 1983 and March 1, 2005
	JAMES W. SHEA, as Trustee of the James William Shea Trust dated December 24, 1983, as amended on March 1, 2005
	/s/ CARRIE SHEA TILTON
	CARRIE SHEA TILTON, formerly Carrie E. Shea, as Trustee of the Carrie Shea Tilton Revocable Trust dated June 13, 1994

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/s/ ALISON SHEA KNOLL

ALISON SHEA KNOLL, formerly Alison

Brannen Shea, as Trustee of the Alison

Brannen Shea Trust dated May 10, 2005

MAURA SHEA FLANNAGAN, formerly

Maura Babbitt Shea, as Trustee of the Maura

Babbitt Shea Trust dated July 19, 1989, as

amended on December 18, 2003

MATTHEW G. SHEA., as Trustee of the

Matthew G. Shea Trust dated August 9,

1992, as amended on March 1, 2005

DOROTHY SHEA HOBIN, formerly

Dorothy Lucille Shea, as Trustee of the

Dorothy Lucille Hobin Trust dated August 9,

1993, as amended on June 22, 2004

COLLEEN SHEA MORRISSEY,

formerly Colleen M. Shea, as Trustee of the

Colleen M. Shea Trust dated January 1,

1979, as amended.

EDMUND H. SHEA III, as Trustee of the

Edmund H. Shea III Trust dated January 1,

1979, as amended on April 6, 1981 and

November 1, 1989

MARY SHEA MCCONNELL, formerly

Mary Shea, as Trustee of the Mary Shea

McConnell Trust dated November, 1997

TIMOTHY T. SHEA, as Trustee of the

Timothy T. Shea Trust

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ALISON SHEA KNOLL, formerly Alison

Brannen Shea, as Trustee of the Alison

Brannen Shea Trust dated May 10, 2005

/s/ MAURA SHEA FLANNAGAN

MAURA SHEA FLANNAGAN, formerly

Maura Babbitt Shea, as Trustee of the Maura

Babbitt Shea Trust dated July 19, 1989, as

amended on December 18, 2003

MATTHEW G. SHEA., as Trustee of the

Matthew G. Shea Trust dated August 9,

1992, as amended on March 1, 2005

DOROTHY SHEA HOBIN, formerly

Dorothy Lucille Shea, as Trustee of the

Dorothy Lucille Hobin Trust dated August 9,

1993, as amended on June 22, 2004

COLLEEN SHEA MORRISSEY,

formerly Colleen M. Shea, as Trustee of the

Colleen M. Shea Trust dated January 1,

1979, as amended.

EDMUND H. SHEA III, as Trustee of the

Edmund H. Shea III Trust dated January 1,

1979, as amended on April 6, 1981 and

November 1, 1989

MARY SHEA MCCONNELL, formerly

Mary Shea, as Trustee of the Mary Shea

McConnell Trust dated November, 1997

TIMOTHY T. SHEA, as Trustee of the

Timothy T. Shea Trust

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ALISON SHEA KNOLL, formerly Alison

Brannen Shea, as Trustee of the Alison

Brannen Shea Trust dated May 10, 2005

MAURA SHEA FLANNAGAN, formerly

Maura Babbitt Shea, as Trustee of the Maura

Babbitt Shea Trust dated July 19, 1989, as

amended on December 18, 2003

/s/ MATTHEW G. SHEA

MATTHEW G. SHEA., as Trustee of the

Matthew G. Shea Trust dated August 9,

1992, as amended on March 1, 2005

DOROTHY SHEA HOBIN, formerly

Dorothy Lucille Shea, as Trustee of the

Dorothy Lucille Hobin Trust dated

August 9, 1993, as amended on June 22, 2004

COLLEEN SHEA MORRISSEY,

formerly Colleen M. Shea, as Trustee of the

Colleen M. Shea Trust dated January 1,

1979, as amended.

EDMUND H. SHEA III, as Trustee of the

Edmund H. Shea III Trust dated January 1,

1979, as amended on April 6, 1981 and

November 1, 1989

MARY SHEA MCCONNELL, formerly

Mary Shea, as Trustee of the Mary Shea

McConnell Trust dated November, 1997

TIMOTHY T. SHEA, as Trustee of the

Timothy T. Shea Trust

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ALISON SHEA KNOLL, formerly Alison

Brannen Shea, as Trustee of the Alison

Brannen Shea Trust dated May 10, 2005

MAURA SHEA FLANNAGAN, formerly

Maura Babbitt Shea, as Trustee of the Maura

Babbitt Shea Trust dated July 19, 1989, as

amended on December 18, 2003

MATTHEW G. SHEA., as Trustee of the

Matthew G. Shea Trust dated August 9,

1992, as amended on March 1, 2005

DOROTHY SHEA HOBIN, formerly

Dorothy Lucille Shea, as Trustee of the

Dorothy Lucille Hobin Trust dated August 9,

1993, as amended on June 22, 2004

COLLEEN SHEA MORRISSEY,

formerly Colleen M. Shea, as Trustee of the

Colleen M. Shea Trust dated January 1,

1979, as amended.

/s/ EDMUND H. SHEA III

EDMUND H. SHEA III, as Trustee of the

Edmund H. Shea III Trust dated January 1,

1979, as amended on April 6, 1981 and

November 1, 1989

MARY SHEA MCCONNELL, formerly

Mary Shea, as Trustee of the Mary Shea

McConnell Trust dated November, 1997

TIMOTHY T. SHEA, as Trustee of the

Timothy T. Shea Trust

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ALISON SHEA KNOLL, formerly Alison

Brannen Shea, as Trustee of the Alison

Brannen Shea Trust dated May 10, 2005

MAURA SHEA FLANNAGAN, formerly

Maura Babbitt Shea, as Trustee of the Maura

Babbitt Shea Trust dated July 19, 1989, as

amended on December 18, 2003

MATTHEW G. SHEA., as Trustee of the

Matthew G. Shea Trust dated August 9,

1992, as amended on March 1, 2005

DOROTHY SHEA HOBIN, formerly

Dorothy Lucille Shea, as Trustee of the

Dorothy Lucille Hobin Trust dated August 9,

1993, as amended on June 22, 2004

COLLEEN SHEA MORRISSEY,

formerly Colleen M. Shea, as Trustee of the

Colleen M. Shea Trust dated January 1,

1979, as amended

EDMUND H. SHEA III, as Trustee of the

Edmund H. Shea III Trust dated January 1,

1979, as amended on April 6, 1981 and

November 1, 1989

/s/ MARY SHEA MCCONNELL

MARY SHEA MCCONNELL, formerly

Mary Shea, as Trustee of the Mary Shea

McConnell Trust dated November, 1997

TIMOTHY T. SHEA, as Trustee of the

Timothy T. Shea Trust

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	/s/ KATHLEEN SHEA HOLT
	KATHLEEN SHEA HOLT, formerly
	Kathleen M. Shea, as Trustee of the
	Kathleen Shea Holt Trust dated
	September 21, 1995, as amended on December 17,
	1999
	ELLEN SHEA DIETRICK, formerly
	Ellen M. Shea, as Trustee of the Ellen Shea
	Trust dated June 13, 1997
	PETER O. SHEA, JR., as Trustee of the
	Peter O. Shea, Jr. Trust dated March 1, 1985
	RONALD L. LAKEY, as Trustee of the
	Catherine Nicol Shea Trust dated November 13,
	1984, as amended on March 1, 1989,
	July 22, 1993 and September 30, 2004
	SARAH SHEA WYLDER, formerly Sarah
	H. Shea, as Trustee of the Sarah H. Shea
	Trust dated 1987
JFSC:	J.F. SHEA CO., INC.,
	a Nevada corporation
	By:
	Name:
	Title:
	By:
	Name:
	Title:

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	KATHLEEN SHEA HOLT, formerly
	Kathleen M. Shea, as Trustee of the
	Kathleen Shea Holt Trust dated September 21, 1995, as amended on December 17,
	1999
	/s/ ELLEN SHEA DIETRICK
	ELLEN SHEA DIETRICK, formerly
	Ellen M. Shea, as Trustee of the Ellen Shea
	Trust dated June 13, 1997
	PETER O. SHEA, JR., as Trustee of the
	Peter O. Shea, Jr. Trust dated March 1, 1985
	RONALD L. LAKEY, as Trustee of the
	Catherine Nicol Shea Trust dated November 13, 1984, as amended on March 1, 1989,
	July 22, 1993 and September 30, 2004
	SARAH SHEA WYLDER, formerly Sarah
	H. Shea, as Trustee of the Sarah H. Shea
	Trust dated 1987
JFSC:	J.F. SHEA CO., INC.,
	a Nevada corporation
	By:
	Name:
	Title:
	By:
	Name:
	Title:

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	KATHLEEN SHEA HOLT, formerly
	Kathleen M. Shea, as Trustee of the
	Kathleen Shea Holt Trust dated September 21, 1995, as amended on December 17,
	1999
	ELLEN SHEA DIETRICK, formerly
	Ellen M. Shea, as Trustee of the Ellen Shea
	Trust dated June 13, 1997
	/s/ PETER O. SHEA, JR.
	PETER O. SHEA, JR., as Trustee of the
	Peter O. Shea, Jr. Trust dated March 1, 1985
	/s/ RONALD L. LAKEY
	RONALD L. LAKEY, as Trustee of the
	Catherine Nicol Shea Trust dated November 13, 1984, as amended on March 1, 1989,
	July 22, 1993 and September 30, 2004
	SARAH SHEA WYLDER, formerly Sarah
	H. Shea, as Trustee of the Sarah H. Shea
	Trust dated 1987
JFSC:	J.F. SHEA CO., INC.,
	a Nevada corporation
	By:	/s/ Ronald L. Lakey
	Name:	RONALD L. LAKEY
	Title:	VICE PRESIDENT
	By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer

S-3

	KATHLEEN SHEA HOLT, formerly
	Kathleen M. Shea, as Trustee of the
	Kathleen Shea Holt Trust dated September 21, 1995, as amended on December 17,
	1999
	ELLEN SHEA DIETRICK, formerly
	Ellen M. Shea, as Trustee of the Ellen Shea
	Trust dated June 13, 1997
	PETER O. SHEA, JR., as Trustee of the
	Peter O. Shea, Jr. Trust dated March 1, 1985
	RONALD L. LAKEY, as Trustee of the
	Catherine Nicol Shea Trust dated November 13, 1984, as amended on March 1, 1989,
	July 22, 1993 and September 30, 2004
	/s/ SALLY SHEA WYLDER
	SARAH SHEA WYLDER, formerly Sarah
	H. Shea, as Trustee of the Sarah H. Shea
	Trust dated 1987
JFSC:	J.F. SHEA CO., INC.,
	a Nevada corporation
	By:
	Name:
	Title:
	By:
	Name:
	Title:

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AMENDMENT TO OPERATING AGREEMENT OF SHEA HOMES AT

MONTAGE, LLC

THIS AMENDMENT TO OPERATING AGREEMENT OF SHEA HOMES AT MONTAGE, LLC (this “Amendment”) is entered into as of May 9, 2011, by and between J.F. SHEA CO., INC., a Nevada corporation (“JFSC”), and SHEA HOMES, INC., a Delaware corporation (“SHI”), with reference to the following facts:

R E C I T A L S

A. JFSC was the sole member of Shea Homes at Montage, LLC, a California limited liability company (the “Company”).

B. Pursuant to the certain Agreement Regarding Purchase and Sale of Membership Interest of even date herewith (the “Purchase and Sale Agreement”) between JFSC and SHI, JFSC sold the entire Interest in the Company to SHI in exchange for a reduction in the principal amount outstanding under the Loan (as defined in the Purchase and Sale Agreement) previously made by SHI, as lender, to JFSC, as borrower.

C. JFSC and SHI desire to amend the Operating Agreement of the Company dated as of December 30, 2008 (as amended from time to time, the “Operating Agreement”) to further memorialize the sale and assignment of the Interest pursuant to the Purchase and Sale Agreement, to recognize SHI as the sole Member of the Company and to make certain other changes to the Operating Agreement. Unless otherwise noted, capitalized terms used in this Amendment shall have the meanings given to them in the Operating Agreement. Any references in the Operating Agreement to this “Agreement” shall mean and refer to the Operating Agreement as amended by this Amendment.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, JFSC and SHI do hereby amend the Operating Agreement in the following particulars only:

1. SHI. SHI is hereby admitted to the Company as the sole Member and agrees to be bound by the terms of the Operating Agreement.

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2. Certificate of Limited Liability Interests. The following is hereby added to the Operating Agreement as a new Section 14:

SECTION 14

RIGHTS OF SECURED PARTY

Section 14.1 Rights and Remedies Under Security Documents.

Notwithstanding anything to the contrary contained in this Agreement, if any if Interests have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Interests, then, at such time, the Secured Party shall have all of the rights associated with such Interests under this Agreement and applicable law.

Section 14.2 Transfer Restrictions Inapplicable

Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Interests shall be inapplicable, and of no force and effect, as to any transfer of any Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

Section 14.3 Certificates.

All of the Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Interests held by that Member. Each Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

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Section 14.3 UCC Security

Each of the Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

Section 14.4 Amendment Prior to Termination Date

At all times prior to the termination of any Pledge of the Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor the Executive Committee will, without the prior written consent of the Secured Party, (A) amend this Agreement to provide that any Interests (i) shall not be evidenced by a certificate or (ii) shall not be securities governed by Article 8 of the Uniform Commercial Code or (B) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

Section 14.5 Successors and Assigns

The provisions of this Section 14 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members or Executive Committee members and their respective successors and assigns.

Section 14.6 No Adverse Amendment

At all times prior the Termination Date, none of the provisions of this Section 14 or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Interests, without the prior written consent of such Secured Party.”

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3. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Operating Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Operating Agreement shall remain in full force and effect without modification.

b. Counterparts; Email; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic mail or facsimile copies of the signed counterparts, which email or facsimile counterparts shall be binding upon the parties.

c. Authorization. Each party hereto represents and warrants to the other parties hereto that each person executing this Amendment on its behalf is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings, representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

e. Recitals. The Recitals above are incorporated into this Amendment and the Operating Agreement by reference and are hereby verified by JFSC and SHI.

[Signatures on Next Page]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date and year first above written.

JFSC:	J.F. SHEA CO., INC., a Nevada corporation
	By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
	By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHI:	SHEA HOMES, INC., a Delaware corporation
	By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
	By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer

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EX-3.29

Exhibit 3.29

ARTICLES OF INCORPORATION

of

FOUNDATION ADMINISTRATIVE SERVICES, INC.

The undersigned, acting as the incorporators of a corporation under Chapter I of Title 10, Arizona Revised Statutes, adopts the following Articles of Incorporation for such corporation.

FIRST: The name of the corporation is FOUNDATION ADMINISTRATIVE SERVICES, INC.

SECOND: The purposes for which the corporation is organized include the transaction of any or all lawful business for which corporations may be incorporated under the laws of the State of Arizona, as they may be amended from time to time. The character of business which the corporation initially intends actually to conduct in the State of Arizona will be administrative services for the benefit of operating companies of the Baptist Foundation of Arizona.

THIRD: The aggregate number of shares which the corporation shall have authority to issue is One Million (1,000,000) of One Dollar ($1.00) par value common stock.

FOURTH: The name and address of the initial statutory agent of the corporation is WILLIAM P. CROTTS, 300 West Osborn Road, Suite 100, Phoenix, Arizona 85013. The address of the initial known place of business of the corporation is 300 West Osborn Road, Suite 100, Phoenix, Arizona 85013.

FIFTH: The number of directors constituting the initial board of directors of the corporation is twenty-one (21). The names and addresses of the persons who are to serve as the directors until the first annual meeting of shareholders or until their successors be elected and qualified are:

NAME	ADDRESS
CLINTON BRAY	11135 West Palmeras Drive
	Sun City, Arizona 85373
GINGER CARTER	2301 East Orangewood Avenue
	Phoenix, Arizona 85020
DAVID CHAN	Tucson Chinese Baptist Church
	1159 East Mabel
	Tucson, Arizona 85719
REX COLLINS	509 West Moon Valley
	Phoenix, Arizona 85023
TRUMAN COOK	10314 Burns Drive
	Sun City, Arizona 85351
DORRIS CUNNINGHAM	2540 North 29th Avenue
	Phoenix, Arizona 85009

WALLIS FLEMING	5950 West Missouri, #8 Glendale, Arizona 85301
DWAIN HOOVER	211 West Kaler Drive Phoenix, Arizona 85021
TROY JONES	3312 East Berridge Lane Paradise Valley, Arizona 85253
ALAN KUHN	2652 South Los Altos Mesa, Arizona 85202
ROGER LAUBE	649 Filaree Drive Prescott, Arizona 86301
WILLIAM LENO	Post Office Box 113 Mesa, Arizona 85201
JOE MAY	1849 West Chapella Tucson, Arizona 85704
JACK MECK	Route 1, Box 72 Buckeye, Arizona 85326
GARY NAYLOR	North Phoenix Baptist Church 5757 North Central Avenue Phoenix, Arizona 85012

GENE PUCKETT	Post Office Box 129 Young, Arizona 85554
JULIAN RAY	Post Office Box 37943 Phoenix, Arizona 85069
LeROY STEVENS	6541 North 41st Avenue Phoenix, Arizona 85019
WILLIAM L. STONE	Post Office Box 430 Litchfield Park, Arizona 85340
EUGENE VIRT	First Baptist Church 11019 West Peoria Avenue Sun City, Arizona 85351
TRUMAN WEBB	Post Office Box 37 Coolidge, Arizona 85228

SIXTH: The names and addresses of the incorporators are:

NAME	ADDRESS
TROY JONES	3312 East Berridge Lane Paradise Valley, Arizona 85253

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DWAIN HOOVER	211 West Kaler Drive Phoenix, Arizona 85021
JOE MAY	1849 West Chapalla Tucson, Arizona 85704

DATED: December 5, 1985.

TROY JONES

DWAIN HOOVER

JOE MAY

“Incorporators”

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December 2, 1985

Arizona Corporation Commission

Incorporating Division

1210 West Washington

Phoenix, Arizona 85007

Re: FOUNDATION ADMINISTRATIVE SERVICES, INC.

Gentlemen:

I, WILLIAM P. CROTTS, having been designated to act as Statutory Agent for the above-referenced corporation, hereby consent to act in that capacity until renewal or resignation is submitted in accordance with Arizona Revised Statutes.

Very truly yours,

        

WILLIAM P. CROTTS

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ARTICLES OF AMENDMENT

TO

ARTICLES OF INCORPORATION

OF

FOUNDATION ADMINISTRATIVE SERVICES, INC.

an Arizona corporation

Pursuant to the provisions of Section 10-061, Arizona Revised Statutes, the undersigned Corporation adopts the following Articles of Amendment to its Articles of Incorporation:

FIRST: The name of the Corporation is:

FOUNDATION ADMINISTRATIVE SERVICES, INC.

an Arizona corporation

SECOND: The document attached hereto as Exhibit “A” sets forth the amendments to the Articles of Incorporation which were adopted by the Shareholders of the Corporation on July 31, 1991 in the manner prescribed by law.

THIRD: The number of shares of stock outstanding at the time of such adoption was 10,030 shares, and the number of shares entitled to vote on the Amendment was 10,030 shares.

FOURTH: The designation and number of outstanding shares of each class or series entitled to vote thereon, as a class or series, was as follows:

CLASS OR SERIES	NUMBER OF SHARES
Common		10,030

6 4 1 0 2 3     0 0 0 6

FIFTH: The number of shares of each class or series entitled to vote thereon as a class or series voted for or against such Amendment, respectively, was:

CLASS OR SERIES	NUMBER FOR		NUMBER AGAINST
Common		10,030		None

DATED: August 8, 1991

FOUNDATION ADMINISTRATIVE SERVICES, INC., an Arizona corporation
By
	William P. Crotts President

ATTEST:

Thomas D. Grabinski, Secretary

2

6 4 1 0 2 3     0 0 0 6

EXHIBIT A

AMENDMENT TO THE

ARTICLES OF INCORPORATION

OF

FOUNDATION ADMINISTRATIVE SERVICES, INC.

an Arizona corporation

1. The following paragraphs, SEVENTH and EIGHTH, are additions to the Articles of Incorporation of this Corporation:

SEVENTH: (a) The Corporation shall indemnify, to the extent permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation,

3

6 4 1 0 2 3     0 0 0 6

partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c) To the extent that a director, officer, employee or agent of a Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b) of this Article, or in defense of any claim issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees actually and reasonably incurred by him in connection therewith).

(d) Any indemnification under paragraphs (a) or (b) of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) or (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (3) by the members.

(e) Expenses (including attorneys’ fees) incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in paragraph (d) of this Article upon receipt of an undertaking by or on behalf for the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this section.

4

6 4 1 0 2 3     0 0 0 6

(f) The indemnification provided by this section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of members or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

EIGHTH: The Directors of the Corporation shall have no liability for damages to the Corporation or its members unless the actions of the Director or Directors were not in good faith, involved intentional misconduct or a knowing violation of law, or are of such a nature and character that the law does not permit a limit on the Director’s liability.

5

STATE OF ARIZONA

ARTICLES OF AMENDMENT

TO THE ARTICLES OF INCORPORATION

OF

FOUNDATION ADMINISTRATIVE SERVICES, INC.

Foundation Administrative Services, Inc. has adopted the following Articles of Amendment to its Articles of Incorporation in accordance with section 10-1006 of the Arizona Revised Statutes.

FIRST: The name of the corporation is Foundation Administrative Services, Inc. (the “Corporation”).

SECOND: Paragraph FIFTH of the Amended and Restated Articles of Incorporation is amended to read as follows:

“FIFTH: The name of the corporation is Shea Homes Southwest, Inc.”

THIRD: Paragraph EIGHTH of the Amended and Restated Articles of Incorporation is amended is read as follows:

“EIGHTH: The name and address of the statutory agent of the corporation is Steven L. Lisker, Esq., c/o Bryan Cave LLP, Two North Central Avenue, Suite 2200, Phoenix, Arizona 85004-4406. The address of the initial known place of business of the corporation is 8800 North Gainey Center Drive, Suite 350, Scottsdale, Arizona 85258.”

FOURTH: The foregoing amendment to the Articles of Incorporation of the Corporation was duly adopted by its shareholders and Board of Directors on January 22, 2001.

FIFTH: The number of shares of the Corporation outstanding at the time of such adopted was 100; and the number of shares entitled to vote thereon was 100.

SIXTH: The shares of the corporation’s common stock entitled to vote were voted in favor of or against the amendment, as follows:

For	Against
100		None

SEVENTH: The amendment does not provide for an exchange, reclassification or cancellation of the issued shares of the Corporation.

EIGHT: The amendment does not affect the stated capital of the Corporation.

IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed these Articles of Amendment as of the 22 day of January, 2001.

FOUNDATION ADMINISTRATIVE SERVICES, INC.
By
	James G. Shontere, Secretary

291567

2

LETTER OF CONSENT

The undersigned hereby consents to act as the Statutory Agent for Shea Homes Southwest, Inc., an Arizona corporation.

DATED this 22 day of January, 2001.

Steven L. Lisker, Esq.

Mailing Address: Steven L. Lisker, Esq. Bryan Cave LLP Two North Central Avenue Suite 2200 Phoenix, Arizona 85004-4406 Telephone: (602) 364-7000

291567

3

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

FOUNDATION ADMINISTRATIVE SERVICES, INC.

an Arizona corporation

Foundation Administrative Services, Inc., a corporation organized and existing under the laws of the State of Arizona (the “Corporation”) hereby certifies as follows:

FIRST: The name of the Corporation is Foundation Administrative Services, Inc. The date of the filing of its original Articles of Incorporation with the Arizona. Corporation Commission was December 11, 1985 (the “Original Articles of Incorporation”). The name under which the Corporation filed its Original Articles of Incorporation was Foundation Administrative Services, Inc.

SECOND: These Amended and Restated Articles of Incorporation amend, restate and integrate the provisions of the Original Articles of Incorporation of the Corporation, in accordance with the applicable provisions of Section 10-1008 of the General Corporation Law of the State of Arizona, as it may be amended from time to time.

THIRD: These Amended and Restated Articles of Incorporation were approved by the United States Bankruptcy Court for the District of Arizona (the “Bankruptcy Court”) pursuant to that certain Confirmation Order, dated December 22, 2000 (the “Confirmation Order”) which also approved the “First Amended Joint Liquidating Plan of Reorganization of the Debtors under Chapter 11 of the Bankruptcy Code,” dated September 25, 2000 (the “Plan”) relating to In re Baptist Foundation of Arizona, an Arizona nonprofit corporation; Arizona Southern Baptist New Church Ventures. Inc., an Arizona nonprofit corporation; A.L.O., Inc., an Arizona corporation; E.V.I.G., Inc., an Arizona corporation, et al., as Debtors, jointly administered under case number 99-13275-ECF-GBN (the “Bankruptcy Case”).

FOURTH: The Bankruptcy Court had jurisdiction over the Bankruptcy Case pursuant to 28 U.S.C. §§ 157 and 1334.

FIFTH: The name of the Corporation shall remain Foundation Administrative Services, Inc.

SIXTH: The purposes for which the corporation is organized include the transaction of any or all lawful business for which corporations may be incorporated under the laws of the State of Arizona, as they may be amended from time to time.

SEVENTH: The aggregate number of shares which the corporation shall have authority to issue is One Hundred (100) of One Dollar ($1.00) par value. Such shares may be issued in such classes or series as the Directors of the Corporation see fit. The voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, if any, of each such series or class may differ from those of any and all other

series or classes of shares at any time outstanding, and the Directors of the Corporation are hereby expressly granted authority to fix or alter, by resolution or resolutions, the designation, number, voting powers, preferences, and relative, participating, optional, and other special rights, and the qualifications, limitations, and restrictions thereof, of each such series or class to the fullest extent permitted by law.

EIGHTH: The name and address of the statutory agent of the corporation is Andrew Service Corporation of Arizona, 40 North Central Avenue, Suite 2700, Phoenix, Arizona 85004. The address of the initial known place of business of the corporation is 1313 East Osborn Road, Suite 250, Phoenix, Arizona 85014.

NINTH: The number of directors constituting the board of directors of the corporation shall be not less than one (1) nor more than nine (9). The name and address of the person who is to serve as a director until his successor is elected and qualified is:

NAME	ADDRESS
Clifton R. Jessup, Jr.	1313 East Osborn Road, Suite 250 Phoenix, Arizona 85014

TENTH: (a) The Corporation shall indemnify, to the extent permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a Judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect, of any

claim, issue or matter as to which such person shall have been, adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c) To the extent that a director, officer, employee or agent of a Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to paragraphs (a) and (b) of this Article, or in defense of any claim issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees actually and reasonably incurred by him in connection therewith).

(d) Any indemnification under paragraphs (a) or (b) of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) or (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (3) by the members.

(e) Expenses (including attorneys’ fees) incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in paragraph (d) of this Article upon receipt of an undertaking by or on behalf for the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this section.

(f) The indemnification provided by this section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of members or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(g) Notwithstanding any other provision of this Article Tenth to the contrary, the Corporation shall not indemnify, and shall have no obligation to indemnify, any person, reimburse any person for, or pay to or on behalf of any person, including any person who is a director, officer, employee or agent of the Corporation or any other entity, any amounts whatsoever or for any reason whatsoever, relating to any claim, action, suit or other liability (whether liquidated, contingent or otherwise) against such person arising on or prior to the date of the later to occur of (a) the date of these Amended and Restated Articles of Incorporation or (b) the consummation of the transactions contemplated by that certain Acquisition Agreement dated September 7, 2000, originally by and among Baptist Foundation of Arizona, Inc.; Foundation Administrative Services, Inc.; ALO, Inc.; ALO Pleasant Point, Inc.; Pleasant Point, LLC; and Shea Homes, Inc.

ELEVENTH: No director of the Corporation shall be personally liable to the Corporation or its shareholders for money damages for any action taken or any failure to take any action as a director, except liability for any of the following; (a) the amount of a financial benefit received by a director to which the director is not entitled; (b) an intentional infliction of harm on the Corporation or the shareholders; (c) a violation of section 10-833 of the Arizona Revised Statutes or any successor statute; or (d) an intentional violation of criminal law. The limitation of liability provided herein shall continue after a director has ceased to occupy such position as to acts or omissions occurring during such director’s term or terms of office, and no amendment or repeal of this Article Eleventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

Dated: January 22, 2001	FOUNDATION ADMINISTRATIVE SERVICES, INC.
	By:	The Restructuring Committee of Baptist Foundation of Arizona, on behalf of Foundation Administrative Services, Inc.
	By:	/s/ Mark A. Roberts
		Mark A. Roberts Member of Committee

ACCEPTANCE OF APPOINTMENT AS STATUTORY AGENT

Andrew Service Corporation of Arizona, an Arizona corporation, having been designated to act as Statutory Agent for Foundation Administrative Services, Inc., hereby consents to act in that capacity until removed or its resignation is submitted.

Dated: January 22, 2001

ANDREW SERVICE CORPORATION OF ARIZONA, an Arizona corporation
By:	Norman C. Storey
Its:	President

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re:	)	In Proceedings Under Chapter 11
	)
BAPTIST FOUNDATION OF ARIZONA, et al.,	)	Case Nos. 99-13275-ECF-GBN through
	)	99-13364-ECF-RTB
Debtors.	)
	)	All Cases Jointly Administered Under Case
	)	No. 99-13275-ECF-GBN

ORDER CONFIRMING FIRST AMENDED JOINT LIQUIDATING PLAN OF

REORGANIZATION

A. BACKGROUND AND PROCEDURAL HISTORY

1. BAPTIST FOUNDATION OF ARIZONA (“BFA”), together with certain of its subsidiaries and affiliates (collectively with BFA, the “Debtors”) as debtors and debtor-in-possession in these Chapter 11 cases filed with the Court on September 25, 2000 the “Disclosure Statement Concerning the First Amended Liquidating Plan of Reorganization” and “Disclosure Statement Summary” (collectively, the “Disclosure Statement”). The Court approved the Disclosure Statement at a hearing conducted on September 20, 2000.

2. Also on September 8, 2000, the Debtors, the Official Unsecured Creditors Committee (“UCC”), and the Official Collateralized Investors Committee (“CIC” and together with the UCC, the “Committees”) jointly filed the “First Amended Joint Liquidating plan of Reorganization of the Debtors Under Chapter 11 of the Bankruptcy Code” (the “Plan”) (as amended, modified, and supplemented, the “Plan”), which is incorporated into this Order by this reference. Unless otherwise defined below, capitalized terms used in this Order retain the definitions given to them in the Plan.

3. Starting on November 14, 2000, and ending on November 16, 2000, the Court conducted a hearing (the “Confirmation Hearing”) to consider the confirmation of the Plan and

16. The Liquidating Trust Agreement, Amended and Restated Articles of Incorporation for Foundation Administrative Services, Inc., Amended and Restated By-Laws of Foundation Administrative Services, Inc., Articles of Organization of New Asset Subsidiary, L.L.C., Operating Agreement of New Asset Subsidiary, L.L.C., any and all agreements as they relate to the FAS Purchase Agreement and Shea Acquisition Agreement as previously approved by the Pleasant Point Sale Order are APPROVED and may be executed and implemented by the Liquidating Trust as of or after the Effective Date. Nothing in this Confirmation Order shall affect any provision of the Pleasant Point Sale Order, including but not limited to the discharge and injunction provisions of Paragraph 5 of the Pleasant Point Sale Order and the indemnity provisions described in Paragraph 7 of the Pleasant Point Sale Order. If any provision of this Confirmation Order is inconsistent with or conflicts with any provision of the Pleasant Point Sale Order, the terms of the Pleasant Point Sale Order shall control; provided, however, that the Debtors and Shea (as defined in the Pleasant Point Sale Order) shall have the right by mutual agreement to extend the deadline for closing the transactions that are the subject matter of the Pleasant Point Sale Order.

17. This Court’s retention of jurisdiction as set forth in Article 14 of the Plan is APPROVED. Such retention of jurisdiction does not affect the finality of this Confirmation Order, which the Court now expressly directs the Clerk of the Bankruptcy Court to enter immediately.

18. In accordance with Section 151 of the Plan, the Debtors and the Committees are authorized at any time before or on the Effective Date to make non-material changes to any document necessary to implement the Plan, including but not limited to clarifications, typographical edits, grammatical edits, and changes intended to ensure that a document is

17

29. It is further ordered, adjudged and decreed that the relief requested by Marshall Group’s Motion for Order Confirming Interpretation of Letter Agreement Among Counsel, as proposed in Marshall Group’s proposed order lodged therewith at page 4, lines 14 through 19, and at page 5, lines 1 through 5, shall be considered as to the Debtors, the Liquidating Trustee, and their various counsel, at the currently-scheduled 4 December 2000 hearing. All parties reserve all rights and arguments on those issues;

30. It is further ordered, adjudged and decreed that the relief requested by Marshall Group’s Motion for Order Confirming Interpretation of Letter Agreement Among Counsel as against putative class counsel shall be considered as to such putative class counsel at the Currently-scheduled 4 December 2000 hearing Neither the Debtors, nor the Liquidating Trustee, nor any attorney representing the Debtors or the Liquidating Trustee, shall oppose any such relief as requested against such putative class counsel;

31. It is further ordered, adjudged and decreed that unpaid principal and accrued interest as of the Petition Date an account of Investor Claims and Investor Debt Securities are not included in Class 8 (Debt Securities Claims), which Class 8 claims are subordinated pursuant to the Plan and Bankruptcy Code Section 510, and

32. It is further ordered, adjudged and decreed that nothing set forth in the Plan or the Confirmation Order, or the confirmation and effectiveness of the Plan, shall impair or otherwise affect the rights of the holder of any Investment Debt Security or Related Investor Claim as against any other Person that is not an “Exculpated Party” (as such term is defined in the Plan).

Dated   December 22, 2000

The Honorable George B. Nielsen, Jr

Chief United States Bankruptcy Judge

21

SQUIRE, SANDERS & DEMPSEY LLP.

Two Renaissance Square

40 North Central Avenue, Suite 2700

Phoenix, Arizona 85004-4498

Office: –1.602.528.4000

Fax: +1.602.253.8129

Direct Dial: +1.602.528.4168

LWatson@ssd.com

Admitted in California Only

January 26, 2001

VIA FACSIMILE

Steven L. Lisker, Esq

BRYAN CAVE LLP

Two North Central Avenue, Suite 2200

Phoenix. AZ 85004-4406

Re: Baptist Foundation Of Arizona, Chapter II Bankruptcy Cases, No. 99-13275-

ECF-GBN (Jointly Administered)

Dear Steve:

As you know Square, Sanders & Dempsey L.L.P. has served as counsel for the Baptist Foundation of Arizona and certain of its subsidiaries and affiliates (collectively, the “Debtors”) throughout each of their respective bankruptcy cases. It is my understanding that the Arizona Corporation Commission has requested documentation of the approval of the Court granting Mark A. Roberts the authority to sign documents on behalf of the debtor entity Foundation Administrative Services. Inc. (“FAS”).

Attached you will find several documents which grant Mr. Roberts, as a member of the Restructuring Committee, the necessary authority to sign all necessary documents on behalf of FAS. The first document is a copy of the Court’s docket indicating that the FAS petition was filed on November 9, 1999 and assigned the case number 99-13279-GBN. The second document is a copy of the “Order Authorizing And Directing (1) Joint Administration; (2) Transfer Of Assignment Of Cases To One Judge; And (3) Use Of A Consolidated Caption” (the “Joint Administration Order”). This Joint Administration Order consolidated all of the individual debtor entities’ cases under one order and made each debtor entity subject to each administrative order subsequently entered by the Court (see Docket number 3)

The third attached document is the “Emergency Motion Approving Certain Corporate Governance Provisions Regarding The Restructuring Committee For The Companies” that was filed with the Court on November 9, 1999 (the “Corporate Governance Motion”). This Corporate Governance Motion requested the Court to enter an administrative order to approve the Restructuring Committee, its members (which included Mr. Roberts), and the attached By-Laws of the Restructuring Committee

SQUIRE, SANDERS & DEMPSEY LLP.

Steven Lisker, Esq.

January 26, 2001

Page 2

authorizing members of the Restructuring Committee to sign and enter into agreements on behalf of the jointly administered debtor entities, of which necessarily included FAS. The Fourth attached document is the Court’s administrative order granting the relief requested in the Corporate Governance Motion including the approval of the members of the Restructuring Committee and the By-Laws.

The Fifth attached document is the relevant pages of the “Debtors’ Disclosure Statement Concerning The First Amended Joint Liquidating Plan Of Reorganization” (the “Disclosure Statement”) describing the Corporate Governance Motion, the authority of the Restructuring Committee, and Mr. Roberts’ background as a member of the Restructuring Committee. The Sixth and final document is the Court’s order approving the Disclosure Statement on September 29, 2000.

Pursuant to the authority granted under each of the above identified documents Mr. Roberts, as a duty recognized member of the Restructuring Committee, has repeatedly signed documents that have been necessary to effect transactions for all of the jointly administered debtor entities including FAS.

Mr. Roberts has all necessary authority to sign on behalf of all the debtor entities, including FAS, as a member of the Restructuring Committee. This is clearly supported by the above pleadings, the above mentioned Orders of the Court, the court approved By Laws of the Restructuring Committee, and the numerous transactions previously entered into by Mr. Roberts as a member of the Restructuring Committee and approved by the Court in these cases.

If you have any questions or concerns related to this matter please do not hesitate to contact me.

Best regards,

Larry L. Watson

Copy Elizabeth Amorosi, Office of the United States Trustee

Craig D. Hansen, Esq.

Clifton R. Jessup, Esq.

Mark A. Roberts

U.S Bankruptey Court

District of Arizona

Cases Filed Report

Case No. Office Closed	TP	Cls	Case Title	Dates
99-13275-GBN Office: 2	bk	11	BAPTIST FOUNDATION OF ARIZONA, INC.	Filed:11/09/1999
99-00786-GBN Office: 2	ap		BAPTIST FOUNDATION OF ARIZONA, INC. v.JAMES F. COOK FAMILY TRUST et al	Filed: 11/09/1999
99-13276-GBN Office: 2	bk	11	FOUNDATION POOL MANAGEMENT INC.	Filed: 11/09/1999
99-13277-GBN Office: 2	bk	11	FOUNDATION ASSET MANAGEMENT, INC.	Filed: 11/09/1999
99-13278-GBN Office: 2	bk	11	THE FOUNDATION COMPANIES, INC.	Filed: 11/09/1999
99-13279-GBN Office: 2	bk	11	FOUNDATION ADMINISTRATIVE SERVICES, INC.	Filed: 11/09/1999
99-13280-GBN Office: 2	bk	11	CHRISTIAN INVESTMENT SERVICES, INC.	Filed: 11/09/1999
99-13281-GBN Office: 2	bk	11	FOUNDAxTION HOLDINGS, INC.	Filed: 11/09/1999
99-13282-GBN Office: 2	bk	11	FOUNDATION CAPITAL MANAGEMENT, INC.	Filed: 11/09/1999
99-13283-GBN Office: 2	bk	11	FOUNDATION MORTGAGE CORPORATION	Filed: 11/09/1999
99-13284-GBN Office: 2	bk	11	BAPTIST FOUNDATION CREDIT CORPORATION	Filed: 11/09/1999
99-13285-GBN Office: 2	bk	11	FOUNDATION INVESTMENT ADVISORS, INC.	Filed: 11/09/1999
99-13286-GBN Office: 2	bk	11	SUMMIT ASSET MANAGEMENT CORPORATION	Filed: 11/09/1999
99-13287-GBN Office: 2	bk	11	FOUNDATION CONSULTING, INC.	Filed: 11/09/1999
99-13288-GBN Office: 2	bk	11	THE PARK AT JUNIPER RIDGE, INC.	Filed: 11/09/1999
99-13289-GBN Office: 2	bk	11	FOUNDATION INVESTMENT, INC.	Filed: 11/09/1999
99-13290-GBN Office: 2	bk	11	MINISTRY RESOURCE CORPORATION	Filed: 11/09/1999
99-13291-GBN Office: 2	bk	11	BFCC I, INC.	Filed: 11/09/1999

99-13292-GBN	bk	11	FOUNDATION SOUTHWINDS, INC.	Filed: 11/09/1999
Office: 2
99-13293-GBN	bk	11	SOUTHWINDS MARINA, L.L.C.	Filed: 11/09/1999
Office: 2
99-13294-GBN	bk	11	GUAM HOLDING CORPORATION	Filed: 11/09/1999
Office: 2
99-13295-GBN	bk	11	FOUNDATION HAULOVER, INC.	Filed: 11/09/1999
Office: 2
99-13296-GBN	bk	11	THE INN AT TONOPAH, INC.	Filed: 11/09/1999
Office: 2
99-13297-GBN	bk	11	FOUNDATION SURPRISE CENTER, INC.	Filed: 11/09/1999
Office: 2
99-13298-GBN	bk	11	FOUNDATION MARINA ENTERPRISES, INC.	Filed: 11/09/1999
Office: 2
99-13299-GBN	bk	11	FOUNDATION PROPERTY INVESTORS, INC.	Filed: 11/09/1999
Office: 2
99-13300-GBN	bk	11	FOUNDATION INSURANCE CO., LTD (CAYMAN)	Filed: 11/09/1999
Office: 2
99-13301-GBN	bk	11	FOUNDATION LEASING CORPORATION	Filed: 11/09/1999
Office: 2
99-13302-GBN	bk	11	FOUNDATION COBBLESTONE CORPORATION	Filed: 11/09/1999
Office: 2
99-13303-GBN	bk	11	FOUNDATION SOUTHWEST LAND EXCHANGE, INC.	Filed: 11/09/1999
Office: 2
99-13304-GBN	bk	11	FOUNDATION PONDEROSA TRAILS CORPORATION	Filed: 11/09/1999
Office: 2
99-13305-GBN	bk	11	FOUNDATION HIDDEN SPRINGS, INC.	Filed: 11/09/1999
Office: 2
99-13306-GBN	bk	11	FOUNDATION KING ISLAND, INC.	Filed: 11/09/1999
Office: 2
99-13307-GBN	bk	11	FOUNDATION DEVELOPMENT ALABAMA, INC.	Filed: 11/09/1999
Office: 2
99-13308-GBN	bk	11	SUNSET POINT DEVELOPER, L.L.C.	Filed: 11/09/1999
Office: 2
99-13309-GBN	bk	11	FOUNDATION ALABAMA INVESTORS, INC.	Filed: 11/09/1999
Office: 2
99-13310-GBN Office: 2	bk	11	ARIZONA SOUTHERN BAPTIST NEW CHURCH VENTURES, INC.	Filed: 11/09/1999
99-13311-GBN	bk	11	CFP PROPERTIES, INC.	Filed: 11/09/1999
Office: 2
99-13312-GBN	bk	11	CHRISTIAN FINANCIAL PARTNERS, INC.	Filed: 11/09/1999
Office: 2

99-13313-GBN Office: 2	bk	11	CHRISTIAN ASSET MANAGEMENT, INC.	Filed: 11/09/1999
99-13314-GBN Office: 2	bk	11	VALLEY ASSET MANAGEMENT, INC.	Filed: 11/09/1999
99-13315-GBN Office: 2	bk	11	NEW CHURCH VENTURES PROPERTIES, INC.	Filed: 11/09/1999
99-13316-GBN Office: 2	bk	11	NEW CHURCH VENTURES CREDIT CORPORATION	Filed: 11/09/1999
99-13317-GBN Office: 2	bk	11	VENTURE MEDIA SERVICES, INC.	Filed: 11/09/1999
99-13318-GBN Office: 2	bk	11	MCF CORPORATION	Filed: 11/09/1999
99-13319-GBN Office: 2	bk	11	MCF HOUSING DEVELOPMENT, INC.	Filed: 11/09/1999
99-13320-GBN Office: 2	bk	11	ASC SAN ANTONIO VENTURE I	Filed: 11/09/1999
99-13321-GBN Office: 2	bk	11	A.L.O., INC.	Filed: 11/09/1999
Case No. Office Closed	TP	Ch	Case Title	Dates
99-13322-GBN Office: 2	bk	11	S.C.S.C., INC.	Filed: 11/09/1999
99-13323-GBN Office: 2	bk	11	ARIZONA RETAIL SHOPPING CENTERS, INC.	Filed: 11/09/1999
99-13324-GBN Office: 2	bk	11	FIRST MORTGAGE ACCEPTANCE CORPORATION	Filed: 11/09/1999
99-13325-GBN Office: 2	bk	11	NORTHWOOD PARK, INC.	Filed: 11/09/1999
99-13326-GBN Office: 2	bk	11	ALBUQUERQUE GARAGE, INC.	Filed: 11/09/1999
99-13327-GBN Office: 2	bk	11	ALBUQUERQUE TOWER, INC.	Filed: 11/09/1999
99-13328-GBN Office: 2	bk	11	SELECT TRADING GROUP, INC.	Filed: 11/09/1999
99-13329-GBN Office: 2	bk	11	NORTHWOOD PARK ALABAMA, INC.	Filed: 11/09/1999
99-13330-GBN Office: 2	bk	11	FIRST ACCEPTANCE CORPORATION	Filed: 11/09/1999
99-13331-GBN Office: 2	bk	11	HFD, INC.	Filed: 11/09/1999
99-13332-GBN Office: 2	bk	11	ALO PLEASANT POINT, INC.	Filed: 11/09/1999

99-13333-GBN Office: 2	bk	11	LEEWARD HOLDINGS, INC.	Filed: 11/09/1999
99-13334-GBN Office: 2	bk	11	VALLEY REAL ESTATE OPPORTUNITIES, INC.	Filed: 11/09/1999
99-13335-GBN Office: 2	bk	11	FMC HOLDING CORPORATION	Filed: 11/09/1999
99-13336-GBN Office: 2	bk	11	STILL WATERS LAND COMPANY, INC.	Filed: 11/09/1999
99-13337-GBN Office: 2	bk	11	SUNSET POINT DEVELOPER, L.L.C.	Filed: 11/09/1999
99-13338-GBN Office: 2	bk	11	STILL WATERS DEVELOPMENT COMPANY, L.P.	Filed: 11/09/1999
99-13339-GBN Office: 2	bk	11	STILL WATERS MANAGEMENT COMPANY, INC.	Filed: 11/09/1999
99-13340-GBN Office: 2	bk	11	IRONWOOD APARTMENTS, INC.	Filed: 11/09/1999
99-13341-GBN Office: 2	bk	11	AMERICAN HOMEBUYERS, INC.	Filed: 11/09/1999
99-13342-GBN Office: 2	bk	11	DESERT HOLDINGS, INC.	Filed: 11/09/1999
99-13343-GBN Office: 2	bk	11	WESCO REALTY CORPORATION	Filed: 11/09/1999
99-13344-GBN Office: 2	bk	11	SUN BAR HEADQUARTERS RANCH, INC.	Filed: 11/09/1999
99-13345-GBN Office: 2	bk	11	WEST PHOENIX ESTATES, INC.	Filed: 11/09/1999
99-13346-GBN Office: 2	bk	11	RELIABLE INVESTMENTS, INC.	Filed: 11/09/1999
99-13347-GBN Office: 2	bk	11	SADDLE MOUNTAIN RV PARK, INC.	Filed: 11/09/1999
99-13348-GBN Office: 2	bk	11	EQUITY CAPITAL INVESTORS, INC.	Filed: 11/09/1999
99-13349-GBN Office: 2	bk	11	DESERT SKY RANCHES, INC.	Filed: 11/09/1999
99-13350-GBN Office: 2	bk	11	POLYPROPERTIES, INC.	Filed: 11/09/1999
99-13351-GBN Office: 2	bk	11	WEST VALLEY RANCHES, INC.	Filed: 11/09/1999
99-13352-GBN Office: 2	bk	11	LA PAZ CAPITAL INVESTMENT, INC.	Filed: 11/09/1999
99-13353-GBN Office: 2	bk	11	PORT PERRY MARKETING CORP.	Filed: 11/09/1999
99-13354-GBN	bk	11	THEATRE LEASING INC.	Filed: 11/09/1999
Office: 2

99-13355-GBN Office: 2	bk	11	NEW MEXICO PARKING CORP.	Filed: 11/09/1999
99-13356-GBN Office: 2	bk	11	POLYPROPERTIES (GUAM), INC.	Filed: 11/09/1999
99-13357-GBN Office: 2	bk	11	SHOW LOW COUNTRY CLUB	Filed: 11/09/1999
99-13358-GBN Office: 2	bk	11	BARRIGADA EQUITIES, INC.	Filed: 11/09/1999
99-13359-GBN Office: 2	bk	11	TAMUNIG CAPITAL INVESTMENT, INC.	Filed: 11/09/1999
99-13360-GBN Office: 2	bk	11	MARINE DRIVE CAPITAL INVESTMENT, INC.	Filed: 11/09/1999
99-13361-GBN Office: 2	bk	11	E.V.I.G., INC.	Filed: 11/09/1999
99-13362-GBN Office: 2	bk	11	H & S CAPITAL INVESTMENT, INC.	Filed: 11/09/1999
99-13363-GBN Office: 2	bk	11	MICRONESIAN LEASEHOLD CORPORATION	Filed: 11/09/1999
99-13364-GBN Office: 2	bk	11	SANTA FE TRAIL RANCH II, INC.	Filed: 11/09/1999
00-00104-GBN Office: 2	ap		BAPTIST FOUNDATION OF ARIZONA, INC. et al v. HOOVER et al	Filed: 02/15/2000
00-00113-GBN Office: 2	ap		BAPTIST FOUNDATION OF ARIZONA, INC. et al v. FRIEND et al	Filed: 02/18/2000
00-00171-GBN Office: 2	ap		GRANT et al v. ARTHUR ANDERSON LLP et al	Filed: 03/17/2000
00-00231-GBN Office: 2	ap		BAPTIST FOUNDATION OF ARIZONA, INC. v. WESTREC SOUTHWINDS, INC.	Filed: 04/13/2000
00-00233-GBN Office: 2	ap		ADVENT FINANCIAL SERVICES, L.L.C. v. THE FOUNDATION COMPANIES, INC. et al	Filed: 04/14/2000
00-00357-GBN Office: 2	ap		BFCC I, INC, v. TEGA CAY PROPERTIES, LLC	Filed: 06/14/2000
00-00420-GBN Office: 2	ap		BAPTIST FOUNDATION OF ARIZONA, INC, et al v. CARLSON et al Lead BK 99-13275 BAPTIST FOUNDATION OF ARIZONA, INC. Chapter: 11	Filed: 07/14/2000
00-00772-GBN Office:2	ap		CHRISTIAN UNIVERSITY ACQUISITIONS. INC, et al v. BAPTIST FOUNDATION OF ARIZONA, INC.	Filed: 11/14/2000

00-05873-GBN Office: 2	bk	11	TEGA CAY COMMUNITIES, L.L.C.	Filed: 06/01/2000
00-05874-GBN Office: 2	bk	11	TEGA CAY CLUB, L.L.C.	Filed: 06/01/2000
00-10051-GBN Office: 2	bk	11	FOUNDATION STILL WATERS, INC.	Filed: 09/15/2000
00-10290-GBN Office: 2	bk	11	PLEASANT POINT, LLC	Filed: 09/21/2000
00-11966-GBN Office: 2	bk	11	NMK, INC.,	Filed: 11/01/2000

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re:	)	In Proceedings Under Chapter 11
	)
BAPTIST FOUNDATION OF ARIZONA, INC.,	)	Case No. 99-13275, through 99-13364
an Arizona nonprofit 501(c)(3) corporation, et al.,	)
	)	All Cases Jointly Administered Under Case
	)	No. 99-13275
Debtors.	)
	)	ORDER AUTHORIZING AND DIRECTING
	)	(1) JOINT ADMINISTRATION; (2)
	)	TRANSFER OF ASSIGNMENT OF CASES
	)	TO ONE JUDGE; AND (3) USE OF A
	)	CONSOLIDATED CAPTION
	)
	)
	)
	)

THIS MATTER came before the Court pursuant to the “Emergency Ex-Parte Motion for an Order Authorizing and Directing: (1) Joint Administration: (2) Transfer of Assignment of Cases to One Judge: and (3) Use of a Consolidated Caption” (the “Motion”), filed on November 9, 1999 by the above captioned debtors and debtors-in-possession (the “Companies”). Based upon the Motion, the “Affidavit of Joe Panter in Support of Chapter 11 Petitions and First Day Motions;” and this Court having determined that the relief requested in the Motion is in the best interest of the Companies, their estates, their creditors, and other parties-in-interest; and it appearing that proper and adequate notice having been given and no other or further notice is necessary; and upon the record of these Chapter 11 cases; and after due deliberation thereon; and good and sufficient cause appearing therefor,

IT IS HEREBY ORDERED as follows:

1. The Motion shall be, and hereby is, APPROVED.

2. The bankruptcy proceedings of the following ninety (90) entities shall be jointly administered by the Court.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. Baptist Foundation of Arizona Foundation Pool Management Foundation Asset Management, Inc. The Foundation Companies, Inc. Foundation Administrative Services, Inc. Christian Investment Services, Inc. Foundation Holdings, Inc. Foundation Capital Management, Inc. Foundation Mortgage Corporation Baptist Foundation Credit Corporation Foundation Investment Advisors, Inc. Summit Asset Management Corporation Foundation Consulting, Inc. The Park at Juniper Ridge, Inc. Foundation Investments, Inc. Ministry Resource Corporation BFCC I, Inc. Foundation Southwinds, Inc. Southwinds Marina, L.L.C. Guam Holding Corporation Foundation Haulover, Inc. The Inn at Tonopah, Inc. Foundation Surprise Center, Inc. Foundation Marina Enterprises, Inc. Foundation Property Investors, Inc. Foundation Insurance Co., Ltd. (Cayman) Foundation Leasing Corporation Foundation Cobblestone Corporation Foundation Southwest Land Exchange, Inc. Foundation Ponderosa Trails Corporation Foundation Hidden Springs, Inc. Foundation King Island, Inc. Foundation Development Alabama, Inc. Sunset Point Developer, L.L.C. Foundation Alabama Investors, Inc.

2

36.	Arizona Southern Baptist New Church Ventures, Inc.
37.	CFP Properties, Inc.
38.	Christian Financial Partners, Inc.
39.	Christian Asset Management, Inc.
40.	Valley Asset Management, Inc.
41.	New Church Ventures Properties, Inc.
42.	New Church Ventures Credit Corporation
43.	Venture Media Services, Inc.
44.	MCF Corporation
45.	MCF Housing Development, Inc.
46.	ASC San Antonio Venture, I
47.	ALO
48.	S.C.S.C., Inc.
49.	Arizona Retail Shopping Centers, Inc.
50.	First Mortgage Acceptance Corporation
51.	Northwood Park, Inc.
52.	Albuquerque Garage, Inc.
53.	Albuquerque Tower, Inc.
54.	Select Trading Group, Inc.
55.	Northwood Park Alabama, Inc.
56.	First Acceptance Corporation
57.	HFD, Inc.
58.	ALO Pleasant Point, Inc.
59.	Leeward Holdings, Inc.
60.	Valley Real Estate Opportunities, Inc.
61.	FMC Holding Corp
62.	Still Waters Land Company, Inc.
63.	Sunset Point Development L.L.C.
64.	Still Waters Development Company, L.P.
65.	Still Waters Management Company, Inc.
66.	Ironwood Apartments, Inc.
67.	American Homebuyers, Inc.
68.	Desert Holdings, Inc.
69.	Wesco Realty Corporation
70.	Sun Bar Headquarters Ranch, Inc.
71.	West phoenix Estates, Inc.
72.	Reliable Investments, Inc.
73.	Saddle Mountain RV Park, Inc.
74.	Equity Capital Investors, Inc.
75.	Desert Sky Ranches, Inc.
76.	Polyproperties, Inc.
77.	West Valley Ranches, Inc.
78.	La Paz Capital Investment, Inc.

3

79.	Port Perry Marketing Corp.
80.	Theatre Leasing, Inc.
81.	New Mexico Parking Corp.
82.	Polyproperties (Guam), Inc.
83.	Showlow Country Club
84.	Barrigada Equities, Inc.
85.	Tamunig Capital Investment, Inc.
86.	Marine Drive Capital Investment, Inc.
87.	E.V.I.G., INC.
88.	H & S Capital Investment, Inc.
89.	Micronesian Leasehold Corporation
90.	Santa Fe Trail Ranch II, Inc.

3. The caption of the jointly administered cases shall read as follows:

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re:	)	In Proceedings Under Chapter 11
	)
BAPTIST FOUNDATION OF ARIZONA, INC.,	)	Case Nos. 99-13275 through 99-13364-ECF-GBN
an Arizona nonprofit 501(c)(3) corporation, et al.,	)
	)	All Cases Jointly Administered Under Case
Debtors.	)	No. 99-13275-ECF-GBN
	)
	)	[TITLE OF MOTION]
	)
	)

4. In circumstances where the relief requested in the pleading pertains to specific debtor(s), the caption shall be modified to indicate the specific debtor(s) to which a pleading or order applies, and the first paragraph of each pleading or order shall indicate the specific debtor(s) to which it applies. Accordingly, the caption for a pleading or order which pertains to specific debtor(s) shall read as follows:

4

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re:	)	In Proceedings Under Chapter 11
	)
BAPTIST FOUNDATION OF ARIZONA, INC.,	)	Case Nos. 99-13275 through 99-13364-ECF-GBN
an Arizona nonprofit 501(c)(3) corporation, et al.,	)
	)	All Cases Jointly Administered Under Case
	)	No. 99-13275-ECF-GBN
Debtors.	)
	)	[TITLE OF MOTION]
	)
	)
APPLICABLE DEBTORS	)
	)
Name of Specific Debtor	)
(Case No. 99-        -PHX-        )	)
	)
Name of Specific Debtor	)
(Case No. 99-        -PHX-        )	)
	)

5. One file and one docket shall be maintained for all ninety (90) of the jointly administered cases, which file shall be the file established for the lowest numbered case and which docket shall be the docket for the lowest numbered case.

6. A docket entry shall be made on the docket for the remaining eighty-nine (89) cases substantially as follows:

“An order has been entered in this case directing the procedural consolidation and joint administration of the Chapter 11 cases of Baptist Foundation of Arizona, Inc., and eighty-nine (89) of its subsidiaries and affiliates. Accordingly, the docket in Case No. 99-        -PHX-         should be consulted for all matters affecting this case.”

5

Facsimile Delivery Instructions

This facsimile contains information which (a) may be LEGALLY PRIVILEGED, PROPRIETARY IN NATURE. OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE and (b) is intended only for the use of the Addressee(s) named below. If you are not the Addressee, or the person responsible for delivering this to the Addressee(s), you are hereby notified that reading, copying or distributing this facsimile is prohibited. If you have received this facsimile In error, please telephone us immediately and mail the facsimile back to us at the above address. Thank you

FROM:	Valerie A. Viemont	DATE:	1/26/01
MATTER NO:	116509	DIRECT DIAL:	(602) 364-7449

MESSAGE FROM SENDER          TOTAL NO. OF PAGES: 51 (Including this page)

Re: Amended and Restated Articles for Foundation Administrative Services, Inc.

Janet - Per our conversations today, attached hereto are the pertinent pages from the Order from the Bankruptcy Court approving the form of “Amended and Restated Articles” which were filed, along with a letter from Larry Watson of Squire Sanders with the appropriate attachments confirming that Mark Roberts is a Member of the Restructuring Committee authorized to execute the Amended and Restated Articles.

As I Indicated when we spoke, I will be out of the office this afternoon and if you have any additional questions, please contact Steven L. Lisker, Esq. at 602-364-7373 directly. Otherwise, I will be available once again first thing Monday morning.

Thank you for your assistance In this matter. Val Viemont.

PLEASE DELIVER TO THE FOLLOWING:
TO:         JANET TAYLOR	FAX NO:	602-542-4100
COMPANY:        Arizona Corporation Commission	PHONE NO:

TO SENDER:
Do you wish to have your copy returned?	x	Yes	¨	No
Do you wish to be contacted when fax is Sent?	¨	Yes	x	No
Do you wish to have the confirmation sheet sent to you?	x	Yes	¨	No
Do you wish to be contacted at your home/office if fax CANNOT be sent within one hour?                                    Phone No:	¨	Yes	x	No

If you do not receive all material, please call (602) 364-7366, or (602) 364-7449

7. If the jointly administered cases were initially assigned to different judges, all cases should be transferred to the judge with the lowest numbered case.

Dated: Nov 9, 1999

UNITED STATES BANKRUPTCY JUDGE

6

Craig D. Hansen (AZ Bar No. 007405)

Thomas J. Salerno (AZ Bar No. 007492)

Renée Sandler Shamblin (AZ Bar No. 017473)

SQUIRE, SANDERS & DEMPSEY L.L.P.

Two Renaissance Square

40 North Central Avenue, Suite 2700

Phoenix, Arizona 85004-4498

(602) 528-4000

Proposed Attorneys for Baptist Foundation of Arizona, Inc.

and certain subsidiaries

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re.	)	In Proceedings Under Chapter 11
	)
BAPTIST FOUNDATION OF ARIZONA, INC.,	)	Case Nos.                      through
an Arizona nonprofit 501(c)(3) corporation, et al.,	)
	)	All Cases Jointly Administered Under Case
	)	No.
Debtors.	)
	)	EMERGENCY MOTION APPROVING
	)	CERTAIN CORPORATE GOVERNANCE
	)	PROVISIONS REGARDING THE
	)	RESTRUCTURING COMMITTEE FOR THE
	)	COMPANIES.
	)

BAPTIST FOUNDATION OF ARIZONA, INC., an Arizona 501(c) (3) nonprofit corporation (“BFA”), together with certain of its subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (collectively with BFA, the “Companies”), hereby move this Court for an order pursuant to Section 105 of the Bankruptcy Code authorizing and approving certain corporate governance procedures with respect to the five (5) person Restructuring Committee (as defined and described below). This Motion is supported by the entire record before the Court, the “Affidavit of Joe Panter in Support of Chapter 11 Petitions and First Day Motions,” and the facts included herein.

RESPECTFULLY SUBMITTED this 9th day of November, 1999

SQUIRE, SANDERS & DEMPSEY L.L.P.
Two Rennissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004-4441
By:
	Craig D. Hansen
	Thomas J. Salerno
	Reneé Sandler Shamblin
Proposed Attorneys for Baptist Foundation of
Arizona, Inc., and certain of its subsidiaries and
affiliates

2

MEMORANDUM OF POINTS AND AUTHORITIES

STATEMENT OF FACTS

1. On November 9, 1999, the Companies filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. A list of the Companies is attached hereto as Exhibit 1 to the Panter Affidavit and is incorporated herein by this reference.

2. Since the commencement of their Chapter 11 cases, the Companies continue to operate their business and manage their assets as debtors and debtors-in-possession pursuant to Sections 1l07(a) and 1108 of the Bankruptcy Code.

3. The Companies have filed a Motion requesting consolidation of the bankruptcy estates for administrative purposes. In addition, the Companies have also filed a Motion requesting substantive consolidation. The Companies have requested that this Motion be heard in conjunction with the confirmation hearing regarding the pre-negotiated plan of reorganization that will be filed shortly.

4. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and 1334. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. This Motion is a core proceeding pursuant to 28 U.S.C. § l57(b)(2). The statutory predicate for the relief requested herein is Section 105 of the Bankruptcy Code.

5. The Companies are comprised of 92 entities. As was widely reported prior to the commencement of these Chapter 11 cases, in August 1999, the Board of Directors of BFA terminated the employment of the individuals who were its then president, general counsel and controller. These individuals also served as directors and officers to a substantial number of the Companies prior to their termination. As a result of the potential liability associated with the financial difficulties of the Companies, it has been difficult (if not impossible) to recruit replacement officers and directors for some of the Companies.

3

6. In the early 1990s, BFA transferred a substantial amount of its underperforming real estate assets to ALO, Inc. and certain of its subsidiaries (collectively “ALO”) and EVIG, Inc and certain of its subsidiaries (collectively “EVIG”). Prior to the commencement of the above-captioned Chapter 11 cases, BFA regained control of both ALO and EVIG to ensure that their assets are available for funding the contemplated restructuring. Both ALO and EVIG are part of the Companies that have filed these Chapter 11 cases and the current Board of Directors of BFA has voting control over such entities.

7. The current Boards of Directors of BFA and Arizona Southern Baptist New Church Ventures, Inc. (“NCV”) (also one of the Companies), are appointed by the Arizona Southern Baptist Convention. The Boards of Directors of both BFA and NCV currently have in the aggregate more than 25 members. While the members of the Boards of Directors of BFA and NCV are well intentioned, they do not have significant (if any) experience in restructuring matters.

8. To facilitate the restructuring of the Companies and maximize the return to the more than 13,000 investors, the Boards of Directors of both BFA and NCV authorized the formation of a formal restructuring committee vested with all of the duties and powers to manage the Companies during the restructuring process (the “Restructuring Committee”). The Restructuring Committee will automatically terminate on the effective date of the pre-negotiated plan of reorganization implementing the restructuring contemplated by the “Restructuring Agreement Regarding Pre-Negotiated Plan or Reorganization”, dated as of October 31, 1999 (the “Restructuring Agreement”), among the Companies and the ad hoc committee of investors (the “Investor Committee”).

4

9. Each of the members of the Restructuring Committee were subjected to an extensive investigation by the professionals employed by BFA, as well as by the Investor Committee, to ensure that they are independent and capable of making the difficult business decisions necessary to successfully reorganize the Companies and maximize the recovery to all investors. The members of the Restructuring Committee were also chosen for their substantial business experience and knowledge of restructuring transactions. The members of the Restructuring Committee and their backgrounds are summarized below:

NAME	BACKGROUND
Jock Patton	Mr. Patton, Chairman of the Restructuring Committee, is an experienced executive with significant experience in corporate restructuring matters. Mr. Patton was head of the corporate securities practice at the Phoenix law firm of Streich Lang until 1991, when he left to join a software company, Stockval, where he served as president until it was sold in 1997. Since then, he has been a private investor and venture capitalist. Mr. Patton serves on the boards of directors of JDA Software Group, Hypercom Corp. and Stuart Entertainment, all public companies. He is a trustee of 18 mutual funds in the Pilgrim Mutual Fund Group, and a director of a privately held national airline based in Las Vegas, NV. He has previously served as a director of numerous other privately held companies. He has been involved in successful restructuring programs at several companies, including Stuart Entertainment and Unison Healthcare Corporation.
Joseph C. Chan	Mr. Chan is a private investor. In August 1987, Mr. Chan helped to found ASR Investment Corporation, a publicly traded real estate investment trust. For most of the period from August 1987 through March 1998 when that company was sold, Mr Chan served as a Director, Executive Vice President and Chief Operator Officer.
Joseph Panter	Mr. Panter has served as Chief Financial Officer and eventually Chief Executive Officer of Main Street & Main, a publicly held company with operations in 14 states, 3,000 employees and revenues of more than $250 million. More recently, he has been a local businessman engaged in real estate investment, merchant banking activities and financial advisory services.

5

Mark Roberts

Mr. Roberts has more than 11 years experience in business process re-engineering and financial reorganization. He served as vice president and Chief Financial Officer for a $100 million investment company and, previously, as Chief Financial Officer for a nationally known biotech company. His professional career started with five years of experience at a “Big 5” accounting firm. He graduated from the University of Virginia with a bachelor’s degree in Accounting.

Daniel Stringer

Mr. Stringer served as Executive Director-Treasurer for the Arizona Southern Baptist Convention from September 1990 to December 1996. Mr. Stringer received his undergraduate degree from Baylor University and post-graduate degree from Southern Baptist Theological Seminary. He currently serves on the Board of Directors for Golden Gate Baptist Theological Investment Advisory Board and the Arizona Chapter of Myasthenia Gravis Foundation of America.

10. Recognizing the critical importance of the Restructuring Committee, the Investor Committee insisted that the Restructuring Agreement be conditioned upon the formation of the Restructuring Committee and the approval by the Bankruptcy Court of its governance procedures. Specifically, Section 7.1(b)(i) of the Restructuring Agreement provides that the Restructuring Agreement terminates unless;

(i) The Bankruptcy Court shall have entered an order, within five (5) days following the Petition Date, approving the formation of the Restructuring Committee and the Committee’s governance and control of the Companies. See Section 7.1(b)(i) of the Restructuring Agreement (emphasis supplied).

RELIEF REQUESTED

11. Accordingly, in view of the size and complexity of these Chapter 11 cases, and to facilitate the governance of the Companies during the restructuring by experienced and independent business professionals, the Companies respectfully request that this Court grant, pursuant to Section 105 of the Bankruptcy Code, the following relief:

6

A. Approving the formation of the Restructuring Committee:

B. Approving the by-laws of the Restructuring Committee attached hereto as Exhibit “1.”

RESPECTFULLY SUBMITTED this 9th day of November, 1999.

SQUIRE, SANDERS & DEMPSEY L.L.P. Two Renaissance Square 40 North Central Avenue, Suite 2700 Phoenix, Arizona 85004
By:
	Craig D. Hansen Thomas J. Salerno Renée Sandler Shamblin
Proposed Attorneys for Baptist Foundation of Arizona, Inc. and certain subsidiaries

7

EXHIBIT 1

BYLAWS OF

THE

RESTRUCTURING COMMITTEE

BYLAWS

OF

THE RESTRUCTURING COMMITTEE

OF

BAPTIST FOUNDATION OF ARIZONA, INC.

ARTICLE I

RESTRUCTURING COMMITTEE

SECTION 1.1 General Powers.

Unless otherwise restricted by the United States Bankruptcy Court (the “Bankruptcy Court”) or these Bylaws, and subject to the duties of Restructuring Committee members (“Members”) as prescribed by these Bylaws, any and all corporate powers of Baptist Foundation of Arizona, Inc., an Arizona non-profit corporation (“BFA”), Arizona Southern Baptist New Church Ventures, Inc., an Arizona non-profit corporation (“NCV”), A.L.O., Inc., an Arizona non-profit corporation (“ALO”), E.V.I.G., Inc., an Arizona corporation (“EVIG”), and each of their respective subsidiaries, including, without limitation, those subsidiaries that are not currently debtors under Chapter 11 (collectively, the “Companies” and, individually, the “Company”), shall be exercised by or under the authority of, and the business and affairs of the Companies shall be controlled by, the Restructuring Committee.

SECTION 1.2 Restructuring Committee.

(a) Number, Qualification and Term of Office. The authorized number of Members of the Restructuring Committee shall be between three (3) and nine (9). The initial number of Members of the Restructuring Committee shall be set at five (5).

(b) Resignation. Any Member may resign from the Restructuring Committee at any time by giving written notice to the Chairman of the Restructuring Committee. Any such resignation shall take effect at the time specified therein, or if the time when such resignation shall become effective shall not be so specified, then such resignation shall take effect immediately upon its receipt by the Secretary of the Restructuring Committee; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(c) Nomination of Members. Candidates for membership of the Restructuring Committee shall be nominated only by the remaining members of the Restructuring Committee.

SECTION 1.3 Meetings of the Restructuring Committee.

(a) Regular Meetings. Regular meetings of the Restructuring Committee shall be held without call at such times as the Restructuring Committee shall from time to time by resolution determine. Notice of all such regular meetings hereby is dispensed with

(b) Special Meetings. Special meetings of the Restructuring Committee may be called by the Chairman of the Restructuring Committee pursuant to a resolution approved by a majority of the whole Restructuring Committee. Notice of the time and place of special meetings of the Restructuring Committee shall be given by the Secretary of the Restructuring Committee, or by any other Member assigned with such task by the Restructuring Committee. Such notice shall be given to each Member personally or by mail, messenger, telecopy, telephone or telegraph at such Member’s business or residence address. Notice by mail shall be deposited in the United States mail, postage prepaid, not later than the fifth day prior to the date fixed for such special meeting. Notice by telecopy, telephone or telegraph shall be sent, and notice given personally or by messenger shall be delivered, at least twelve hours prior to the time set for such special meeting. Notice of a special meeting of the Restructuring Committee need not contain a statement of the purpose of such special meeting.

(c) Adjourned Meetings. A majority of Members present at any regular or special meeting of the Restructuring Committee or any committee thereof, whether or not constituting a quorum, may adjourn any meeting from time to time until a quorum is present or otherwise. Notice of the time and place of holding any adjourned meeting shall not be required if the time and place are fixed at the meeting adjourned.

(d) Place of Meetings. Meetings of the Restructuring Committee, both regular and special, may be held within or without the State of Arizona.

(e) Participation by Telephone. Members of the Restructuring Committee or any committee may participate in any meeting of the Restructuring Committee or committee through the use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another, and such participation shall constitute presence in person at such meeting.

(f) Quorum. At all meetings of the Restructuring Committee, a majority of the total number of Members of the entire then authorized Restructuring Committee shall constitute a quorum for the transaction of business and the act of a majority of the Members present at any such meeting at which there is a quorum shall be the act of the Restructuring Committee or any committee, except as may be otherwise specifically provided by These Bylaws. A meeting of the Restructuring Committee at which a quorum initially is present may continue to transact business notwithstanding the withdrawal of Members so long as any action is approved by at least a majority of the required quorum for such meeting.

(g) Waiver of Notice. The transactions of any meeting of the Restructuring Committee for which notice is required, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present

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and if, either before or after the meeting, each of the Members not present signs a written waiver of notice, or a consent to hold such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

SECTION 1.4 Action Without Meeting.

Any action required or permitted to be taken by the Restructuring Committee at any meeting may be taken without a meeting if all members of the Restructuring Committee consent in writing and the writing or writings are filed with the minutes of the proceedings of the Restructuring Committee.

SECTION 1.5 Compensation of Members.

The initial compensation of the Restructuring Committee shall be fixed at $9,000 per quarter. Any member of the Restructuring Committee that is also employed by the Companies shall not be entitled to compensation as a member of the Restructuring Committee. The Members may be paid their expenses, if any, of attendance at each meeting of the Restructuring Committee.

SECTION 1.6 Committees of the Restructuring Committee.

(a) Committees. The Restructuring Committee may, by resolution adopted by a majority of the Restructuring Committee, designate one or more committees of the Restructuring Committee, each committee to consist of one or more Members together with such other persons as the Restructuring Committee shall deem necessary and appropriate for the purpose of managing the affairs of any Company and otherwise facilitating the reorganization of the Companies. Each such committee shall have and may exercise such of the powers of the Restructuring Committee in the management and affairs of the Companies as may be prescribed by the resolutions creating such committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Restructuring Committee. The Restructuring Committee may designate one or more Members as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Restructuring Committee to act at the meeting in the place of any such absent or disqualified member. The Restructuring Committee shall have the power, at any time for any reason, to change the members of any such committee, to fill vacancies, and to discontinue any such committee.

(b) Minutes of Meetings. Each committee shall keep regular minutes of its meetings and report the same to the Restructuring Committee when required.

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ARTICLE II

OFFICERS

SECTION 2.1 Officers.

(a) Number. During the pendency of the bankruptcy proceedings of the Companies, the officers of each of the Companies shall be chosen by the Restructuring Committee and shall include a Chief Executive Officer, a President, a Vice President, a Secretary and a Treasurer. The Restructuring Committee also may appoint one or more Assistant Secretaries or Assistant Treasurers and such other officers and agents with such powers and duties as it shall deem necessary. Any Vice President may be given such specific designation as may be determined from time to time by the Restructuring Committee. Any number of offices may be held by the same person, unless otherwise required by law or the Certificate of Incorporation or Articles of Incorporation, as the case may be, of the applicable Company. The Restructuring Committee may delegate to any other officer of any of the Companies the power to choose such other officers and to prescribe their respective duties and powers.

(b) Election and Term of Office. The officers shall be elected by the Restructuring Committee at such time as the Restructuring Committee deems necessary or appropriate and each officer shall hold office until such officer’s death, resignation or removal. Any officer of any of the Companies may be removed at any time, with or without cause, by a vote of the majority of the whole Restructuring Committee. Any vacancy occurring in any office may be filled by the Restructuring Committee.

(c) Salaries. The salaries of all officers of the Companies shall be fixed by the Restructuring Committee or a committee thereof from time to time.

SECTION 2.2 Chairman of the Restructuring Committee.

The Chairman of the Restructuring Committee shall preside at all meetings of the Restructuring Committee and shall have such other power and authority as may from time to time be assigned by the Restructuring Committee.

SECTION 2.3 Chief Executive Officer.

The Chief Executive Officer of each Company shall see that all orders and resolutions of the Restructuring Committee are carried into effect. Subject to the provisions of these Bylaws and to the direction of the Restructuring Committee, the Chief Executive Officer shall have the general and active management of the business of the applicable Company, may execute all contracts and any mortgages, conveyances or other legal instruments in the name of and on behalf of the Corporation, but this provision shall not prohibit the delegation of such powers by the Restructuring Committee to some other officer, agent or attorney-in-fact of the applicable Company or the assumption of such power by the Restructuring Committee.

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SECTION 2.4 President.

In the absence or disability of the Chief Executive Officer, the President shall perform all the duties of the Chief Executive Officer, and when so acting shall have all the powers of and be subject to all the restrictions upon, the Chief Executive Officer. The President shall have such other powers and perform such other duties as from time to time may be prescribed by the Restructuring Committee or these Bylaws.

SECTION 2.5 Vice Presidents.

In the absence or disability of the Chief Executive Officer and the President, the Vice Presidents in order of their rank as fixed by the Restructuring Committee, or if not ranked, the Vice President designated by the Restructuring Committee, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them, respectively, by the Restructuring Committee or these Bylaws.

SECTION 2.6 Secretary and Assistant Secretaries.

The Secretary of each Company shall record or cause to be recorded, in books provided for the purpose, minutes of the meetings of the stockholders, the Restructuring Committee and all committees of the Restructuring Committee; see that all notices are duly given in accordance with the provisions of these Bylaws as required by law; be custodian of all corporate records (other than financial) and of the seal of the applicable Company, and have authority to affix the seal to all documents requiring it and attest to the same; give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Restructuring Committee; and in general, shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to him by the Restructuring Committee or by the President of the applicable Company. At the request of the Secretary, or in the Secretary’s absence or disability, any Assistant Secretary shall perform any of the duties of the Secretary and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary.

SECTION 2.7 Treasurer and Assistant Treasurers.

The Treasurer of each Company shall keep or cause to be kept the books of account of the Companies and shall render statements of the financial affairs of the applicable Company in such form and as often as required by the Restructuring Committee. The Treasurer, subject to the order of the Restructuring Committee, shall have custody of all funds and securities of the applicable Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Restructuring Committee. He shall disburse the funds of the applicable Company as may be ordered by the Restructuring Committee, taking proper vouchers for such disbursements. The Treasurer shall perform all other duties commonly incident to his office and shall perform such other duties and have such other powers as the Restructuring Committee or applicable President shall designate from time to time. At the request of the Treasurer, or in the Treasurer’s absence or disability,

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any Assistant Treasurer may perform any of the duties of the Treasurer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. Except where by law the signature of the Treasurer is required, each of the Assistant Treasurers shall possess the same power as the Treasurer to sign all certificates, contracts, obligations and other instruments of the Corporation.

ARTICLE III

INDEMNIFICATION AND INSURANCE

SECTION 3.1 Right to Indemnification.

Subject to the terms and conditions of this Article III, each Member of the Restructuring Committee or an officer who was or is made a party or witness or is threatened to be made a party or witness to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a Member of the Restructuring Committee or an officer (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action or inaction in an official capacity while serving as a Member, shall be indemnified and held harmless by the Companies to the fullest extent authorized by the law, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ER1SA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a Member and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided herein with respect to proceedings to enforce rights to indemnification, the Companies shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Restructuring Committee. The right to indemnification conferred in this Section shall include the right to be paid by the Companies the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses).

SECTION 3.2 Specific Limitations on Indemnification.

Notwithstanding anything in this Article to the contrary, the Companies shall not be obligated to make any payment to any indemnitee with respect to any proceeding (i) to the extent that payment is actually made to the indemnitee under any insurance policy, or is made to indemnitee by the Companies or an affiliate thereof otherwise than pursuant to this Article, (ii) for any expense, liability or loss in connection with a proceeding settled without the Companies written consent, which consent, however, shall not be unreasonably withheld, or (iii) where prohibited by applicable law.

SECTION 3.3 Contract.

The provisions of this Article shall be deemed to be a contract between the Companies and each Member and officer who serves in such capacity at any time while such Section is in

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effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter based in whole or in part upon any such state of facts

SECTION 3.4 Partial Indemnity.

If the indemnitee is entitled under any provision of this Article to indemnification by the Companies for some or a portion of the expenses, liabilities or losses incurred in connection with a proceeding but not, however, for all of the total amount thereof, the Companies shall nevertheless indemnify the indemnitee for the portion thereof to which the indemnitee is entitled. Moreover, notwithstanding any other provision of this Article, to the extent that the indemnitee has been successful on the merits or otherwise in defense of any or all claims relating in whole or in part to a proceeding or in defense of any issue or matter therein, including dismissal without prejudice, the indemnitee shall be indemnified against all loss, expense and liability incurred in connection with the portion of the proceeding with respect to which indemnitee was successful on the merits or otherwise.

SECTION 3.5 Non-Exclusivity of Rights.

The rights to indemnification and to the advancement of expenses conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, Certificate of Incorporation or Articles of Incorporation of any of the Companies, bylaw, agreement, vote of disinterested Members or otherwise.

SECTION 3.6 Notice by Indemnitee and Defense of Claim.

The indemnitee shall promptly notify the Restructuring Committee and the Companies in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter, whether civil, criminal, administrative or investigative, but the omission so to notify the Restructuring Committee and the Companies will not relieve it from any liability which it may have to the indemnitee if such omission does not prejudice the Companies’ rights. If such omission does prejudice the Companies’ rights, the Companies will be relieved from liability only to the extent of such prejudice; nor will such omission relieve the Companies from any liability which it may have to the indemnitee otherwise than under this Article III. With respect to any proceedings as to which the indemnitee notifies the Corporation of the commencement thereof:

(a) Each Company, as applicable, will be entitled to participate therein at its own expense; and

(b) Each Company, as applicable, will be entitled to assume the defense thereof, with counsel reasonably satisfactory to the indemnitee; provided, however, that the applicable Company shall not be entitled to assume the defense of any proceeding (and this Section 3.6 shall be inapplicable to such proceeding) if the indemnitee shall have reasonably concluded that there may be a conflict of interest between the applicable Company and the indemnitee with respect to such proceeding. After notice from the Company to the indemnitee of us election to

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assume the defense thereof, the Company will not be liable to the indemnitee under this Article III for any expenses subsequently incurred by the indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. The indemnitee shall have the right to employ its own counsel in such proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the indemnitee unless:

(i) The employment of counsel by the indemnitee has been authorized by the Company in writing; or

(ii) The Company shall not have employed counsel to assume the defense in such proceeding or shall not have assumed such defense and be acting in connection therewith with reasonable diligence;

in each of which cases the fees and expenses of such counsel shall be at the expense of the Company.

(c) The Company shall not settle any proceeding in any manner which would impose any penalty or limitation on the indemnitee without the indemnitee’s written consent; provided, however, that the indemnitee will not unreasonably withhold his consent to any proposed settlement.

ARTICLE IV

MISCELLANEOUS

SECTION 4.1 Execution of Instruments.

The Restructuring Committee may, in its discretion, determine the method and designate the signatory Member, officer or officers, or other persons, to execute any corporate instrument or document or to sign the corporate name without limitation, except where otherwise provided by law or these Bylaws. Such designation may be general or confined to specific instances.

SECTION 4.2 Voting of Securities Owned by the Companies.

All stock and other securities of other corporations held by any Company shall be voted, and all proxies with respect thereto shall be executed, by the person so authorized by resolution of the Restructuring Committee.

SECTION 4.3 Amendments.

These Bylaws may be altered, amended or repealed by the approval of a majority the Members of the Restructuring Committee.

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re:	)	In Proceedings Under Chapter 11
	)
BAPTIST FOUNDATION OF ARIZONA, INC.,	)	Case No 99-13275 through 99-13364
an Arizona nonprofit 501(c)(3) corporation, et al.,	)
	)	All Cases Jointly Administered Under Case
	)	No. 99-13275
Debtors.	)
	)	ORDER: AUTHORIZING AND
	)	APPROVING THE FORMATION OF THE
	)	RESTRUCTURING COMMITTEE AND THE
	)	BY-LAWS GOVERNING THE POWERS
	)	AND DUTIES OF SUCH COMMITTEE

This matter came before the Court pursuant to the “Emergency Ex Parte Motion Approving Certain Corporate Governance Provisions Regarding The Restructuring Committee For the Companies” (the “Motion”), filed on November 9, 1999, by the above captioned debtors and debtors-in-possession (the “Debtors” or the “Companies”). All capitalized terms used in this Order shall have the same meaning as such terms are defined in the Motion unless otherwise noted. Based upon the Motion, the entire record before the Court and the statements on the record by counsel for the Investors Committee, and other good cause appearing therefor.

IT IS HEREBY ORDERED as follows:

1. The Motion shall be, and hereby is, approved.

2. The Restructuring Committee shall be, and hereby is, approved and is vested with all the powers and duties to govern and operate the Companies pending further order of this Court; and

3. The By-Laws of the Restructuring Committee attached hereto as Exhibit 1 and incorporated herein by this reference shall be, and hereby are, approved.

Dated this 9^th day of November 1999.

United States Bankruptcy Judge

EXHIBIT 1

BYLAWS OF

THE

RESTRUCTURING COMMITTEE

BYLAWS

OF

THE RESTRUCTURING COMMITTEE

OF

BAPTIST FOUNDATION OF ARIZONA, INC.

ARTICLE I

RESTRUCTURING COMMITTEE

SECTION 1.1 General Powers.

Unless otherwise restricted by the United States Bankruptcy Court (the “Bankruptcy Court”) or these Bylaws, and subject to the duties of Restructuring Committee members (“Members”) as prescribed by these Bylaws, any and all corporate powers of Baptist Foundation of Arizona, Inc., an Arizona non-profit corporation (“BFA”), Arizona Southern Baptist New Church Ventures, Inc., an Arizona non-profit corporation (“NCV”), A.L.O. Inc., an Arizona non-profit corporation (“ALO”), E.V.I.G., Inc., an Arizona corporation (“EVIG”), and each of their respective subsidiaries, including, without limitation, those subsidiaries that are not currently debtors under Chapter II (collectively, the “Companies” and, individually, the “Company”), shall be exercised by or under the authority of, and the business and affairs of the Companies shall be controlled by the Restructuring Committee.

SECTION 1.2 Restructuring Committee.

(a) Number, Qualification and Term of Office. The authorized number of Members of the Restructuring Committee shall be between three (3) and nine (9). The initial number of Members of the Restructuring Committee shall be set at five (5).

(b) Resignation. Any Member may resign from the Restructuring Committee at any time by giving written notice to the Chairman of the Restructuring Committee. Any such resignation shall take effect at the time specified therein, or if the time when such resignation shall become effective shall not be so specified, then such resignation shall take effect immediately upon its receipt by the Secretary of the Restructuring Committee; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(c) Nomination of Members. Candidates for membership of the Restructuring Committee shall be nominated only by the remaining members of the Restructuring Committee.

SECTION 1.3 Meetings of the Restructuring Committee.

(a) Regular Meetings. Regular meetings of the Restructuring Committee shall be held without call at such times as the Restructuring Committee shall from time to time by resolution determine. Notice of all such regular meetings hereby is dispensed with.

(b) Special Meetings. Special meetings of the Restructuring Committee may be called by the Chairman of the Restructuring Committee pursuant to a resolution approved by a majority of the whole Restructuring Committee. Notice of the time and place of special meetings of the Restructuring Committee shall be given by the Secretary of the Restructuring Committee, or by any other Member assigned with such task by the Restructuring Committee Such notice shall be given to each Member personally or by mail, messenger, telecopy, telephone or telegraph at such Member’s business or residence address. Notice by mail shall be deposited in the United States mail, postage prepaid, not later than the fifth day prior to the date fixed for such special meeting. Notice by telecopy, telephone or telegraph shall be sent, and notice given personally or by messenger shall be delivered, at least twelve hours prior to the time set for such special meeting. Notice of a special meeting of the Restructuring Committee need not contain a statement of the purpose of such special meeting.

(c) Adjourned Meetings. A majority of Members present at any regular or special meeting of the Restructuring Committee or any committee thereof, whether or not constituting a quorum, may adjourn any meeting from time to time until a quorum is present or otherwise. Notice of the time and place of holding any adjourned meeting shall not be required if the time and place are fixed at the meeting adjourned.

(d) Place of Meetings. Meetings of the Restructuring Committee, both regular and special, may be held within or without the State of Arizona.

(e) Participation by Telephone. Members of the Restructuring Committee or any committee may participate in any meeting of the Restructuring Committee or committee through the use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another, and such participation shall constitute presence in person at such meeting.

(f) Quorum. At all meetings of the Restructuring Committee, a majority of the total number of Members of the entire then authorized Restructuring Committee shall constitute a quorum for the transaction of business and the act of a majority of the Members present at any such meeting at which there is a quorum shall be the act of the Restructuring Committee or any committee, except as may be otherwise specifically provided by These Bylaws. A meeting of the Restructuring Committee at which a quorum initially is present may continue to transact business notwithstanding the withdrawal of Members so long as any action is approved by at least a majority of the required quorum for such meeting.

(g) Waiver of Notice. The transactions of any meeting of the Restructuring Committee for which notice is required, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present

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and if, either before or after the meeting, each of the Members not present signs a written waiver of notice, or a consent to hold such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

SECTION 1.4 Action Without Meeting.

Any action required or permitted to be taken by the Restructuring Committee at any meeting may be taken without a meeting if all members of the Restructuring Committee consent in writing and the writing or writings are filed with the minutes of the proceedings of the Restructuring Committee.

SECTION 1.5 Compensation of Members.

The initial compensation of the Restructuring Committee shall be fixed at $9,000 per quarter. Any member of the Restructuring Committee that is also employed by the Companies shall not be entitled to compensation as a member of the Restructuring Committee. The Members may be paid their expenses, if any, of attendance at each meeting of the Restructuring Committee.

SECTION 1.6 Committees of the Restructuring Committee.

(a) Committees. The Restructuring Committee may, by resolution adopted by a majority of the Restructuring Committee, designate one or more committees of the Restructuring Committee, each committee to consist of one or more Members together with such other persons as the Restructuring Committee shall deem necessary and appropriate for the purpose of managing the affairs of any Company and otherwise facilitating the reorganization of the Companies. Each such committee shall have and may exercise such of the powers of the Restructuring Committee in the management and affairs of the Companies as may be prescribed by the resolutions creating such committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Restructuring Committee. The Restructuring Committee may designate one or more Members as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Restructuring Committee to act at the meeting in the place of any such absent or disqualified member. The Restructuring Committee shall have the power, at any time for any reason, to change the members of any such committee, to fill vacancies, and to discontinue any such committee.

(b) Minutes of Meetings. Each committee shall keep regular minutes of its meetings and report the same to the Restructuring Committee when required.

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ARTICLE II

OFFICERS

SECTION 2.1 Officers.

(a) Number. During the pendency of the bankruptcy proceedings of the Companies, the officers of each of the Companies shall be chosen by the Restructuring Committee and shall include a Chief Executive Officer, a President, a Vice President, a Secretary and a Treasurer. The Restructuring Committee also may appoint one or more Assistant Secretaries or Assistant Treasurers and such other officers and agents with such powers and duties as it shall deem necessary. Any Vice President may be given such specific designation as may be determined from time to time by the Restructuring Committee. Any number of offices may be held by the same person, unless otherwise required by law or the Certificate of Incorporation or Articles of Incorporation, as the case may be, of the applicable Company. The Restructuring Committee may delegate to any other officer of any of the Companies the power to choose such other officers and to prescribe their respective duties and powers.

(b) Election and Term of Office. The officers shall be elected by the Restructuring Committee at such time as the Restructuring Committee deems necessary or appropriate and each officer shall hold office until such officer’s death, resignation or removal. Any officer of any of the Companies may be removed at any time, with or without cause, by a vote of the majority of the whole Restructuring Committee. Any vacancy occurring in any office may be filled by the Restructuring Committee.

(c) Salaries. The salaries of all officers of the Companies shall be fixed by the Restructuring Committee or a committee thereof from time to time.

SECTION 2.2 Chairman of the Restructuring Committee.

The Chairman of the Restructuring Committee shall preside at all meetings of the Restructuring Committee and shall have such other power and authority as may from time to time be assigned by the Restructuring Committee.

SECTION 2.3 Chief Executive Officer.

The Chief Executive Officer of each Company shall see that all orders and resolutions of the Restructuring Committee are carried into effect. Subject to the provisions of these Bylaws and to the direction of the Restructuring Committee, the Chief Executive Officer shall have the general and active management of the business of the applicable Company, may execute all contracts and any mortgages, conveyances or other legal instruments in the name of and on behalf of the Corporation, but this provision shall not prohibit the delegation of such powers by the Restructuring Committee to some other officer, agent or attorney-in-fact of the applicable Company or the assumption of such power by the Restructuring Committee.

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SECTION 2.4 President.

In the absence or disability of the Chief Executive Officer, the President shall perform all the duties of the Chief Executive Officer, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer. The President shall have such other powers and perform such other duties as from time to time may be prescribed by the Restructuring Committee or these Bylaws.

SECTION 2.5 Vice Presidents.

In the absence or disability of the Chief Executive Officer and the President, the Vice Presidents in order of their rank as fixed by the Restructuring Committee, or if not ranked, the Vice President designated by the Restructuring Committee, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them, respectively, by the Restructuring Committee or these Bylaws.

SECTION 2.6 Secretary and Assistant Secretaries.

The Secretary of each Company shall record or cause to be recorded, in books provided for the purpose, minutes of the meetings of the stockholders, the Restructuring Committee and all committees of the Restructuring Committee; see that all notices are duly given in accordance with the provisions of these Bylaws as required by law; be custodian of all corporate records (other than financial) and of the seal of the applicable Company, and have authority to affix the seal to all documents requiring it and attest to the same give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Restructuring Committee and in general, shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to him by the Restructuring Committee or by the President of the applicable Company. At the request of the Secretary, or in the Secretary’s absence or disability any Assistant Secretary shall perform any of the duties of the Secretary and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary.

SECTION 2.7 Treasurer and Assistant Treasurers.

The Treasurer of each Company shall keep or cause to be kept the books of account of the Companies and shall render statements of the financial affairs of the applicable Company in such form and as often as required by the Restructuring Committee. The Treasurer, subject to the order of the Restructuring Committee, shall have custody of all funds and securities of the applicable Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Restructuring Committee. He shall disburse the funds of the applicable Company as may be ordered by the Restructuring Committee, taking proper vouchers for such disbursements. The Treasurer shall perform all other duties commonly incident to his office and shall perform such other duties and have such other powers as the Restructuring Committee or applicable President shall designate from time to time. At the request of the Treasurer, or in the Treasurer’s absence or disability,

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any Assistant Treasurer may perform any of the duties of the Treasurer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer, Except where by law the signature of the Treasurer is required, each of the Assistant Treasurers shall possess the same power as the Treasurer to sign all certificates, contracts, obligations and other instruments of the Corporation.

ARTICLE III

INDEMNIFICATION AND INSURANCE

SECTION 3.1 Right to Indemnification

Subject to the terms and conditions of this Article III, each Member of the Restructuring Committee or an officer who was or is made a party or witness or is threatened to be made a party or witness to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a Member of the Restructuring Committee or an officer (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action or inaction in an official capacity while serving as a Member, shall be indemnified and held harmless by the Companies to the fullest extent authorized by the law, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnittee who has ceased to be a Member and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided herein with respect to proceedings to enforce rights to indemnification, the Companies shall indemnify any such indemnitee in connection with 3 proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Restructuring Committee. The right to indemnification conferred in this Section shall include the right to be paid by the Companies the expenses incurred in defending any such proceeding in advance of its final disposition thereinafter an “advancement of expenses)

SECTION 3.2 Specific Limitations on Indemnification

Notwithstanding anything in this Article to the contrary the Companies shall not be obligated to make any payment to any indemnitee with respect to any proceeding (i) to the extent that payment is actually made to the indemnitee under any insurance policy, or is made to indemnitee by the Companies or an affiliate thereof otherwise than pursuant to this Article, (ii) for any expense, liability or loss in connection with a proceeding settled without the companies’ written consent, which consent, however, shall not be unreasonably withheld, or (iii) where prohibited by applicable law.

SECTION 3.3 Contract.

The provisions of this Article shall be deemed to be a contract between the Companies and each Member and officer who serves in such capacity at any time while such Section is in a

6

effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter based in whole or in part upon any such state of facts.

SECTION 3.4 Partial Indemnity.

If the indemnitee is entitled under any provision of this Article to indemnification by the Companies for some or a portion of the expenses, liabilities or losses incurred in connection with a proceeding but not, however, for all of the total amount thereof, the Companies shall nevertheless indemnify the indemnitee for the portion thereof to which the indemnitee is entitled. Moreover, notwithstanding any other provision of this Article, to the extent that the indemnitee has been successful on the merits or otherwise in defense of any or all claims relating in whole or in part to a proceeding or in defense of any issue or matter therein, including dismissal without prejudice, the indemnitee shall be indemnified against all loss, expense and liability incurred in connection with the portion of the proceeding with respect to which indemnitee was successful on the merits or otherwise.

SECTION 3.5 Non-Exclusivity of Rights.

The rights to indemnification and to the advancement of expenses conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute. Certificate of Incorporation or Articles of Incorporation of any of the Companies, bylaw, agreement, vote of disinterested Members or otherwise.

SECTION 3.6 Notice by Indemnitee and Defense of Claim.

The indemnitee shall promptly notify the Restructuring Committee and the Companies in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter, whether civil, criminal, administrative or investigative, but the omission so to notify the Restructuring Committee and the Companies will not relieve it from any liability which it may have to the indemnitee if such omission does not prejudice the Companies’ rights. If such omission does prejudice the Companies’ rights, the Companies will be relieved from liability only to the extent of such prejudice; nor will such omission relieve the Companies from any liability which it may have to the indemnitee otherwise than under this Article III. With respect to any proceedings as to which the indemnitee notifies the Corporation of the commencement thereof:

(a) Each Company, as applicable, will be entitled to participate therein at its own expense; and

(b) Each Company, as applicable, will be entitled to assume the defense thereof, with counsel reasonably satisfactory to the indemnitee provided, however, that the applicable Company shall not be entitled to assume the defense of any proceeding (and this Section 3.6 shall be inapplicable to such proceeding) if the indemnitee shall have reasonably concluded that there may be a conflict of interest between the applicable Company and the indemnitee with respect to such proceeding. After notice from the Company to the indemnitee of its election to

7

assume the defense thereof, the Company will not be liable to the indemnitee under this Article III for any expenses subsequently incurred by the indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. The indemnitee shall have the right to employ its own counsel in such proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the indemnitee unless:

(i) The employment of counsel by the indemnitee has been authorized by the Company in writing: or

(ii) The Company shall not have employed counsel to assume the defense in such proceeding or shall not have assumed such defense and be acting in connection therewith with reasonable diligence;

in each of which cases the fees and expenses of such counsel shall be at the expense of the Company.

(c) The Company shall not settle any proceeding in any manner which would impose any penalty or limitation on the indemnitee without the indemnitee’s written consent; provided, however, that the indemnitee will not unreasonably withhold his consent to any proposed settlement.

ARTICLE IV

MISCELLANEOUS

SECTION 4.1 Execution of Instruments.

The Restructuring Committee may, in its discretion, determine the method and designate the signatory Member, officer or officers, or other persons, to execute any corporate instrument or document or to sign the corporate name without limitation, except where otherwise provided by law or these Bylaws. Such designation may be general or confined to specific instances.

SECTION 4.2 Voting of Securities Owned by the Companies.

All stock and other securities of other corporations held by any Company shall be voted, and all proxies with respect thereto shall be executed, by the person so authorized by resolution of the Restructuring Committee.

SECTION 4.3 Amendments.

These Bylaws may be altered, amended or repealed by the approval of a majority the Members of the Restructuring Committee.

8

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re:	)	In Proceedings Under Chapter 11
	)
BAPTIST FOUNDATION OF ARIZONA, an Arizona nonprofit corporation; ARIZONA SOUTHERN BAPTIST NEW CHURCH VENTURES, INC., an Arizona nonprofit corporation; A.L.O., INC., an Arizona corporation, E.V.I.G., INC., an Arizona corporation, et al.,	) ) ) ) ) )	Case Nos. 99-13275-ECF-GBN through 99-13364-ECF-RTB All Cases Jointly Administered Under Case No. 99-13275-ECF-GBN (Substantive Consolidation Pending)
	)
Debtors.	)
	)
	)

DEBTORS’ DISCLOSURE STATEMENT CONCERNING THE

FIRST AMENDED JOINT LIQUIDATING PLAN OF REORGANIZATION

SQUIRE, SANDERS & DEMPSEY L.L.P. 40 North Central Avenue, Suite 2700 Phoenix, Arizona 85004		GREENBERG TRAURIG LLP One East Camelback Road, Suite 1100 Phoenix, Arizona 85012
Telephone:	(602) 528-4000	Telephone:	(602) 263-2300
Attorneys:	Craig D. Hansen	Attorney:	Charles R. Sterbach
	Thomas J. Salerno
	Larry L. Watson

Counsel to BAPTIST FOUNDATION OF ARIZONA, et al., Debtors Counsel to ARIZONA SOUTHERN BAPTIST NEW CHURCH VENTURES, INC., et al., Debtors

HENDRICKSON & ASSOCIATES

4411 S. Rural Road, Suite 201

Tempe, Arizona 85282

Telephone: (480) 345-7500

Attorney: Brian W. Hendrickson

Counsel to A.L.O., INC. and E.V.I.G., INC., et al.,

Debtors

BAKER & McKENZIE

101 West Broadway, Twelfth Floor

San Diego, California 92101

Telephone: (619) 236-1441

Attorneys: Ali M. M. Mojdehi

       Peter W. Ito

                          Nellwyn W. Voorhies

Counsel to OFFICIAL COLLATERALIZED INVESTORS’ COMMITTEE

Solely as Co-Proponent of the Plan

Dated:   September 25, 2000

    Phoenix, Arizona

administered under Case No. 99-13275-ECF-GBN. Since the Petition Date, the Debtors have operated their businesses and managed their properties as debtors-in-possession, under the authority of sections 1107(a) and 1108 of the Bankruptey Code. See “Chapter 11 Filings of Tega Cay Communities, L.L.C., TC Villages, L.L.C. and Tega Cay Club L.L.C.” on page 59 for a description of the other three affiliates of the Debtors who recently filed Chapter 11 petitions.

First Day Motions and Orders

Upon the filing of their Chapter 11 cases, the Debtors obtained numerous first day orders of the Court to facilitate the orderly and cost-effective administration of the bankruptcy cases and the operations of the Debtors, including the authority to have all of the Debtors’ cases jointly administered, the ability to pay pre-petition wages and benefits to employees and the authority to streamline the Debtors’ complex cash management system and implement a more efficient system.

Certain Corporate Governance Motions

The combined Board of Directors of BFA and NCV consisted of over 30 members. To facilitate a more orderly decision making process and provide needed restructuring experience, BFA and NCV formed a formal restructuring committee vested with all of the duties and powers of the Board of Directors for such companies to manage and oversee the Debtors and their non-debtor affiliates during the restructuring process (the “Restructuring Committee”). A summary of the post petition asset sales and cash flows of the Debtors while they were under the control of the Restructuring Committee is attached as Schedule 11.

The Restructuring Committee was formed immediately prior to the commencement of the Chapter 11 cases. Each of the members of the Restructuring Committee was the subject of an extensive investigation by the new professionals employed by BFA to ensure that they had the skills and experience necessary to act as a member of the Restructuring Committee and that they were independent and capable of making the difficult business decisions necessary to successfully reorganize the Debtors and maximize the recovery to all Creditors. The members of the Restructuring Committee and their backgrounds are summarized below.

NAME	BACKGROUND
Jock Patton	Mr. Patton, Chairman of the Restructuring Committee, is an experienced executive with significant experience in corporate restructuring matters. Mr. Patton was head of the corporate securities practice at the Phoenix law firm of Streich Lang until 1991, when he left to join a software company, StockVal, where he served as president until it was sold in 1997. Since then, he has been a private investor and venture capitalist. Mr. Patton serves on the boards of directors of JDA Software Group and Hypercom Corp., both public companies. He is a trustee of the 32 mutual funds comprising the Pilgrim Group, and a director of privately held National Airlines, based in Las Vegas, NV. He has previously served as a director of numerous other publicly held companies. He has been involved in successful restructuring programs at several companies, including Stuart Entertainment, Unison Healthcare Corporation and America West Airlines.
Joseph Panter	Mr. Panter has served as Chief Financial Officer and eventually Chief Executive Officer of Main Street & Main, a publicly held company with operations in 14 states, 3,000 employees and revenues of more than $250

41

	million. More recently, he has been a local businessman engaged in real estate investment, merchant banking activities and financial advisory services, Mr. Panter is a former officer and director of certain of the Debtors and an owner of Whitestone
Joseph C. Chan	Mr. Chan is a private investor. In August 1987, Mr. Chan helped to found ASR Investment Corporation, a publicly traded real estate investment trust. For most of the period from August 1987 through March 1998 when that company was sold, Mr. Chan served as a Director, Executive Vice President and Chief Operator Officer.
Mark A. Roberts	Mr. Roberts’ professional experience started with five years of experience at KPMG LLP. He then served for five years as the West Coast Chief Financial Officer for a nationally known biotech company with total revenues in excess of $1 billion. Mr. Roberts served as vice president and Chief Financial Officer for TFCI, Inc., a for-profit subsidiary of the Debtors, from June 1998 until August 1999. Mr. Roberts has more than 11 years of experience in business process re-engineering and financial reorganization. He graduated from the University of Virginia McIntire School of Commerce with a bachelor’s degree in Accounting.
Daniel Stringer	Mr. Stringer served as Executive Director-Treasurer for the Arizona Southern Baptist Convention from September 1990 to December 1996. Mr. Stringer received his undergraduate degree from Baylor University and post-graduate degree from Southern Baptist Theological Seminory. He currently serves on the Board of Directors for Golden Gate Baptist Theological Investment Advisory Board and the Arizona Chapter of Myasthenia Gravis Foundation of America. Mr. Stringer is a former director of certain of the Debtors.

Upon the filing of the Chapter 11 cases and approval by the Court of the Articles and By-Laws governing the Restructuring Committee, the Boards of Directors of both BFA and NCV ceased to exist. The Court approved such Articles and By-Laws on November 9, 1999. The By-Laws of the Restructuring Committee may not be amended without approval from the Court, and no member of the Restructuring Committee may be replaced without approval from the Court. The Restructuring Committee will automatically terminate upon the effective date of the Liquidating Plan.

Motion to Retain Ordinary Course Professionals

The Debtors filed this motion to retain those professionals who provide services that support the day-to-day operations of their business. These professionals include various accountants, independent financial consultants, attorneys, law firms, and other professionals. These professionals are not related to services regarding the Debtors Chapter 11 cases. In addition, the Unsecured Creditors’ Committee has reserved the right to review the fees of the ordinary course professionals. The Court entered the Order approving this motion on November 9, 1999.

Interim Compensation Order

The Debtors filed this motion to retain those professionals who are providing services to support the Debtors’ efforts in these Chapter 11 cases, as a well as to retain those professionals providing services to the Unsecured Creditors’ Committee. The motion allows both the professionals and Unsecured Creditors’ Committee members to submit their expense and fee statements every 30 days to the Debtors

42

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ARIZONA

In re: BAPTIST FOUNDATION OF ARIZONA, INC., an Arizona nonprofit 501(c)(3) corporation, et al.,	) ) ) )	In Proceedings Under Chapter 11 Case Nos. 99-13275-ECF-GBN through 99-13364-ECF-RTB
Debtors.	) ) )	All Cases Jointly Administered Under Case No. 99-13275-ECF-GBN
	) ) ) )	ORDER APPROVING DISCLOSURE STATEMENT, DISCLOSURE STATEMENT SUMMARY AND RELATED SOLICITATION MATERIALS PURSUANT TO 11 U.S.C. § 1125
	) ) )	Date of Hearing: September 20, 2000 Time of Hearing: 9:00 a.m. (MST)
	)

BAPTIST FOUNDATION OF ARIZONA, INC., an Arizona 501(c)(3) nonprofit corporation and certain of its subsidiaries, debtors and debtors-in-possession in the above-captioned cases (collectively, “BFA” or “Debtors”) filed the “Disclosure Statement Concerning the First Amended Liquidating Plan of Reorganization,” on September 8, 2000, (the “Disclosure Statement”) and the “Debtors Disclosure Statement Summary With Respect to Investors in Classes 3A and 3B Under the First Amended Joint Liquidating Plan of Reorganization,” on September 14, 2000 (the “Disclosure Statement Summary”). This Court conducted a disclosure statement hearing on September 20, 2000 (the “Hearing”). Appearing at such Hearing were

representatives of the Debtors, the Official Unsecured Creditors’ Committee (“UCC”), the Official Collateralized Investors Committee (“CIC”), the Office of the United States Trustee, Cook Family Investments, L.L.C., Carolyn Marshall, individually and as Trustee of the Marshall Revocable Intervivos Trust Under Declaration of Trust dated 2 February, 1998 and the Arizona Southern Baptist Convention. The Court having considered the arguments and representations of counsel at the Hearing, the entire record before the Court and other good and sufficient cause appearing therefor.

THE COURT FINDS as follows;

A. Capitalized terms not otherwise defined in this Order have the meanings given to them in the Disclosure Statement and the Disclosure Statement Summary.

B. Notice of the Hearing was sufficient under the circumstances.

C. The Motion and relief requested therein constitute “core proceedings” in which this Court may enter final and dispositive orders under 28 U.S.C. §§ 1334 and 157(b)(2)(A) and (O) and Bankruptcy Code § 105.

D. The Disclosure Statement and the Disclosure Statement Summary do not contain any materially misleading statements and contain adequate information, including, without limitation, adequate discussions and disclosure of: (a) the First Amended Joint Liquidating Plan of Reorganization dated as of September 8, 2000, as may be modified from time to time (the “Plan”); (b) significant events preceding the Debtors’ Chapter 11 cases; (c) the operation of the Debtors’ business during the course of these Chapter 11 cases; (d) risk factors affecting the Plan; (e) an analysis setting forth the estimated return that creditors would receive under the Plan; and (f) federal tax consequences of the Plan. Accordingly, the Disclosure Statement contains “adequate information” within the meaning of Bankruptcy Code § 1125.

2

ACCORDINGLY, IT IS HEREBY ORDERED as follows:

1. The Disclosure Statement, the Disclosure Statement Summary and the letters of recommendation of the UCC and CIC are APPROVED for use in soliciting acceptances and rejections of the Plan from creditors and interest holders in accordance with the Court’s Order (A) Establishing Procedures For Soliciting And Tabulating Votes On The Joint Liquidating Plan Of Reorganization; (B) Approving Form Of Ballots; (C) Approving Form of Recommendations to Accept the Plan; (D) Approving the Voting Procedures Concerning Certain Common Trusts and Individual Trust and (E) Approving Notice And Publication Procedures (the “Solicitation and Voting Order”) entered concurrently herewith.

2. The plan proponents are authorized and directed to commence solicitation of votes to accept or reject the Plan in accordance with the procedures set forth in the Solicitation and Voting Order no later than October 2, 2000.

3. The Debtors, the CIC and the UCC may, without further approval from the Court, modify or amend the Plan and other supporting documents to cure any ambiguity, to correct or supplement, or to eliminate any inconsistencies, as long as such changes do not materially effect the rights of Creditors or Investors or the information disclosed in the Disclosure Statement and the Disclosure Statement Summary.

4. To the extent not otherwise resolved or withdrawn at the hearing on September 20, 2000, all objections to the approval of the Disclosure Statement, Disclosure Statement Summary or the letters of recommendation of the UCC and the CIC shall be, and hereby are, overruled and denied.

DATED this 29^th day of Sept, 2000.

Honorable George B. Nielsen Jr.

United States Bankruptcy Judge

3

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

FOUNDATION ADMINISTRATIVE SERVICES, INC.

an Arizona corporation

Foundation Administrative Services, Inc., a corporation organized and existing under the laws of the State of Arizona (the “Corporation”) hereby certifies as follows:

FIRST: The name of the Corporation is Foundation Administrative Services, Inc. The date of the filing of its original Articles of Incorporation with the Arizona Corporation Commission was December 11, 1985 (the “Original Articles of Incorporation”). The name under which the Corporation filed its Original Articles of Incorporation was Foundation Administrative Services, Inc.

SECOND: These Amended and Restated Articles of Incorporation amend, restate and integrate the provisions of the Original Articles of Incorporation of the Corporation, in accordance with the applicable provisions of Section 10-1008 of the General Corporation Law of the State of Arizona, as it may be amended from time to time.

THIRD: These Amended and Restated Articles of Incorporation were approved by the United States Bankruptcy Court for the District of Arizona (the “Bankruptcy Court”) pursuant to that certain Confirmation Order, dated December 22, 2000 (the “Confirmation Order”) which also approved the “First Amended Joint Liquidating Plan of Reorganization of the Debtors under Chapter 11 of the Bankruptcy Code,” dated September 25, 2000 (the “Plan”) relating to In re Baptist Foundation of Arizona, an Arizona nonprofit corporation; Arizona Southern Baptist New Church Ventures, Inc., an Arizona nonprofit corporation; A.L.O., Inc., an Arizona corporation; E.V.I.G., Inc., an Arizona corporation, et al., as Debtors, jointly administered under case number 99-13275-ECF-GBN (the “Bankruptcy Case”).

FOURTH: The Bankruptcy Court had jurisdiction over the Bankruptcy Case pursuant to 28 U.S.C. §§ 157 and 1334.

FIFTH: The name of the Corporation shall remain Foundation Administrative Services, Inc.

SIXTH: The purposes for which the corporation is organized include the transaction of any or all lawful business for which corporations may be incorporated under the laws of the State of Arizona, as they may be amended from time to time.

SEVENTH: The aggregate number of shares which the corporation shall have authority to issue is One Hundred (100) of One Dollar ($1.00) par value. Such shares may be issued in such classes or series as the Directors of the Corporation see fit. The voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, if any, of each such series or class may differ from those of any and all other

series or classes of shares at any time outstanding, and the Directors of the Corporation are hereby expressly granted authority to fix or alter, by resolution or resolutions, the designation, number, voting powers, preferences, and relative, participating, optional, and other special rights, and the qualifications, limitations, and restrictions thereof, of each such series or class to the fullest extent permitted by law.

EIGHTH: The name and address of the statutory agent of the corporation is Andrew Service Corporation of Arizona, 40 North Central Avenue, Suite 2700, Phoenix, Arizona 85004. The address of the initial known place of business of the corporation is 1313 East Osborn Road, Suite 250, Phoenix, Arizona 85014.

NINTH: The number of directors constituting the board of directors of the corporation shall be not less than one (1) nor more than nine (9). The name and address of the person who is to serve as a director until his successor is elected and qualified is:

NAME	ADDRESS
Clifton R. Jessup, Jr.	1313 East Osborn Road, Suite 250 Phoenix, Arizona 85014

TENTH: (a) The Corporation shall indemnify, to the extent permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a Judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect, of any

claim, issue or matter as to which such person shall have been, adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c) To the extent that a director, officer, employee or agent of a Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to paragraphs (a) and (b) of this Article, or in defense of any claim issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees actually and reasonably incurred by him in connection therewith).

(d) Any indemnification under paragraphs (a) or (b) of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) or (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (3) by the members.

(e) Expenses (including attorneys’ fees) incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in paragraph (d) of this Article upon receipt of an undertaking by or on behalf for the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this section.

(f) The indemnification provided by this section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of members or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(g) Notwithstanding any other provision of this Article Tenth to the contrary, the Corporation shall not indemnify, and shall have no obligation to indemnify, any person, reimburse any person for, or pay to or on behalf of any person, including any person who is a director, officer, employee or agent of the Corporation or any other entity, any amounts whatsoever or for any reason whatsoever, relating to any claim, action, suit or other liability (whether liquidated, contingent or otherwise) against such person arising on or prior to the date of the later to occur of (a) the date of these Amended and Restated Articles of Incorporation or (b) the consummation of the transactions contemplated by that certain Acquisition Agreement dated September 7, 2000, originally by and among Baptist Foundation of Arizona, Inc.; Foundation Administrative Services, Inc.; ALO, Inc.; ALO Pleasant Point, Inc.; Pleasant Point, LLC; and Shea Homes, Inc.

ELEVENTH: No director of the Corporation shall be personally liable to the Corporation or its shareholders for money damages for any action taken or any failure to take any action as a director, except liability for any of the following: (a) the amount of a financial benefit received by a director to which the director is not entitled; (b) an intentional infliction of harm on the Corporation or the shareholders; (c) a violation of section 10-833 of the Arizona Revised Statutes or any successor statute; or (d) an intentional violation of criminal law. The limitation of liability provided herein shall continue after a director has ceased to occupy such position as to acts or omissions occurring during such director’s term or terms of office, and no amendment or repeal of this Article Eleventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

Dated: January 22, 2001	FOUNDATION ADMINISTRATIVE SERVICES, INC.
	By:	The Restructuring Committee of Baptist Foundation of Arizona, on behalf of Foundation Administrative Services, Inc.
		By:
			Mark A. Roberts
			Member of Committee

STATE OF ARIZONA

ARTICLES OF AMENDMENT

TO THE ARTICLES OF INCORPORATION

OF

FOUNDATION ADMINISTRATIVE SERVICES, INC.

Foundation Administrative Services, Inc. has adopted the following Articles of Amendment to its Articles of Incorporation in accordance with section 10-1006 of the Arizona Revised Statutes.

FIRST: The name of the corporation is Foundation Administrative Services, Inc. (the “Corporation”).

SECOND: Paragraph FIFTH of the Amended and Restated Articles of Incorporation is amended to read as follows:

“FIFTH: The name of the corporation is Shea Homes Southwest, Inc.”

THIRD: Paragraph EIGHTH of the Amended and Restated Articles of Incorporation is amended is read as follows:

“EIGHTH: The name and address of the statutory agent of the corporation is Steven L. Lisker, Esq., c/o Bryan Cave LLP, Two North Central Avenue, Suite 2200, Phoenix, Arizona 85004-4406. The address of the initial known place of business of the corporation is 8800 North Gainey Center Drive, Suite 350, Scottsdale, Arizona 85258.”

FOURTH: The foregoing amendment to the Articles of Incorporation of the Corporation was duly adopted by its shareholders and Board of Directors on January 22, 2001.

FIFTH: The number of shares of the Corporation outstanding at the time of such adopted was 100; and the number of shares entitled to vote thereon was 100.

SIXTH: The shares of the corporation’s common stock entitled to vote were voted in favor of or against the amendment, as follows:

For	Against
100		None

SEVENTH: The amendment does not provide for an exchange, reclassification or cancellation of the issued shares of the Corporation.

EIGHT: The amendment does not affect the stated capital of the Corporation.

IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed these Articles of Amendment as of the 22 day of January, 2001.

FOUNDATION ADMINISTRATIVE SERVICES, INC.
By
	James G. Shontere, Secretary

291567

2

EX-3.30

Exhibit 3.30

AMENDED AND RESTATED BYLAWS

OF

FOUNDATION ADMINISTRATIVE SERVICES, INC.

(as amended and restated effective January 22, 2001)

I.    CORPORATION ARTICLES

1.01 References Thereto. Any reference herein made to the Corporation’s Articles will be deemed to refer to its Articles of Incorporation and all amendments thereto as at any given time on file with the Arizona Corporation Commission, together with any and all certificates theretofore filed by the Corporation with the Arizona Corporation Commission pursuant to applicable law.

1.02 Seniority Thereof. The Articles will in all respects be considered senior and superior to these Bylaws, with any inconsistency to be resolved in favor of the Articles, and with these Bylaws to be deemed automatically amended from time to time to eliminate any such inconsistency which may then exist.

II.    CORPORATION OFFICES

2.01 Known Place of Business. The known place of business of the Corporation in the State of Arizona shall be 1313 East Osborn Road, Suite 250, Phoenix, Arizona 85014. The Corporation may have such other offices, either within or without the State of Arizona, as the Board of Directors may designate or as the business of the Corporation may require from time to time.

2.02 Change Thereof. The known place of business and the office of its statutory agent may be changed from time to time by the Board of Directors by filing a statement with the Arizona Corporation Commission pursuant to Section 10-013, Arizona Revised Statutes.

III.    SHAREHOLDERS MEETING

3.01 Annual Meeting. Each annual meeting of the shareholders shall be held in November of each year, beginning with the year 1986, at such time and place as the Board of Directors shall choose (or, in the absence of action by the Board, as set forth in the notice given, or waiver signed, with respect to such meeting pursuant to Section 3.03 below). If any such annual meeting is for any reason not held on the date determined as aforesaid, a deferred annual meeting may thereafter be called and held in lieu thereof, and the same proceedings (including the election of directors) may be conducted thereat. Any Director elected at any annual meeting, or deferred annual meeting, will continue in office until the election of his successor, subject to his earlier resignation pursuant to Section 7.01.

3.02 Special Meeting. Special meetings of the shareholders may be held whenever and wherever called for by the Chairman of the Board, the President, or the Board of Directors, and shall be called by the President at the request of the holders of not less than ten percent (10%) of all issued and outstanding shares of the Corporation entitled to vote at the meeting.

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3.03 Notices. Not less than ten (10) nor more than fifty (50) days (inclusive of the date of meeting) before the date of any meeting of the shareholders and at the discretion of the person or persons calling the meeting, the Secretary of the Corporation will cause a written notice setting forth the time, place and general purposes of the meeting to be deposited in the mail with postage prepaid, addressed to each shareholder of record at his last address as it then, or on the applicable record date, appears on the Corporation’s records. Any shareholder may waive call or notice of any annual or special meeting (and any adjournment thereof) at any time before, during or after it is held. Attendance of a shareholder at any such meeting in person or by proxy will automatically evidence his waiver of call and notice of such meeting (and any adjournment thereof) unless he or his proxy is attending the meeting for the express purpose of objecting to the transaction of business thereat because it has not been properly called or noticed. No call or notice of a meeting of the shareholders will be necessary if each of them waives the same in writing or by attendance as aforesaid.

3.04 Shareholders of Record. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders (and at any adjournment thereof), or shareholders entitled to express written consent to corporate action without a meeting, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other lawful action, the Board of Directors may fix in advance a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) nor less than ten (10) days prior to such other action.

If no record date is fixed for determining shareholders entitled to notice of or to vote at a meeting of shareholders, the record date shall be at four o’clock (4:00) in the afternoon on the day before the day on which notice is given or, if notice is waived, at the commencement of the meeting. If no record date is fixed for determining shareholders entitled to express written consent to corporate action without meeting, the record date shall be the time of the day on which the first written consent is served upon an officer or director of the Corporation.

A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided however, that the Board of Directors may fix a new record date for the adjourned meeting and further provided that the adjournment or adjournments of any such meeting do not exceed thirty (30) days in the aggregate.

3.05 Voting Record. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make a complete record of the shareholders entitled to vote at a meeting of the shareholders (and at any adjournment thereof), arranged in alphabetical order, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof.

3.06 Proxies. Any shareholder entitled to vote thereat may vote by proxy at any meeting of the shareholders (and at any adjournment thereof) which is specified in such proxy, provided that

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his proxy is executed in writing by him or his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. The burden of proving the validity of any proxy undated, irrevocable or otherwise contested at any such meeting of the shareholders will rest with the person seeking to exercise the same. A telegram or cablegram appearing to have been transmitted by a shareholder or by his duly authorized attorney-in-fact may be accepted as a sufficiently written and executed proxy.

3.07 Voting. Except for the election of Directors (which will be governed by cumulative voting laws of Arizona) and except as may otherwise be required by the Corporation’s Articles, each issued and outstanding share of the Corporation (specifically excluding shares held in the treasury of the Corporation) represented at any meeting of the shareholders in person or by a proxy given as provided in Section 3.06 above, will be entitled to one (1) vote. Unless otherwise required by the Corporation’s Articles or by statute, any question submitted to the shareholders will be resolved by a majority of the votes cast thereon provided that such votes constitute a majority of the quorum of the particular meeting, whether or not such quorum is then present. The voting will be by ballot on any question as to which begins, by any person entitled to vote on such question; otherwise, a voice vote will suffice. No ballot or change of vote will be accepted after the polls have been declared closed following the ending of the announced time for voting.

3.08 Voting of Shares by Certain Holders. Shares of the Corporation held by another corporation may be voted by such other corporation’s officer, agent or proxy as its Bylaws may prescribe or, in the absence of such a bylaw provision, by any other person designated by resolution of its board of directors and such officer, agent or other person so designated may vote such corporation’s shares in this Corporation in person or by proxy appointed by him.

Shares held by an administrator, executor, guardian or conservator may be voted by such representative, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee, other than a trustee in bankruptcy, may be voted by such representative, either in person or by proxy, but no such trustee shall be entitled to vote shares held by him without a transfer of such shares into his name; provided, however, that shares standing in the name of BFA Liquidation Trust may be voted by the trustee of the BFA Liquidation Trust, either in person or by proxy, without a transfer of such shares into the name of such trustee.

Shares outstanding in the name of a receiver, trustee in bankruptcy or assignee for the benefit of creditors may be voted by such representative, either in person or by proxy. Shares held by or under the control of such a receiver or trustee may be voted by such receiver or trustee, either in person or by proxy, without the transfer thereof into his name, if authority to do so be contained in an appropriate order of the court by which such receiver or trustee was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

If shares stand in the name of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or tenants by community property or otherwise, or if two (2) or more persons have the same fiduciary relationship

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respecting the same shares, unless the Corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect:

(1) If only one votes, his act binds; (2) If more than one votes, the act of the majority so voting binds all; and (3) If more than one votes, but the vote is evenly split on any particular matter, each faction may vote the shares in question proportionally.

Shares standing in the name of a married woman but not also standing in the name of her husband with such a designation of the mutual relationship on the certificate, may be voted and all rights incident thereto may be exercised in the same manner as if she were unmarried.

Shares standing in the name of a married man but not also standing in the name of his wife with such a designation of the mutual relationship on the certificate, may be voted and all rights incident thereto may be exercised in the same manner as if he were unmarried.

Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor counted for quorum purposes. Nothing, in this section shall be construed as limited the right of the Corporation to vote its own stock held by it in a fiduciary capacity.

3.9 Quorum. At any meeting of the shareholders, the presence in person or by proxy of the holders of a majority of all issued and outstanding shares of the Corporation will constitute a quorum of the shareholders for all purposes. In the absence of a quorum, any meeting may be adjourned from time to time (but not exceeding thirty (30) days in the aggregate) by its Chairman until a quorum is formed without notice by announcement at the meeting, or with notice pursuant to Section 3.03 above, if a new record date is fixed for the adjourned meeting. At any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal or temporary absence of enough shareholders to leave less than a quorum.

3.10 Election Inspectors. The Board of Directors, in advance of any meeting of the shareholders, may appoint an election inspector or inspectors to act at such meeting (and any adjournment thereof). If an election inspector or inspectors are not so appointed, the chairman of the meeting may, or upon request of any person entitled to vote at the meeting, will make such appointment. If any person appointed as an inspector fails to appear or to act, a substitute may be appointed by the Chairman of the meeting. If appointed, the election inspector or inspectors (acting through a majority of them if there be more than one) will determine the number of shares outstanding, the authenticity, validity and effect of proxies and the number of shares represented at the meeting in person or by proxy; they will receive and count votes, ballots and consents and announce the results thereof; they will hear and determine all challenges and questions pertaining to proxies and voting; and, in general, they will perform such acts as may be proper to conduct elections and voting will complete fairness to all shareholders. No such election inspector need be a shareholder of the Corporation.

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3.11 Organization and Conduct of Meetings. Each meeting of the shareholders will be called to order and thereafter chaired by the Chairman of the Board of Directors if there is one; or, if not, or if the Chairman of the Board is absent or so requests, then by the President; or if both the Chairman of the Board and the President are unavailable, then by such other officer of the Corporation or such shareholder as may be appointed by the Board of Directors. The Corporation’s Secretary will act as secretary of each meeting of the shareholders; in his absence the Chairman of the meeting may appoint any person (whether a shareholder or not) to act as secretary thereat. After calling a meeting to order, the Chairman thereof may require the registration of all shareholders intending to vote in person, and the filing of all proxies, with the elected inspector or inspectors, if one or more have been appointed (or, if not, with the secretary of the meeting). After the announced time for such filing of proxies has ended, no further proxies or changes, substitutions or revocations, of proxies will be accepted. If directors are to be elected, a tabulation of the proxies so filed will, if any person entitled to vote in such election so requests, be announced at a meeting (or adjournment thereof) prior to the closing of the election polls. Absent a showing of bad faith on his part, the Chairman of a meeting will, among other things, have absolute authority to fix the period of time allowed for the registration of shareholders and the filing of proxies, to determine the order of business to be conducted at such meeting and to establish reasonable rules for expediting the business of the meeting (including any informal or question and answer portions thereof).

3.12 Shareholder Approval or Ratification. The Board of Directors may submit to the shareholders any contract or act for their approval or ratification at any duly constituted meeting of the shareholders (the notice of which either includes mention of the proposed submittal or is waived as provided in Section 3.03 above) or, alternatively, the Board of Directors may submit any such contract or act for the approval or ratification of the shareholders acting by unanimous written consent without a meeting pursuant to Section 3.14 below. If any contract or act so submitted is approved or ratified by a majority of the votes cast thereon at such meeting or by such unanimous written consent, the same will be valid and binding upon the Corporation as the act of its shareholders pursuant to Section 3.07 above and Section 3.14 below.

3.13 Informalities and Irregularities. All informalities or irregularities in any call or notice of a meeting of the shareholders, or in the areas of credentials, proxies, quorums, voting and similar matters, will be deemed waived if no objection is made at the meeting.

3.14 Action by Shareholders Without a Meeting. Any action required or permitted to be taken at a meeting of the shareholders of the Corporation may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same effect as a unanimous vote of the shareholders of the Corporation.

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IV.    BOARD OF DIRECTORS

4.01 Membership. The Board of Directors will be comprised of not less than one (1) nor more than nine (9), as established from time to time by the shareholders. The Board may fill any vacancies which may occur in its membership, whether resulting from an increase in the size of that Board as aforesaid or otherwise, pending the next annual meeting of the shareholders. Directors need not be residents of the State of Arizona or shareholders of the Corporation.

4.02 Regular Meetings. A regular annual meeting of the Board of Directors, is to be held immediately after and at the same place as each annual meeting of the shareholders. Regular meetings, other than the annual ones, may be held at regular intervals at such places and at such times as the Board of Directors may provide.

4.03 Special Meetings. Special meetings of the Board of Directors may be held whenever and wherever (if within the Continental United States) called for by the Chairman of the Board, the President, or the number of Directors which would be required to constitute a quorum.

4.04 Notices. No notice need be given of regular meetings of the Board of Directors. Written notice of the time and place of any special meeting will be given to each Director in person or via mail or telegram addressed to him at his latest address appearing on the Corporation’s records. The notice shall include notice of all matters then intended by the Chairman or President to be brought to the Directors for their consideration. With the consent of a majority of all Directors, other matters may be considered by the Directors notwithstanding lack of notice. Notice to any Director of any such special meeting will be deemed given sufficiently in advance when, if given by mail, the same is deposited in the mail with first-class postage prepaid, at least four (4) days before the Meeting date or, if personally delivered or given by telegram, the same is handed to the Director, or the telegram is delivered to the telegraph office for fast transmittal at least forty-eight (48) hours prior to the convening of the meeting. Any Director may waive call or notice of any meeting (and any adjournment thereof) unless he is attending the meeting for the express purpose of objecting to the transaction of business thereat because it has not been properly called or noticed. No call or notice of a meeting of Directors will be necessary if each Director waives the same in writing or by attendance as aforesaid. Any meeting, once properly called and noticed (or as to which call and notice have been waived as aforesaid) and at which a quorum is formed, may be adjourned to another time and place by a majority of those in attendance.

4.05 Quorum. A quorum for the transaction of business at any meeting or adjourned meeting of the Board of Directors will consist of a majority of those Directors then in office.

4.06 Voting. Any question submitted to any meeting or adjourned meeting of the Board of Directors will be resolved by a majority of the votes cast thereon. Directors may not vote by proxy. A Director may participate in a meeting by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.

4.07 Executive Committee. The Board of Directors may, by resolution unanimously adopted by the whole Board, name three (3) or more of its members as an executive committee to serve

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until otherwise directed by the Board, but not to exceed one (1) year. At the end of each one year period, the committee may be reappointed by a new resolution. Such executive, committee will have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation while the Board is not in session, subject to such limitations as may be included in the Board’s resolution; provided, however, that such executive committee shall not have the authority of the Board of Directors in reference to the following matters: (1) The submission to shareholders of any action that requires shareholders’ authorization or approval under Title 10, Chapter 1 of Arizona Revised Statutes; (2) The filing of vacancies on the Board of Directors or in any committee of the Board of the Directors, (3) The amendment or repeal of the Bylaws, or the adoption of new Bylaws; and (4) The fixing of compensation of Directors for serving on the Board or on any committee of the Board of Directors. A majority of those named to the executive committee will constitute a quorum.

4.08 Other Committees. The Board of Directors may from time to time, by resolution adopted by a majority of the whole Board, appoint other standing or temporary committees from its membership and vest such committees with such powers as the Board may include in its resolution to serve until otherwise directed by the Board, but not to exceed one (1) year. At the end of each one year period, the committee may be reappointed by a new resolution. Such committees shall be restricted in their authority as specifically set forth with respect to the executive committee in Section 4.07 above. A majority of those named to any such committee will constitute a quorum.

4.09 Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors or of any committee at which action is taken on any corporate matter will be presumed to have assented to the action taken unless his dissent is entered in the minutes of the meeting or unless he files his written dissent by registered or certified mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent will not be available to a Director who voted in favor of the action.

4.10 Compensation. By resolution of the Board of Directors, each Director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors, or of any committee, and may be paid a fixed sum for attendance at each such meeting or a stated salary as a Director or committee member. No such payment will preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.

4.11 Action by Directors Without a Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors or of a committee of this Corporation may be taken without a meeting if all Directors or committee members, as the case may be, consent thereto in writing. Such consent shall have the same effect as a unanimous vote of the Directors or committee members of the Corporation.

V.    OFFICERS - GENERAL

5.01 Elections and Appointments. The Board of Directors will elect or appoint the officers of the Corporation, including (if they choose to have one) the Chairman of the Board. Such election or appointment will regularly take place at each annual meeting of the Board of Directors, but elections of officers may be held at any other meeting of the Board. A person

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elected or appointed to any office will continue to hold that office until the election or appointment of his successor, subject to action earlier taken pursuant to Section 5.04 or 7.01 below. Any two (2) or more offices may be held by the same person at the same time, except for the offices of President and Secretary.

5.02 Additional Appointments. In addition to the officers contemplated in Article VI below, the Board of Directors may appoint any other person or entity to perform such duties as may be prescribed from time to time by the Board of Directors, by the President, or, in the case of assistant officers (as, for example, one or more assistant secretaries), by his or their superior officers (which, in the foregoing example, would be the Secretary). Each of such assistant officers (in the order designated by the Board) will be vested with all of the powers and charged with all of the duties (including those herein specifically set forth) of his superior officer in the event of such superior officer’s absence or disability.

5.03 Bonds and Other Requirements. The Board of Directors may require any officer to give bond to the Corporation (with sufficient surety, and conditioned for the faithful performance of the duties of his office) and to comply with such other conditions as may from time to time be required of him by the Board.

5.04 Removal or Delegations. The Board of Directors may, whenever in its judgment the best interests of the Corporation will be served thereby, remove any officer or agent of the Corporation or temporarily delegate his powers and duties to any other officer or to any Director. Such removal or delegation shall be without prejudice to the contract rights, if any, of the person so removed or whose powers and duties have been delegated. Election or appointment of an officer or agent shall not of itself create contract rights.

5.05 Salaries. Officer salaries may from time to time be fixed by the Board of Directors or (except as to his own) be left to the discretion of the President. No officer will be prevented from receiving a salary by reason of the fact that he is also a Director of the Corporation.

VI.    SPECIFIC OFFICERS

6.01 Chairman of the Board of Directors. The Board may elect a Chairman to serve as a general executive officer of the Corporation and, if specifically designated as such by the Board, as the Chief Executive Officer of the Corporation. If elected, the Chairman will preside at all meetings of the Board of Directors and be vested with such other powers and duties as the Board may from time to time delegate to him.

6.02 President and Vice Presidents. The President will supervise the business and affairs of the Corporation and the performance by all of its other officers of their respective duties subject to the control of the Board of Directors and of its Chairman if the Chairman has been specifically designated as Chief Executive Officer of the Corporation (failing which the President will be such Chief Executive Officer). One or more Vice Presidents may be elected by the Board of Directors, each of whom (in the order designated by the Board) will be vested with all of the powers and charged with all of the duties (including those herein specifically set forth) of the President in the event of his absence or disability. Each Vice President will perform such other duties as may from time to time be delegated or assigned to him by the Chief Executive Officer,

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the President or the Board of Directors. The President may represent the Corporation at any meeting of the shareholders of any other corporation in which this Corporation then holds shares, and may vote this Corporation’s shares in such other corporation in person or by proxy appointed by him, provided that the Board of Directors may from time to time confer the foregoing authority upon any other person or persons.

6.03 Secretary. The Secretary will keep the minutes of meetings of the shareholders, the Board of Directors and any committee, and all unanimous written consents of the shareholders, the Board of Directors and any committee of this Corporation, see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law, be custodian of the corporate records and corporate seal, have general charge of the stock transfer book of the Corporation (unless the Board of Directors designates otherwise) and, in general, perform all duties incident to this office. Except as may otherwise be specifically provided in a resolution of the Board of Directors, the Secretary and each Assistant Secretary will be a proper officer to impress the Corporation’s seal on any instrument signed by the President or any Vice President, and to attest to the same.

6.04 Treasurer. The Treasurer will keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, and will cause all money and other valuable effects to be deposited in the name and to the credit of the Corporation in such depositories, subject to withdrawal in such manner as may be designated by the Board of Directors. He will render to the President and to the Directors (at the regular meetings of the Board or whenever they may require), an account of all his transactions as Treasurer and of the financial condition of the Corporation.

VII.    RESIGNATIONS, VACANCIES AND REMOVAL

7.01 Resignations. Any director may resign at any time by giving written notice of his or her resignation to the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when it shall become effective is not specified therein, it shall take effect immediately upon its receipt by the President or the Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

7.02 Vacancies. If the office of any Director, committee member or officer becomes vacant by reason of his death, resignation, disqualification, removal or otherwise, the Board of Directors may choose a successor to hold office for the unexpired term.

7.03 Removal of Directors. Directors may be removed, with or without cause, as provided from time to time by the Arizona Revised Statutes as then in effect.

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VIII.    SEAL

8.01 Form Thereof. The Board of Directors may provide for a seal of the Corporation which will have inscribed thereon the name of the Corporation, the state, and the year of its incorporation.

IX.    CERTIFICATES REPRESENTING SHARES

9.01 Form Thereof. Each certificate representing shares of the Corporation will be in such form as may from time to time be approved by the Board of Directors, will be consecutively numbered and will exhibit the holder’s name, the number of shares represented thereby, and such other information as may be required by law.

9.02 Signatures and Seal Thereon. All certificates issued for shares of the Corporation (whether new, re-issued or transferred) will bear the signatures of the President and of the Secretary (or an Assistant Secretary) and the impression of the Corporation’s corporate seal. The signatures of such officers of the Corporation, and the impression of its corporate seal, may be in facsimile form on any certificates which are manually countersigned by an independent transfer agent and/or registered by a registrar duly appointed by the Corporation and other than the Corporation itself or one of its employees. If a supply of unissued certificates bearing the facsimile signature of a person remains when that person ceases to hold the office of the Corporation indicated on such certificates, they may still be countersigned, registered, issued and delivered by the Corporation’s transfer agent and/or registrar thereafter, the same as though such person had continued to hold the office indicated on such certificate.

9.03 Ownership. The Corporation will be entitled to treat the registered owner of any shares as the absolute owner thereof and, accordingly, will not be bound to recognize any beneficial, equitable or other claim to, or interest in, such share on the part of any other person, whether or not it has notice thereof, except as may expressly be provided by statute.

9.04 Transfers. Transfers of shares of the Corporation may be made on the stock transfer books of the Corporation only at the discretion of the person named in the certificate therefor (or by his duly authorized attorney-in-fact) and upon the surrender of such certificate.

9.05 Lost Certificate. In the event of the loss, theft or destruction of any certificate representing shares of this Corporation or of any predecessor corporation, the Corporation may issue (or, in the case of any such shares as to which a transfer agent and/or registrar have been appointed, may direct such transfer agent and/or registrar to countersign, register and issue) a new certificate and cause the same to be delivered to the owner of the shares represented thereby, provided that the owner shall have submitted such evidence showing the circumstances of the alleged loss, theft or destruction, and his ownership of the certificate, as the Corporation considers pertinent, and further provided that a bond shall have been provided in form and amount satisfactory to the Corporation (and to its transfer agent and/or registrar, if applicable), unless the shares represented by the certificate lost, stolen or destroyed has at the time of the issuance of the new certificate a market value of Five Hundred Dollars ($500.00) or less (as determined by the Corporation on the basis of such information as it may select) in which case the requirements of a bond may be waived. The Corporation may act through its President, any Vice President, its Secretary or its Treasurer for any purpose of this Section 9.05.

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X.    SPECIAL CORPORATE ACTS

10.01 Execution of Written Instruments. Contracts, deeds, bills of sale, assignments, options, mortgages, pledges, notes, bonds, evidences of indebtedness or any other instrument of significant importance to the Corporation shall be executed by the President unless the Board of Directors shall in a particular situation designate another procedure for their execution.

10.02 Loans. No loans shall be contracted on behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Loans may be made by the Corporation to any officer or director as provided under the laws of the State of Arizona.

10.03 Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers as are designated by the Board of Directors.

XI.    DIVIDENDS

11.01 Subject to such restrictions or requirements as may be imposed by law or the Corporation’s Articles or as may otherwise be binding upon the Corporation, the Board of Directors may, from time to time, declare and the Corporation may pay dividends on shares of the Corporation outstanding on the dates of record fixed by the Board, to be paid in cash, in property, or in shares of the Corporation or as of such payment or distribution dates as the Board may prescribe. Notwithstanding anything to the contrary contained herein, upon the unanimous vote of the shareholders, the Board of Directors shall pay dividends on shares of the Corporation outstanding on the date of record, and in the amount indicated, in the shareholders’ resolution.

XII.    AMENDMENTS

12.01 These Bylaws may be altered, amended, supplemented, repealed or temporarily or permanently suspended, in whole or in part, or new Bylaws may be adopted, at any duly constituted meeting of the shareholders or the Board of Directors, the notice of which meeting either includes mention of the proposed action relative to the Bylaws or is waived as provided above in Section 3.03 or Section 4.04 (whichever is applicable) or, alternatively, by the unanimous written consent of the shareholders or of the Directors pursuant to Section 3.14 or Section 4.11 (whichever is applicable). If, however, any such action arises as a matter of necessity at any such meeting and is otherwise proper, no notice thereof will be required.

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EX-3.31

Exhibit 3.31

		LLC-1	File #  201112610268
	State of California             Secretary of State

LIMITED LIABILITY COMPANY ARTICLES OF ORGANIZATION
A $70.00 filing fee must accompany this form.
IMPORTANT – Read instructions before completing this form.	This Space For Filing Use Only

ENTITY NAME (End the name with the words “Limited Liability Company,” or the abbreviations “LLC” or “L.L.C.” The words “Limited” and “Company” may be abbreviated to “Ltd.,” and “Co.,” respectively.)

1.      NAME OF LIMITED LIABILITY COMPANY

         SHEA HOMES VANTIS, LLC

PURPOSE (The following statement is required by statute and should not be altered.)

2.      THE PURPOSE OF THE LIMITED LIABILITY COMPANY IS TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY FOR WHICH A LIMITED LIABILITY COMPANY MAY BE ORGANIZED UNDER THE BEVERLY-KILLEA LIMITED LIABILITY COMPANY ACT.

INITIAL AGENT FOR SERVICE OF PROCESS (If the agent is an individual, the agent must reside in California and both Items 3 and 4 must be completed. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 3 must be completed (leave Item 4 blank).

3.      NAME OF INITIAL AGENT FOR SERVICE OF PROCESS

         PAUL E. MOSLEY

4.      IF AN INDIVIDUAL, ADDRESS OF INITIAL AGENT FOR SERVICE OF PROCESS IN CALIFORNIA	CITY	STATE	ZIPCODE
655 BREA CANYON ROAD	WALNUT	CA	91789

MANAGEMENT (Check only one)

5.      THE LIMITED LIABILITY COMPANY WILL BE MANAGED BY:

x ONE MANAGER

¨ MORE THAN ONE MANAGER

¨ ALL LIMITED LIABILITY COMPANY MEMBER(S)

ADDITIONAL INFORMATION

6.      ADDITIONAL INFORMATION SET FORTH ON THE ATTACHED PAGES, IF ANY, IS INCORPORATED HEREIN BY THIS REFERENCE AND MADE A PART OF THIS CERTIFICATE.

EXECUTION

7.      I DECLARE I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.

MAY 6, 2011
DATE	SIGNATURE OF ORGANIZER
	PAUL E. MOSLEY
	TYPE OR PRINT NAME OF ORGANIZER
LLC-1 (REV 04/2007)	APPROVED BY SECRETARY OF STATE

EX-3.32

Exhibit 3.32

OPERATING AGREEMENT

OF

SHEA HOMES VANTIS, LLC

This Operating Agreement (this “Agreement”) of SHEA HOMES VANTIS, LLC, a California limited liability company (the “Company”), is entered into effective as of May 6, 2011, by J.F. Shea Co., Inc. a Nevada corporation (the “Member”), as sole member of the Company.

R E C I T A L S

WHEREAS, the Member caused the Company to be formed pursuant to the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”); and

WHEREAS, the Member, as sole member of the Company, desires to enter into this Agreement to define formally the terms of such limited liability company and the Member’s rights and obligations with respect thereto.

A G R E E M E N T

NOW, THEREFORE, the Member, as sole member of the Company, hereby agrees as follows:

Section 1 FORMATION

1.1 Name. The name of the Company is SHEA HOMES VANTIS, LLC.

1.2 Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

1.3 Office and Registered Agent. The Company shall continuously maintain an office and registered agent in the State of California as required by section 17057 of the Act. The address of the office of the Company in California is 655 Brea Canyon Road, Walnut, California 91789. The registered agent for service of process of the Company is Paul E. Mosley, c/o J.F. Shea Co., Inc., 655 Brea Canyon Road, Walnut, California 91789.

1.4 Member. The name and the address of the Member is J.F. Shea Co., Inc., 655 Brea Canyon Road, Walnut, California 91789.

1.5 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Certificate. The Articles of Organization of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. SHEA HOMES VANTIS, LLC, a California limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

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Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. J.F. SHEA CO., INC. a Nevada corporation.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 17254 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 17254 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

Section 4 MANAGEMENT

4.1 Management by Member. The business and affairs of the Company shall be managed by the Member. Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

4.2 Officers. Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as Manager may, from time to time, delegate to them. Unless Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the California Corporation Code, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

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Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 17101 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 17250 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701- 3(b)(1)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

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(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the California Secretary of State a certificate of cancellation in accordance with Section 17350 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the internal laws of the State of California without regard to choice of law or conflicts of law provisions.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

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9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A             Articles of Organization

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

[SIGNATURES ON FOLLOWING PAGE]

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The Member has executed this Agreement as of the date and year first above written.

J.F. SHEA CO., INC.,
a Nevada corporation
By:

Name: Ronald L. Lakey

Title: Vice President

By:

Name: Robert R. O’Dell

Title: Treasurer

S-1

LIMITED LIABILITY COMPANY AGREEMENT

OF SHEA HOMES VANTIS, LLC

EXHIBIT A

Articles of Organization

A-1

RIDER TO

OPERATING AGREEMENT OF

SHEA HOMES VANTIS, LLC

See attached.

AMENDMENT TO OPERATING AGREEMENT OF SHEA HOMES VANTIS,

LLC

THIS AMENDMENT TO OPERATING AGREEMENT OF SHEA HOMES VANTIS, LLC (this “Amendment”) is entered into as of May 9, 2011, by and between J.F. SHEA CO., INC., a Nevada corporation (“JFSC”), and SHEA HOMES, INC., a Delaware corporation (“SHI”), with reference to the following facts:

R E C I T A L S

A. JFSC was the sole member of Shea Homes Vantis, LLC, a California limited liability company (the “Company”).

B. Pursuant to the certain Agreement Regarding Purchase and Sale of Membership Interest and Beneficial Interest in Residential Units of even date herewith (the “Purchase and Sale Agreement”) between JFSC, SHI and Shea Homes Vantis, Inc., JFSC sold the entire Interest (as defined below) in the Company to SHI in exchange for a reduction in the principal amount outstanding under the Loan (as defined in the Purchase and Sale Agreement) previously made by SHI, as lender, to JFSC, as borrower.

C. JFSC and SHI desire to amend the Operating Agreement of the Company dated as of May 6, 2011 (as amended from time to time, the “Operating Agreement”) to further memorialize the sale and assignment of the Interest pursuant to the Purchase and Sale Agreement, to recognize SHI as the sole Member of the Company and to make certain other changes to the Operating Agreement. Unless otherwise noted, capitalized terms used in this Amendment shall have the meanings given to them in the Operating Agreement. Any references in the Operating Agreement to this “Agreement” shall mean and refer to the Operating Agreement as amended by this Amendment.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Original Members, JFSC and SHI do hereby amend the Operating Agreement in the following particulars only:

1. SHI. SHI is hereby admitted to the Company as the sole Member and agrees to be bound by the terms of the Operating Agreement.

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2. Certificate of Limited Liability Interests. The following is hereby added to the Operating Agreement as a new Section 10:

SECTION 10

RIGHTS OF SECURED PARTY

Section 10.1 Rights and Remedies Under Security Documents.

Notwithstanding anything to the contrary contained in this Agreement, if any of the interests in the Company (the “Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Interests, then, at such time, the Secured Party shall have all of the rights associated with such Interests under this Agreement and applicable law.

Section 10.2 Transfer Restrictions Inapplicable.

Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Interests shall be inapplicable, and of no force and effect, as to any transfer of any Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

Section 10.3 Certificates.

All of the Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Interests held by that Member. Each Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

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Section 10.3 UCC Security.

Each of the Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

Section 10.4 Amendment Prior to Termination Date.

At all times prior to the termination of any Pledge of the Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor the Executive Committee will, without the prior written consent of the Secured Party, (A) amend this Agreement to provide that any Interests (i) shall not be evidenced by a certificate or (ii) shall not be securities governed by Article 8 of the Uniform Commercial Code or (B) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

Section 10.5 Successors and Assigns.

The provisions of this Section 10 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members or Executive Committee members and their respective successors and assigns.

Section 10.6 No Adverse Amendment.

At all times prior the Termination Date, none of the provisions of this Section 10 or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Interests, without the prior written consent of such Secured Party.”

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3. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Operating Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Operating Agreement shall remain in full force and effect without modification.

b. Counterparts; Email; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic mail or facsimile copies of the signed counterparts, which email or facsimile counterparts shall be binding upon the parties.

c. Authorization. Each party hereto represents and warrants to the other party hereto that each person executing this Amendment on its behalf is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings, representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

e. Recitals. The Recitals above are incorporated into this Amendment and the Operating Agreement by reference and are hereby verified by JFSC and SHI.

[Signatures on Next Page]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date and year first above written.

JFSC:	J.F. SHEA CO., INC.,
	a Nevada corporation
	By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
	By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHI:	SHEA HOMES, INC.,
	a Delaware corporation
	By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
	By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer

S-1

EX-3.33

Exhibit 3.33

2367126

Articles of Incorporation

of

Shea Financial Services, Inc.

1. The name of the corporation is Shea Financial Services, Inc.

2. The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

3. The name and address in the State of California of the corporation’s initial agent for service of process is: Ronald L. Lakey, 655 Brea Canyon Road, Walnut, California 91789-0489.

4. The corporation is authorized to issue only one class of shares of stock, and the total number of shares authorized to be issued is One Hundred (100).

5. The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law.

6. The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) for breach of duty to the corporation and its stockholders through by-law provisions or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject to the limits on such excess indemnification set forth in Section 204 of the California Corporations Code.

Dated September 17, 2001
	Edward Merrill, Incorporator

Shea Financial Services Inc. - Articles of Incorporation

A0580987

2367126

CERTIFICATE OF AMENDMENT OF

ARTICLES OF INCORPORATION

The undersigned certify that:

1. They are the president and the secretary, respectively, of Shea Financial Services, Inc., a California corporation.

2. Article One of the Articles of Incorporation of this corporation is amended to read as follows:

The name of the corporation is,

Shea Insurance Services, Inc.

3. The foregoing amendment of Articles of Incorporation has been duly approved by the board of directors.

4. No shares have been issued.

We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our knowledge.

Date: April 30, 2002
	Karyl Gately, President
	James G. Shontere, Secretary

EX-3.34

Exhibit 3.34

Bylaws

of

Shea Financial Services, Inc.

a California corporation

52069966_1

TABLE OF CONTENTS

		Page
Section 1.	Offices		1
1.1	Principal Office		1
1.2	Other Offices		1
Section 2.	Directors		1
2.1	Exercise of Corporate Powers		1
2.2	Number		1
2.3	Compensation		1
2.4	Election and Term of Office		1
2.5	Vacancies		1
2.6	Removal		2
Section 3.	Officers		2
3.1	Election and Qualifications		2
3.2	Term of Office and Compensation		2
3.3	Removal and Vacancies		3
Section 4.	Chairman Of The Board		3
4.1	Powers and Duties		3
Section 5.	President		3
5.1	Powers and Duties		3
5.2	President pro tem		3
Section 6.	Vice President		4
6.1	Powers and Duties		4
Section 7.	Secretary		4
7.1	Powers and Duties		4
Section 8.	Chief Financial Officer		5
8.1	Powers and Duties		5
Section 9.	Committees Of The Board		5
9.1	Appointment and Procedure		5
9.2	Powers		5
9.3	Executive Committee		6
Section 10.	Meetings Of Shareholders		6
10.1	Place of Meetings		6

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52069966_1

TABLE OF CONTENTS

(Continued)

		Page
10.2	Time of Annual Meetings		6
10.3	Special Meetings		6
10.4	Notice of Meetings		6
10.5	Delivery of Notice		7
10.6	Adjourned Meetings		7
10.7	Consent to Shareholders’ Meeting		7
10.8	Quorum		8
10.9	Actions Without Meeting		8
10.10	Revocation of Consent		9
10.11	Voting Rights		9
10.12	Determination of Holders of Record		9
10.13	Elections for Directors		10
10.14	Proxies		10
10.15	Inspectors of Election		11
Section 11.	Meetings Of Directors		11
11.1	Place of Meetings		11
11.2	Regular Meetings		11
11.3	Special Meetings		11
11.4	Notice of Meetings		12
11.5	Quorum		12
11.6	Adjourned Meetings		12
11.7	Waiver of Notice and Consent		12
11.8	Action Without a Meeting		12
11.9	Conference Telephone Meetings		12
11.10	Meetings of Committees		12
Section 12.	Indemnification And Advancement		12
12.1	Right to Indemnification		12
12.2	Right of Advancement		13
12.3	Right of Claimant to Bring Suit		13
12.4	Non-Exclusivity of Rights		14

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TABLE OF CONTENTS

(Continued)

		Page
12.5	Insurance		14
Section 13.	Additional Provisions		14
13.1	Instruments in Writing		14
13.2	Fiscal Year		14
13.3	Shares Held by the Corporation		14
13.4	Certificates of Stock		14
13.5	Lost Certificates		15
13.6	Certification and Inspection of Bylaws		15
13.7	Notices		15
13.8	Reports to Shareholders		15
Section 14.	Construction Of Bylaws With Reference To Provisions Of Law		15
14.1	Definitions		15
14.2	By-Law Provisions Additional and Supplemental to Provisions of Law		15
14.3	By-Law Provisions Contrary to or Inconsistent with Provisions of Law		16
Section 15.	Adoption, Amendment Or Repeal Of Bylaws		16
15.1	By Shareholders		16
15.2	By the Board of Directors		16

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Bylaws

of

Shea Financial Services, Inc.

a California corporation

Section 1. Offices

1.1 Principal Office. The principal office for the transaction of the business of the corporation, which may be within or outside the State of California, shall be determined from time to time by the Board of Directors or any officer authorized by the Board of Directors to make this determination.

1.2 Other Offices. One or more branch or other subordinate offices may be located from time to time, within or outside the State of California, by the Board of Directors or any officer authorized by the Board of Directors to make this determination.

Section 2. Directors

2.1 Exercise of Corporate Powers. Except as otherwise provided by the Articles of Incorporation of the corporation or by the laws of the State of California now or hereafter in force, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operation of the business of the corporation as permitted by law, provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board.

2.2 Number. The number of the corporation’s directors shall be four (4) until changed by an amendment of the Articles of Incorporation or by an amendment to this Section 2.2 duly adopted by the shareholders. The directors of the corporation need not be shareholders of the corporation.

2.3 Compensation. Directors shall receive such compensation for their services as directors and such reimbursement for their expenses of attendance at meetings as may be determined from time to time by resolution of the Board. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

2.4 Election and Term of Office. At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting, provided that, if for any reason, said annual meeting or an adjournment thereof is not held or the directors are not elected thereat, then the directors may be elected at any special meeting of the shareholders called and held for that purpose. The term of office of the directors shall begin immediately after their election and shall continue until the expiration of the term for which elected and until their respective successors have been elected and qualified.

2.5 Vacancies. A vacancy or vacancies in the Board of Directors shall exist when any authorized position of director is not then filled by a duly elected director, whether caused by death, resignation, removal, change in the authorized number of directors (by the Board or the shareholders)

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52069966_1

or otherwise. The Board of Directors may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony. Except for a vacancy created by the removal of a director, vacancies on the Board may be filled by approval of the Board or, if the number of directors then in office is less than a quorum, by (1) the unanimous written consent of the directors then in office, (2) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice, or (3) a sole remaining director. A vacancy created by the removal of a director may be filled only by the approval of the shareholders. The shareholders may elect a director at any time to fill any vacancy not filled by the directors, but any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote. Any director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

2.6 Removal.

(a) Any or all of the directors may be removed without cause if such removal is approved by the affirmative vote of a majority of the outstanding shares entitled to vote at an election of directors, subject to the following:

(1) No director may be removed (unless the entire Board is removed) when the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the director’s most recent election were then being elected; and

(2) When by the provisions of the Articles the holders of the shares of any class or series, voting as a class or series, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series.

(b) Any reduction of the authorized number of directors does not remove any director prior to the expiration of such director’s term of office.

Section  3. Officers

3.1 Election and Qualifications. The officers of this corporation shall consist of a President, a Secretary and a Chief Financial Officer who shall be chosen by the Board of Directors and such other officers, including a Chairman of the Board, as the Board of Directors shall deem expedient, all of whom shall be chosen in such manner and hold their offices for such terms as the Board of Directors may prescribe. Any two or more of such offices may be held by the same person. Any Vice President, Assistant Treasurer or Assistant Secretary, respectively, may exercise any of the powers of the President, the Chief Financial Officer or the Secretary, respectively, as directed by the Board of Directors and shall perform such other duties as are imposed upon such officer by the Bylaws or the Board of Directors.

3.2 Term of Office and Compensation. The term of office and salary of each of said officers and the manner and time of the payment of such salaries shall be fixed and determined by the Board of Directors and may be altered by said Board from time to time at its pleasure, subject to the rights, if any, of said officers under any contract of employment.

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52069966_1

3.3 Removal and Vacancies. Any officer of the corporation may be removed at the pleasure of the Board of Directors at any meeting or by vote of shareholders entitled to exercise the majority of voting power of the corporation at any meeting or at the pleasure of any officer who may be granted such power by a resolution of the Board of Directors. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. If any vacancy occurs in any office of the corporation, the Board of Directors may elect a successor to fill such vacancy for the remainder of the unexpired term and until a successor is duly chosen and qualified.

Section 4. Chairman of the Board

4.1 Powers and Duties. The Chairman of the Board of Directors, if there is one, shall have the power to preside at all meetings of the Board of Directors, and to call meetings of the shareholders and of the Board of Directors to be held within the limitations prescribed by law or by these Bylaws, at such times and at such places as the Chairman of the Board shall deem proper. The Chairman of the Board shall have such other powers and shall be subject to such other duties as the Board of Directors may from time to time prescribe.

Section  5. President

5.1 Powers and Duties. The powers and duties of the President are:

(a) To act as the chief executive officer of the corporation and, subject to the control of the Board of Directors, to have general supervision, direction and control of the business and affairs of the corporation.

(b) To preside at all meetings of the shareholders and, in the absence of the Chairman of the Board, or if there is none, at all meetings of the Board of Directors.

(c) To call meetings of the shareholders and also of the Board of Directors to be held, subject to the limitations prescribed by law or by these Bylaws, at such times and at such places as the President shall deem proper.

(d) To affix the signature of the corporation to all deeds, conveyances, mortgages, leases, obligations, bonds, certificates and other papers and instruments in writing which have been authorized by the Board of Directors or which, in the judgment of the President, should be executed on behalf of the corporation, to sign certificates for shares of stock of the corporation and, subject to the direction of the Board of Directors, to have general charge of the property of the corporation and to supervise and control all officers, agents and employees of the corporation.

5.2 President pro tem. If neither the Chairman of the Board, the President, nor any Vice President is present at any meeting of the Board of Directors, a President pro tem may be chosen to preside and act at such meeting. If neither the President nor any Vice President is present at any meeting of the shareholders, a President pro tem may be chosen to preside at such meeting.

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Section 6. Vice President

6.1 Powers and Duties. In case of the absence, disability or death of the President, the Vice President, or one of the Vice Presidents, if there is one, shall exercise all the powers and perform all the duties of the President. If there is more than one Vice President, the order in which the Vice Presidents shall succeed to the powers and duties of the President shall be as fixed by the Board of Directors. The Vice President or Vice Presidents shall have such other powers and perform such other duties as may be granted or prescribed by the Board of Directors.

Section 7. Secretary

7.1 Powers and Duties. The powers and duties of the Secretary are:

(a) To keep a book of minutes at the principal office of the corporation, or such other place as the Board of Directors may order, of all meetings of its directors and shareholders with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors meetings, the number of shares present or represented at shareholders’ meetings and the proceedings thereof.

(b) To keep the seal of the corporation and to affix the same to all instruments which may require it.

(c) To keep or cause to be kept at the principal office of the corporation, or at the office of the transfer agent or agents, a share register, or duplicate share registers, showing the names of the shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for shares, and the number and date of cancellation of every certificate surrendered for cancellation.

(d) To keep a supply of certificates for shares of the corporation, to fill in all certificates issued, and to make a proper record of each such issuance; provided, that so long as the corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares, of the corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents.

(e) To transfer upon the share books of the corporation any and all shares of the corporation; provided, that so long as the corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares, of the corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents, and the method of transfer of each certificate shall be subject to the reasonable regulations of the transfer agent to which the certificate is presented for transfer, and also, if the corporation then has one or more duly appointed and acting registrars, to the reasonable regulations of the registrar to which the new certificate is presented for registration; and provided, further, that no certificate for shares of stock shall be issued or delivered or, if issued or delivered, shall have any validity whatsoever until and unless it has been signed or authenticated in the manner provided in Section 13.4 hereof.

(f) To make service and publication of all notices that may be necessary or proper, and without command or direction from anyone. In case of the absence, disability, refusal or neglect of the Secretary to make service or publication of any notices, then such notices may be served and/or published by the President or a Vice President, or by any person thereunto authorized by either of them or by the Board of Directors or by the holders of a majority of the outstanding shares of the corporation.

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(g) Generally to do and perform all such duties as pertain to the office of Secretary and as may be required by the Board of Directors.

Section 8. Chief Financial Officer

8.1 Powers and Duties. The powers and duties of the Chief Financial Officer are:

(a) To supervise and control the keeping and maintaining of adequate and correct accounts of the corporation’s properties and business transactions, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director.

(b) To have the custody of all funds, securities, evidence of indebtedness and other valuable documents of the corporation and, at the Chief Financial Officer’s discretion, to cause any or all thereof to be deposited for the account of the corporation with such depositary as may be designated from time to time by the Board of Directors.

(c) To receive or cause to be received, and to give or cause to be given, receipts and acquittances for moneys paid in for the account of the corporation.

(d) To disburse, or cause to be disbursed, all funds of the corporation as may be directed by the Board of Directors, taking proper vouchers for such disbursements.

(e) To render to the President and to the Board of Directors, whenever they may require, accounts of all transactions and of the financial condition of the corporation.

(f) Generally to do and perform all such duties as pertain to the office of Chief Financial Officer and as may be required by the Board of Directors.

Section 9. Committees of the Board

9.1 Appointment and Procedure. The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors.

9.2 Powers. Any committee appointed by the Board of Directors, to the extent provided in the resolution of the Board or in these Bylaws, shall have all the authority of the Board except with respect to:

(a) the approval of any action which requires the approval or vote of the shareholders;

(b) the filling of vacancies on the Board or on any committee;

(c) the fixing of compensation of the directors for serving on the Board or on any committee;

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(d) the amendment or repeal of Bylaws or the adoption of new Bylaws;

(e) the amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable;

(f) a distribution to the shareholders of the corporation, except at a rate, in a periodic amount or within a price range set forth in the articles or determined by the Board;

(g) the appointment of other committees of the Board or the members thereof.

9.3 Executive Committee. In the event that the Board of Directors appoints an Executive Committee, such Executive Committee, in all cases in which specific direction to the contrary shall not have been given by the Board of Directors, shall have and may exercise, during the intervals between the meetings of the Board of Directors, all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation (except as provided in Section 9.2 hereof) in such manner as the Executive Committee may deem in the best interests of the corporation.

Section 10. Meetings of Shareholders

10.1 Place of Meetings. Meetings (whether regular, special or adjourned) of the shareholders of the corporation shall be held at the principal office for the transaction of business as specified in accordance with Section 1.1 hereof, or any place within or without the State which may be designated by written consent of all the shareholders entitled to vote thereat, or which may be designated by the Board of Directors.

10.2 Time of Annual Meetings. The annual meeting of the shareholders shall be held at the time and date determined by the Board of Directors.

10.3 Special Meetings. Special meetings of the shareholders may be called by the Board of Directors, the Chairman of the Board, the President or the holders of shares entitled to cast not less than 10 percent of the vote at the meeting.

10.4 Notice of Meetings.

(a) Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than 10 (or, if sent by third class mail, 30) nor more than 60 days before the day of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (1) in the case of a special meeting, the general nature of the business to be transacted, and that no other business may be transacted, or (2) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders but subject to the provisions of subdivision (b) any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the Board for election.

(b) Any shareholder approval at a meeting, other than unanimous approval by those entitled to vote, on any of the matters listed below, shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice:

(1) a proposal to approve a contract or other transaction between the corporation and one or more of its directors, or between the corporation and any corporation, firm or association in which one or more directors has a material financial interest;

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(2) proposal to amend the Articles of Incorporation;

(3) a proposal regarding a reorganization, merger or consolidation involving the corporation;

(4) a proposal to wind up and dissolve the corporation;

(5) a proposal to adopt a plan of distribution of the shares, obligations or securities of any other corporation, domestic or foreign, or assets other than money which is not in accordance with the liquidation rights of any preferred shares as specified in the Articles of Incorporation.

10.5 Delivery of Notice. Notice of a shareholders’ meeting or any report shall be given either personally or by first class mail or in the case of a corporation with outstanding shares held of record by 500 or more persons (determined as provided in Section 605 of the California General Corporation Law) on the record date for the shareholders’ meeting, notice may be sent third class mail, or other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of this Section, executed by the Secretary, Assistant Secretary or any transfer agent, shall be prima facie evidence of the giving of the notice or report.

If any notice or report addressed to the shareholder at the address of such shareholder appearing on the books of the corporation is returned to the corporation by United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the shareholder at such address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice or report to all other shareholders.

10.6 Adjourned Meetings. When a shareholders’ meeting is adjourned to another time or place, unless the Bylaws otherwise require and except as provided in this Section, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

10.7 Consent to Shareholders’ Meeting. The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by

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proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the California General Corporation Law to be included in the notice but not so included in the notice if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the Articles of Incorporation or Bylaws, except as provided in Section 10.4(b).

10.8 Quorum.

(a) The presence in person or by proxy of the persons entitled to vote the majority of the voting shares at any meeting shall constitute a quorum for the transaction of business. Except as provided in subdivision (b), the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by law or the Articles of Incorporation or these Bylaws.

(b) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of the number of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.

(c) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (b).

10.9 Actions Without Meeting.

(a) Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted; provided that, subject to the provisions of Section 2.6, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors.

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(b) Unless the consents of all shareholders entitled to vote have been solicited in writing,

(1) notice of any shareholder approval on matters described in Section 10.4(1), Section 10.4(3) or Section 10.4(5) or respecting indemnification of agents of the corporation without a meeting by less than unanimous written consent shall be given at least ten (10) days before the consummation of the action authorized by such approval, and

(2) prompt notice shall be given of the taking of any other corporate action approved by shareholders without a meeting by less than unanimous written consent, to those shareholders entitled to vote who have not consented in writing; the provisions of Section 10.5 shall apply to such notice.

10.10 Revocation of Consent. Any shareholder giving a written consent, or the shareholder’s proxyholders, or a transferee of the shares or a personal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation.

10.11 Voting Rights. Except as provided in Section 10.13 or in the Articles of Incorporation or in any statute relating to the election of directors or to other particular matters, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote of shareholders. Any holder of shares entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, other than elections to office, but, if the shareholder fails to specify the number of shares such shareholder is voting affirmatively, it will be conclusively presumed that the shareholder’s approving vote is with respect to all shares such shareholder is entitled to vote.

10.12 Determination of Holders of Record.

(a) In order that the corporation may determine the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days prior to the date of such meeting nor more than 60 days prior to any other action.

(b) In the absence of any record date set by the Board of Directors pursuant to subdivision (a) above, then:

(1) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board has been taken, shall be the day on which the first written consent is given.

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(3) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later.

(c) A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board fixes a new record date for the adjourned meeting, but the Board shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting.

(d) Shareholders at the close of business on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Articles or by agreement or applicable law.

10.13 Elections for Directors.

(a) Every shareholder complying with subdivision (b) and entitled to vote at any election of directors may cumulate such shareholder’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder’s shares are normally entitled, or distribute the shareholder’s votes on the same principle among as many candidates as the shareholder thinks fit.

(b) No shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such shareholder normally is entitled to cast) unless such candidate or candidates’ names have been placed in nomination prior to the voting and the shareholder has given written notice to the chairman of the meeting at the meeting prior to the voting of the shareholder’s intention to cumulate the shareholder’s votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination.

(c) In any election of directors, the candidates receiving the highest number of affirmative votes of the shares entitled to be voted for them up to the number of directors to be elected by such shares are elected; votes against the director and votes withheld shall have no legal effect.

(d) Elections for directors need not be by ballot unless a shareholder demands election by ballot at the meeting and before the voting begins or unless the Bylaws so require.

10.14 Proxies.

(a) Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to such shares. Any proxy purporting to be executed in accordance with the provisions of the General Corporation Law of the State of California shall be presumptively valid.

(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this Section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

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(c) A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.

10.15 Inspectors of Election.

(a) In advance of any meeting of shareholders the Board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of shareholders may, and on the request of any shareholder or a shareholder’s proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed.

(b) The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders.

(c) The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

Section 11. Meetings of Directors

11.1 Place of Meetings. Unless otherwise specified in the notice thereof, meetings (whether regular, special or adjourned) of the Board of Directors of this corporation shall be held at the principal office of the corporation for the transaction of business, as specified in accordance with Section 1.1 hereof, which is hereby designated as an office for such purpose in accordance with the laws of the State of California, or at any other place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board.

11.2 Regular Meetings. Regular meetings of the Board of Directors, of which no notice need be given except as required by the laws of the State of California, shall be held after the adjournment of each annual meeting of the shareholders (which meeting shall be designated the Regular Annual Meeting) and at such other times as may be designated from time to time by resolution of the Board of Directors.

11.3 Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President or by any Vice President or the Secretary or by any two or more of the directors.

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11.4 Notice of Meetings. Except in the case of regular meetings, notice of which has been dispensed with, the meetings of the Board of Directors shall be held upon four (4) days’ notice by mail or forty-eight (48) hours’ notice delivered personally or by telephone, telegraph or other electronic or wireless means. If the address of a director is not shown on the records and is not readily ascertainable, notice shall be addressed to the director at the city or place in which the meetings of the directors are regularly held. Except as set forth in Section 11.6, notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned.

11.5 Quorum. A majority of the authorized number of directors constitutes a quorum of the Board for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors except as otherwise provided by law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting.

11.6 Adjourned Meetings. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

11.7 Waiver of Notice and Consent. Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

11.8 Action Without a Meeting. Any action required or permitted to be taken by the Board may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors.

11.9 Conference Telephone Meetings. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Participation in a meeting pursuant to this Section constitutes presence in person at such meeting.

11.10 Meetings of Committees. The provisions of this Article apply also to committees of the Board and incorporators and action by such committees and incorporators.

Section 12. Indemnification and Advancement

12.1 Right to Indemnification. Each person who was or is made a party to or witness or other participant in or is threatened to be made a party to or witness or other participant in or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative, investigative or other (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another

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corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an “agent”), whether the basis of the proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the California General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expenses, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement and all interest, assessments and other charges paid or payable in connection with or in respect of such expense, liability and loss) (hereinafter collectively “expenses,” which expenses shall also include without limitation any expenses of establishing a right to indemnification or advancement under this Section) reasonably incurred or suffered by such agent in connection therewith and such indemnification shall continue as to an agent who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the corporation shall indemnify any such agent seeking indemnification in connection with a proceeding (or part thereof) initiated by such agent only if such proceeding (or part thereof) was authorized by the board of directors of the corporation.

The corporation may, by action of the board of directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.

12.2 Right of Advancement.

Expenses incurred by or on behalf of any person in defending any proceeding by reason of the fact that such person is or was an agent of the corporation shall be advanced by the corporation prior to the final disposition of such proceeding; provided, however, that if the California General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding shall be made only upon delivery to the corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise.

12.3 Right of Claimant to Bring Suit. If a claim under either Section 12.1 or Section 12.2 is not paid in full by the corporation within thirty (30) days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the California General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including the board of directors, independent legal counsel, or the stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met

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the applicable standard of conduct set forth in the California General Corporation Law, nor an actual determination by the corporation (including the board of directors, independent legal counsel, or the stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

12.4 Non-Exclusivity of Rights. The indemnification and advancement provided by this Section shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, to the extent such additional rights to indemnification are authorized in the articles of incorporation. Persons seeking indemnification or advancement may seek either or both at his or her discretion and the pursuit of one shall neither be deemed a waiver of such person’s rights to pursue the other, nor shall it have any effect on the outcome of such person’s pursuit of the other. Nothing contained in this Section shall affect any right to indemnification to which persons other than agents may be entitled by contract or otherwise. Nothing in this Section shall restrict the power of the corporation to indemnify its agents under any provision of the California General Corporation Law, as amended from time to time, or under any other provision of law from time to time applicable to the corporation, nor shall anything in this Section authorize the corporation to indemnify its agents in situations prohibited by the California General Corporation Law or other applicable law.

12.5 Insurance. The corporation may maintain insurance, at its expense, to protect itself and any person who is or was a director, officer, employee, agent or fiduciary of the corporation or who is or was serving at the request of the corporation as a director, officer, employee, agent or fiduciary of another corporation or of a partnership, joint venture, trust or other enterprise against any expenses incurred in a proceeding, whether or not the corporation would have the power to indemnify such person against such expenses under the California General Corporation Law.

Section 13. Additional Provisions

13.1 Instruments in Writing. All checks, drafts, demands for money and notes of the corporation, and all written contracts of the corporation, shall be signed by such officer or officers, agent or agents, as the Board of Directors may from time to time by resolution designate. No officer, agent, or employee of the corporation shall have power to bind the corporation by contract or otherwise unless authorized to do so by these Bylaws or by the Board of Directors.

13.2 Fiscal Year. The fiscal year of this corporation shall be as determined by the Board of Directors.

13.3 Shares Held by the Corporation. Shares in other corporations standing in the name of this corporation may be voted or represented and all rights incident thereto may be exercised on behalf of this corporation by the President or by any other officer of this corporation authorized so to do by resolution of the Board of Directors.

13.4 Certificates of Stock. There shall be issued to each holder of fully paid shares of the capita] stock of the corporation a certificate or certificates for such shares. Every holder of shares in the corporation shall be entitled to have a certificate signed in the name of the corporation by the Chairman or Vice Chairman of the Board or the President or a Vice President and by the Chief Financial Officer or an Assistant Treasurer or the Secretary or any Assistant Secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any or all of the

14

52069966_1

signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.

13.5 Lost Certificates. The corporation may issue a new share certificate or a new certificate for any other security in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate or the owner’s legal representative to give the corporation a bond (or other adequate security) sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. The Board of Directors may adopt such other provisions and restrictions with reference to lost certificates, not inconsistent with applicable law, as it shall in its discretion deem appropriate.

13.6 Certification and Inspection of Bylaws. The corporation shall keep at its principal executive office in this state, or if its principal executive office is not in this state at its principal business office in this state, the original or a copy of these Bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside this state and the corporation has no principal business office in this state, it shall upon the written request of any shareholder furnish to such shareholder a copy of the Bylaws as amended to date.

13.7 Notices. Any reference in these Bylaws to the time a notice is given or sent means, unless otherwise expressly provided, the time a written notice by mail is deposited in the United States mails, postage prepaid; or the time any other written notice is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or the time any oral notice is communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient.

13.8 Reports to Shareholders. Except as may otherwise be required by law, the rendition of an annual report to the shareholders is waived so long as there are less than 100 holders of record of the shares of the corporation (determined as provided in Section 605 of the California General Corporation Law). At such time or times, if any, that the corporation has 100 or more holders of record of its shares, the Board of Directors shall cause an annual report to be sent to the shareholders not later than 120 days after the close of the fiscal year or within such shorter time period as may be required by applicable law, and such annual report shall contain such information and be accompanied by such other documents as may be required by applicable law.

Section 14. Construction of Bylaws with Reference to Provisions of Law

14.1 Definitions. Unless defined otherwise in these Bylaws or unless the context otherwise requires, terms used herein shall have the same meaning, if any, ascribed thereto in the California General Corporation Law. as amended from time to time.

14.2 By-Law Provisions Additional and Supplemental to Provisions of Law. All restrictions, limitations, requirements and other provisions of these Bylaws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal.

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14.3 By-Law Provisions Contrary to or Inconsistent with Provisions of Law. Any article, Section, subsection, subdivision, sentence, clause or phrase of these Bylaws which upon being construed in the manner provided in Section 14.2 hereof, shall be contrary to or inconsistent with any applicable provision of law, shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these Bylaws, it being hereby declared that these Bylaws would have been adopted and each article, Section, subsection, subdivision, sentence, clause or phrase thereof, irrespective of the fact that any one or more articles, Sections, subsections, subdivisions, sentence clauses or phrases is or are illegal.

Section 15. Adoption, Amendment or Repeal of Bylaws

15.1 By Shareholders. Bylaws may be adopted, amended or repealed by the approval of the affirmative vote of a majority of the outstanding shares of the corporation entitled to vote.

15.2 By the Board of Directors. Subject to the right of shareholders to adopt, amend or repeal Bylaws, other than a By-Law or amendment thereof changing the authorized number of directors, the Bylaws may be adopted, amended or repealed by the Board of Directors. A By-Law adopted by the shareholders may restrict or eliminate the power of the Board of Directors to adopt, amend or repeal any or all Bylaws.

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Certificate of Secretary

The undersigned certifies that the undersigned is the Secretary of Shea Financial Services, Inc., a California corporation; that the above Bylaws were duly adopted as such by the Board of Directors of said corporation; and that the above Bylaws are in full force and effect on the date of this certificate.

Dated:                     , 200    

James G. Shontere, Vice President and Secretary

52069966_1

WRITTEN CONSENT OF

MAJORITY SHAREHOLDERS OF

SHEA INSURANCE SERVICES, INC.

FEBRUARY 15, 2005

THE UNDERSIGNED, being the majority shareholders entitled to vote for SHEA INSURANCE SERVICES, INC., a California corporation (the “Corporation”) in accordance the bylaws of the undersigned and the laws governing said Corporation, do hereby consent to the adoption of the following resolution:

WHEREAS, there has been presented to and considered a form of amendment to the Bylaws to this Corporation (the “Bylaw Amendment”) attached hereto as Exhibit “A”; and

WHEREAS, the Bylaw Amendment increases the number of Corporation’s directors from at least four (4) to not more than nine (9); and

NOW, THERFORE, BE IT RESOLVED, tat the proposed Bylaw Amendment be, and it hereby is, adopted and approved.

RESOLVED FURTHER, that the Secretary of this Corporation is hereby instructed to certify to the adoption and approval of the Bylaw amendment and to insert a copy of the Bylaws Amendment in this Corporation’s minute book.

Dated and effected as of Tuesday, February 15, 2005

Majority Shareholders:

100	Shares Authorized
100	Shares Issued

Shea Homes, Inc. 100 Shares Held

James G. Shontere, Secretary

EXHIBIT “A”

AMENDMENT TO

BYLAWS

OF

SHEA INSURANCE SERVICES, INC.

The Bylaws (the “Bylaws”) of SHEA INSURANCE SERVICES, INC a California corporation (the “Corporation”), are amended as follows:

Section 2 of the Bylaws regarding Directors is hereby replaced in its entirety to read as follows:

“2. Number. The number of the Corporation’s directors shall be at least four (4) and not more than nine (9) until changed by an amendment to the Articles of Incorporation or by an amendment to this Section 2.2 duly adopted by the shareholders. The directors of the corporation need not be shareholders of the Corporation.”

EX-3.35

Exhibit 3.35

		State of California	File# 200209510143
		Bill Jones Secretary of State                             LIMITED LIABILITY COMPANY                              ARTICLES OF ORGANIZATION	FILED In the Office of the Secretary of State of the State of California APR – 2 2002
		A $70.00 filing fee must accompany this form.         IMPORTANT – Read instructions before completing this form.
			BILL JONES, Secretary of State
			This Space For Filing Use Only
1.      Name of the limited liability company (end the name with the words “Limited Liability Company,” “ Ltd. Liability Co.,” or the abbreviations “LLC” or “L.L.C.”) Shea La Quinta LLC
2.      The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea limited liability company act.
3.      Name the agent for service of process and check the appropriate provision below: Max B. Johnson which is
x       an individual residing in California. Proceed to item 4.
¨       a corporation which has filed a certificate pursuant to section 1505. Proceed to item 5.
4.      If an individual, California address of the agent for service of process: Address: 655 Brea Canyon Road
City: Walnut                             State: CA                                                     Zip Code: 91789
5.      The limited liability company will be managed by: (check one) ¨ one manager ¨ more than one manager x single member limited liability company ¨ all limited liability company members
6.      Other matters to be included in this certificate may be set forth on separate attached pages and are made a part of this certificate. Other matters may include the latest date on which the limited liability company is to dissolve.
7.      Number of pages attached, If any:          1
8.      Type of business of the limited liability company. (For informational purposes only)          Acquire, Own, Improve, Hold, and Sell Real Property
9.      DECLARATION: It is hereby declared that I am the person who executed this instrument, which execution is my act and deed.

	Max B. Johnson
Signature of Organizer	Type or Print Name of Organizer
April 1, 2002
Date

10.    RETURN TO:
NAME	Kathleen Glancana
FIRM ADDRESS CITY/STATE ZIP CODE	Bryan Cave LLP Two North Central Avenue Phoenix, AZ 85004
SEC/STATE (REV. 12/99)

ATTACHMENT

This attachment to the Limited Liability Company Articles of Organization of Shea La Quinta LLC (the “Certificate”) and made a part thereof relates to paragraph 6 of the Certificate and states that the latest date on which Shea La Quinta LLC is to dissolve is April 1, 2052.

200209510143

	State of California Bill Jones Secretary of State			FILED In the Office of the Secretary of State of the State of California
LIMITED LIABILITY COMPANY – STATEMENT OF INFORMATION
Filing Fee $20.00 – If Amendment, See Instructions				MAY - 3 2002
IMPORTANT- Read instructions Before Completing This Form
1.      LIMITED LIABILITY COMPANY NAME: (Do not alter if name is preprinted.) Shea La Quinta LLC				BILL JONES, Secretary of State This Space For Filing Use Only
2.      SECRETARY OF STATE FILE NUMBER		3.      STATE OR PLACE OF ORGANIZATION
200209510143		California
4.      PRINCIPAL EXECUTIVE OFFICE STREET ADDRESS 655 Brea Canyon Road CITY Walnut		STATE CA	ZIP CODE 91789
5.      CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (FOR DOMESTIC ONLY) STREET ADDRESS 655 Brea Canyon Road
CITY Walnut		STATE CA	ZIP CODE 91789
6.      CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS x       AN INDIVIDUAL RESIDING IN CALIFORNIA. ¨       A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO CALIFORNIA CORPORATIONS CODE SECTION 1505.          AGENT’S NAME: Max B. Johnson
7.      ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL ADDRESS 655 Brea Canyon Road
CITY Walnut		STATE CA	ZIP CODE 91789
8.      DESCRIBE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY. acquire, own, improve, hold, and sell real property
9.      LIST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER. ATTACH ADDITIONAL PAGES, IF NECESSARY.
9a.    NAME           Shea Homes, Inc., a Delaware Corporation          ADDRESS   655 Brea Canyon Road
CITY             Walnut		STATE CA	ZIP CODE 91789
9b.    NAME          ADDRESS
CITY		STATE	ZIP CODE
9c.    NAME          ADDRESS
CITY		STATE	ZIP CODE
10.    CHIEF EXECUTIVE OFFICER (CEO), IF ANY
NAME ADDRESS
CITY		STATE	ZIP CODE
11.    NUMBER OF PAGES ATTACHED, IF ANY:
12.    THIS STATEMENT IS TRUE, CORRECT, AND COMPLETE.

Max B. Johnson		Vice President	4/     /02
TYPE OR PRINT NAME OF PERSON COMPLETING FORM	SIGNATURE	TITLE	DATE
DUE DATE:			55
SEC/STATE FORM LLC-12 (REV. 10/2001)		APPROVED BY SECRETARY OF STATE

EX-3.36

Exhibit 3.36

OPERATING AGREEMENT

OF

SHEA LA QUINTA LLC

This Operating Agreement (this “Agreement”) of Shea La Quinta LLC, a California limited liability company (the “Company”), is entered into this 9^th day of April, 2002 by Shea Homes, Inc., a Delaware corporation (the “Member”), as sole member of the Company.

R E C I T A L S

WHEREAS, the Member caused the Company to be formed pursuant to the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”); and

WHEREAS, the Member, as sole member of the Company, desires to enter into this Agreement to define formally the terms of such limited liability company and the Member’s rights and obligations with respect thereto.

A G R E E M E N T

NOW, THEREFORE, the Member, as sole member of the Company, hereby agrees as follows:

1. Name. The name of the Company is Shea La Quinta LLC.

2. Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

3. Office and Registered Agent. The Company shall continuously maintain an office and registered agent in the State of California as required by section 17057 of the Act. The address of the office of the Company in California is 655 Brea Canyon Road, Walnut, California 91789. The registered agent for service of process of the Company is Max B. Johnson, c/o J.F. Shea Co., Inc., 655 Brea Canyon Road, Walnut, California 91789.

4. Member. The name and the address of the Member is Shea Homes, Inc., 655 Brea Canyon Road, Walnut, California 91789.

5. Management. Management of the Company is vested in the Member. The officers of the Member are, and any two of them acting together are authorized, empowered and directed, in the name of and on behalf of the Company, and in the name of and on behalf of the Member, in its capacity as the sole member of the Company, to execute and deliver all agreements, instruments, certificates or other documents as may be deemed reasonably necessary or appropriate, in furtherance of or in connection with the business of the Company.

6. Term; Dissolution. The term of the Company commenced upon the filing of the Articles of Organization of the Company with the California Secretary of State. The Company shall be dissolved upon the first to occur of the following: (a) April 1, 2052, (b) the written consent of the Member, (c) an entry of a decree of judicial dissolution pursuant to section 17351 of the Act, or (d) any other event that requires or causes dissolution of the Company under the Act.

7. Capital Contributions. The Member has contributed or will contribute 100 percent of the capital of the Company. The Member may make further capital contributions to the Company but shall not be required to do so.

8. Tax Matters. During any period in which the Member is the only member of the Company, the following shall apply for federal income tax purposes and relevant state income tax purposes, but only for such purposes: (a) in accordance with Section 301.7701-3 of the Income Tax Regulations, the Company shall be disregarded as an entity separate from the Member; (b) all items of income, gain, loss, deduction and credit of the Company shall be treated as recognized directly by the Member; and (c) the assets and liabilities of the Company shall be treated as the assets and liabilities of the Member. During any period in which the Company has more than one member, the Company shall be treated as a partnership for federal income tax purposes and relevant state income tax purposes, but shall not be treated as a partnership for any other purpose.

9. Distributions. Distributions shall be made to the Member at such times and in such amounts as determined by the Member.

10. Assignments. The Member may assign in whole or in part its limited liability company interest in the Company.

11. Admission of Additional Members. Additional members may be admitted at any time with the consent of the Member. Upon the admission of one or more additional members, this Agreement shall be amended to reflect the agreement of the parties at that time.

12. Liability of Member. The Member shall not have any liability for the obligations or liabilities of the Company except to the extent required under the Act.

13. Amendment. This Agreement may be amended from time to time with the written consent of the Member.

14. Governing Law. This Agreement shall be governed by, and construed under, the laws of the State of California, all rights and remedies being governed by said laws.

IN WITNESS WHEREOF, the undersigned has duly executed this Agreement on the date first above written.

SHEA HOMES, INC.,
a Delaware corporation
By:
	Ron Lakey
Its:	Vice President
By:
	Max B. Johnson
Its:	Vice President

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

3

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By:	JFS Management, L.P., its sole General Partner
		By: J.F. Shea Construction Management, Inc., its sole General Partner
		By:
		Name: James G. Shontere
		Title: Secretary
		By:
		Name: Robert O’ Dell
		Title: Treasurer
SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By:	J.F. Shea L.P., its sole General Partner
		By:	JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name: James G. Shontere
				Title: Secretary
				By:
				Name: Robert O’ Dell
				Title: Treasurer

J.F. SHEA CO., INC. as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name: James G. Shontere
Title: Secretary
By:
Name: Robert O’ Dell
Title: Treasurer
SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By: J.F. SHEA CO., INC., its Manager
By:
Name: James G. Shontere
Title: Secretary
By:
Name: Robert O’ Dell
Title: Treasurer
SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name: James G. Shontere
Title: Secretary
By:
Name: Robert O’ Dell
Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC
By:
By: Ronald L. Lakey
Its: Vice President
By:
By: James G. Shontere
Its: Secretary

J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:
Name: James G. Shontere
Title: Secretary
By:
Name: Robert O’ Dell
Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.37

Exhibit 3.37

ARTICLES OF ORGANIZATION
Form 400 Revised July 1, 2002 Filing fee: $50.00 Deliver to: Colorado Secretary of State Business Division, 1560 Broadway, Suite 200 Denver, CO 80202-5169 This document must be typed or machine printed Copies of filed documents may be obtained at www.sos.state.co.us	ABOVE SPACE FOR OFFICE USE ONLY

Pursuant to § 7-80-203, Colorado Revised Statutes (C.R.S.), the individual named below causes these Articles of Organization to be delivered to the Colorado Secretary of State for filing, and states as follows:

1. The name of the limited liability company is: Shea Ninth and Colorado, LLC

The name of a limited liability company must contain the term “limited liability company”, “ltd. liability company”, “limited liability co.”, or “ltd. liability co.” or the abbreviation “LLC” or “L.L.C.” §7-90-601 (3)[(c), C.R.S.

2. If known, The principal place of business of the limited liability company is: 9135 Ridgeline Blvd., Suite 100, Highlands Ranch, CO 80129

3. The name, and the business address, of the registered agent for service of process on the limited liability company are: Name Jeffrey H. Donelson; Business Address (must be a street or other physical address in Colorado) 9135 Ridgeline Blvd., Suite 100, Highlands Ranch, CO 80129 If mail is undeliverable to this address, ALSO include a post office box address:                                   

4. a. If the management of the limited liability company is vested in managers, mark the box x “The management of the limited liability company is vested in managers rather than members.” The name(s) and business address(es) of the initial manager(s) is (are):

Names(s) Shea Homes	Business Address(es) 9135 Ridgeline Blvd., Suite
Limited Partnership	100, Highlands Ranch, CO 80129

or

b. If management of the limited liability company is not vested in managers rather than members. The name(s) and business address(es) of the initial member(s) is (are):

Names(s)                                          Business Address(es)                                                                                                            

5. The (a) name or names, and (b) mailing address or addresses, of any one or more of the individuals who cause this document to be delivered for filing, and to whom the Secretary of State may deliver notice if filing of this document is refused, are: Karen Rae Smith, 410 17th St., Suite 2200, Denver, CO 80202

OPTIONAL. The electronic mail and/or Internet address for this entity is/are: e-mail                          Web site                          The Colorado Secretary of State may contact the following authorized person regarding this document:

name Karen Rae Smith address 410 17th St., #2200, Denver, CO 80202 voice 303-223-1390 fax 303-223-0390 e-mail ksmith@bhf-law.com

Disclaimer: This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user’s attorney.

AD

EX-3.38

Exhibit 3.38

LIMITED LIABILITY COMPANY AGREEMENT

OF

SHEA NINTH AND COLORADO, LLC

This Limited Liability Company Agreement (this “Agreement”) of Shea Ninth and Colorado, LLC is entered into by and between each of the persons set forth on Schedule A hereto, as members (the “Members”).

The Members desire to form a limited liability company pursuant to and in accordance with the Colorado Limited Liability Company Act, Colo. Rev. Stat. §7-80-101, et seq., as amended from time to time (the “Act”), and hereby agree as follows:

1. Name. The name of the limited liability company is Shea Ninth and Colorado, LLC (the “Company”).

2. Purpose. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary or incidental to the foregoing.

3. Members. The name of the Manager is Shea Homes Limited Partnership, a California limited partnership (“Shea”). The names and mailing addresses of the Members and their percentage interests (“Percentage Interests”) in the Company are set forth on Schedule A hereto.

4. Powers. The business and affairs of the Company shall be managed by Shea. Shea shall have the power to do any and all acts necessary or convenient to or for the furtherance of the purposes described herein, including all powers, statutory or otherwise, possessed by members under the laws of the State of Colorado. Shea is hereby designated as an authorized person, within the meaning of the Act, to execute, deliver and file the articles of organization of the Company (and any amendments or restatements thereof) and any other certificates (and any amendments or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business. Shea is hereby authorized, empowered and directed in the name and on behalf of the Company to approve, execute and deliver any and all agreements, certificates or any other documents on behalf of the Company.

5. Dissolution. The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following: (a) at any time, as determined by Shea, (b) the death, retirement, resignation, expulsion, insolvency, bankruptcy or dissolution of a Member unless the business of the Company is continued by consent of the remaining Members within 90 days following the occurrence of any such event, or (c) the entry of a decree of judicial dissolution under the Act.

6. Capital Accounts. A separate capital account shall be maintained for each Member, including a Member who hereafter acquires an interest in the Company, in accordance with the rules of United States Treasury Regulation Section 1.704-1 (b)(2)(iv).

7. Additional Capital Contributions. The Members shall make additional contributions to the capital of the Company in such amounts and at such times as determined by Shea.

8. Allocation of Profits and Losses. The Company’s profits and losses shall be allocated among the Members in proportion to their Percentage Interests as set forth on Schedule A.

9. Distributions. Distributions shall be made to the Members at the times and in the aggregate amounts determined by Shea. Such distributions shall be allocated among the Members in the same proportion as their Percentage Interests.

10. Assignments. A Member may not assign in whole or in part his limited liability company interest without the written consent of Shea, which consent may be granted or withheld in its sole and absolute discretion.

11. Resignation. A Member may not resign from the Company without Shea’s consent.

12. Liability of Members. The Members shall not have any liability for the obligations or liabilities of the Company except to the extent provided in the Act.

13. Governing Law. This Agreement shall be governed by, and construed under, the laws of the State of Colorado, all rights and remedies being governed by said laws.

* * * * *

2

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Limited Liability Company Agreement as of the 19^th day of April, 2006.

MEMBERS:
SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership
By:
Name:	Jeffrey D. Willis
	Authorized Agent
By:
Name:	Chester T. Latcham
	Authorized Agent

3

SCHEDULE A

Member	Percentage Interest
Shea Homes Limited Partnership 9135 S. Ridgeline Blvd., Suite 100 Highlands Ranch, CO 80129		100	%

4

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

3

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By:	JFS Management, L.P., its sole General Partner
		By: J.F. Shea Construction Management, Inc., its sole General Partner
		By:
		Name:	James G. Shontere
		Title:	Secretary
		By:
		Name:	Robert O’Dell
		Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By: J.F. Shea L.P., its sole General Partner
		By: JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’Dell
				Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By: J.F. Shea Co., INC., its Manager
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC
By:
By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.39

Exhibit 3.39

	State of California                     Bill Jones                     Secretary of State                     LIMITED LIABILITY COMPANY                     ARTICLES OF ORGANIZATION	File# 200013210185
		FILED In the office of the Secretary of State of the State of California MAY 10 2000
A $70.00 filing fee must accompany this form.		BILL JONES, Secretary of State This Space For Filing Use Only
IMPORTANT – Read instructions before completing this form.
1.      Name of the limited liability company (end the name with the words “Limited Liability Company,” “Ltd. Liability Co.,” or the abbreviations “LLC” or “L.L.C.”) Shea Otay Village 11, LLC
2.      The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea limited liability company act.
3.      Name the agent for service of process and check the appropriate provision below: Ronald L. Lakey which is
x       an individual residing in California. Proceed to item 4. ¨       a corporation which has filed a certificate pursuant to section 1505. Proceed to item 5.
4.      If an individual, California address of the agent for service of process: Address: 655 Brea Canyon Road City: Walnut                                                  State: CA                                         Zip Code: 91788-0489
5.      The limited liability company will be managed by: (check one) ¨ one manager  ¨ more than one manager  x single member limited liability company  ¨ all limited liability company members
6.      Other matters to be included in this certificate may be set forth on separate attached pages and are made a part of this certificate. Other matters may include the latest date on which the limited liability company is to dissolve.
7.      Number of pages attached, if any: none
8.      Type of business of the limited liability company. (For informational purposes only)     Real Estate Development
9.      DECLARATION: It is hereby declared that I am the person who executed this instrument, which execution is my act and deed.

	Edward S. Merrill
Signature of Organizer	Type or Print Name of Organizer
May 9, 2000
Date

10.    RETURN TO:
NAME
FIRM ADDRESS CITY/STATE
ZIP CODE
SEC/STATE (REV. 12/99)	FORM LLC-1 – FILING FEE $70.00 Approved by Secretary of State

		State of California   Bill Jones Secretary of State
LIMITED LIABILITY COMPANY – STATEMENT OF INFORMATION			FILED In the Office of the Secretary of State
Filing Fee – Please see information section			of the State of California
IMPORTANT – Read Instructions Before Completing This Form
1.      LIMITED LIABILITY COMPANY NAME			JUL 14 2000
Shea Otay Village 11, LLC			BILL JONES, Secretary of State This Space For Filing Use Only

2.      SECRETARY OF STATE FILE NUMBER          200013210185	3.      JURISDICTION OF FORMATION California
4.      STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE	CITY AND STATE	ZIP CODE
655 Brea Canyon Road	Walnut, CA	91788
5.      STREET ADDRESS IN CALIFORNIA OF OFFICE WHERE RECORDS ARE MAINTAINED (FOR DOMESTIC ONLY)     CITY		ZIP CODE
655 Brea Canyon Road	Walnut	CA 91788
6.      CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS:
x       AN INDIVIDUAL RESIDING IN CALIFORNIA.
¨       A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO SECTION 1505 OF THE CALIFORNIA CORPORATIONS CODE.
AGENT’S NAME:    Ronald L. Lakey
7.        ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL	CITY	ZIP CODE
655 Brea Canyon Road	Walnut	CA 91788
8.      DESCRIBE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY.          Real Estate Development
LIST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER AND CHIEF EXECUTIVE OFFICER (CEO), IF ANY. (CHECK THE APPROPRIATE DESIGNATION). ATTACH ADDITIONAL PAGES IF NECESSARY.
9.       NAME Shea Homes Limited Partnership		¨       MANAGER
ADDRESS 655 Brea Canyon Road		x       MEMBER
CITY Walnut	STATE CA            ZIP 91788	¨       CEO, IF  ANY
10.     NAME ADDRESS           CITY	STATE                  ZIP	¨       MANAGER ¨       MEMBER ¨       CEO, IF  ANY
11.    NUMBER OF PAGES ATTACHED, IF ANY.
12.    I DECLARE THAT THIS STATEMENT IS TRUE, CORRECT, AND COMPLETE.

	7-11-00 DATE
SIGNATURE OF INDIVIDUAL AUTHORIZED TO SIGN

Ronald L. Lakey, Vice President of JF Shea Co, Inc., General Partner of Shea Homes Limited Partnership
TYPE OR PRINT NAME AND TITLE OF PERSON SIGNING
DUE DATE: AUG 10 2000
SEC/STATE FORM LLC-12 (REV. 11/99)	APPROVED BY SECRETARY OF STATE

	State of California Bill Jones Secretary of State	FILED In the Office of the Secretary of State of the State of California
LIMITED LIABILITY COMPANY – STATEMENT OF INFORMATION
	Filing Fee $20.00 – If Amendment, See Instructions	JUN 28 2002
	IMPORTANT- Read Instructions Before Completing This Form	BILL JONES, Secretary of State This Space For Filing Use Only
1.      LIMITED LIABILITY COMPANY NAME: (Do not alter if name is preprinted.) Shea Otay Village 11, LLC

2.      SECRETARY OF STATE FILE NUMBER   200013210185 3.      STATE OR PLACE OF ORGANIZATION             California

4.      PRINCIPAL EXECUTIVE OFFICE STREET ADDRESS 655 Brea Canyon Road CITY Walnut	STATE CA	ZIP CODE 91788
5.      CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (FOR DOMESTIC ONLY) STREET ADDRESS 655 Brea Canyon Road
CITY Walnut	STATE CA	ZIP CODE 91788
6.      CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS
x       AN INDIVIDUAL RESIDING IN CALIFORNIA.
¨       A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO CALIFORNIA CORPORATIONS CODE SECTION 1505.
AGENT’S NAME: Max B. Johnson
7.      ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA IF AN INDIVIDUAL ADDRESS 655 Brea Canyon Road
CITY Walnut	STATE CA	ZIP CODE 91788
8.      DESCRIBE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY. Real estate development
9.      LIST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER. ATTACH ADDITIONAL PAGES, IF NECESSARY.
9a.    NAME           Shea Homes Limited Partnership          ADDRESS     655 Brea Canyon Road          CITY               Walnut,	STATE CA	ZIP CODE 91788
9b.    NAME ADDRESS CITY	STATE	ZIP CODE
9c.    NAME ADDRESS CITY	STATE	ZIP CODE
10.    CHIEF EXECUTIVE OFFICER (CEO), IF ANY
NAME ADDRESS CITY	STATE	ZIP CODE
11.    NUMBER OF PAGES ATTACHED, IF ANY:
12.    THIS STATEMENT IS TRUE, CORRECT, AND COMPLETE.

see attached			6/7/02
TYPE OR PRINT NAME OF PERSON COMPLETING FORM	SIGNATURE	TITLE	DATE

		64
DUE DATE:
SEC/STATE FORM LLC-12 (REV. 10/2001)	APPROVED BY SECRETARY OF STATE

SHEA OTAY VILLAGE 11, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership corporation
Its:	Sole Member
	By:	J.F. Shea Co., Inc, a Nevada corporation
	Its:	General Partner
		By:
			Max B. Johnson
		Its:	Vice President

	State of California Kevin Shelley Secretary of State
LIMITED LIABILITY COMPANY – STATEMENT OF INFORMATION
Filing Fee $20.00 – If Amendment, See Instructions
IMPORTANT - Read Instructions Before Completing This Form
1.      LIMITED LIABILITY COMPANY NAME: (Do not alter if name is preprinted.)
SHEA OTAY VILLAGE 11, LLC 655 BREA CANYON ROAD                                                 3458 WALNUT CA 91788
		This Space For Filing Use Only

x       IF THERE HAS BEEN NO CHANGE IN ANY OF THE INFORMATION CONTAINED IN THE LAST STATEMENT OF INFORMATION ON FILE WITH THE CALIFORNIA SECRETARY OF STATE, CHECK THE BOX AND PROCEED TO ITEM 12.
2.      SECRETARY OF STATE FILE NUMBER          200013210185	3.      STATE OR PLACE OF ORGANIZATION CA

4.	PRINCIPAL EXECUTIVE OFFICE
	STREET ADDRESS
	CITY	STATE	ZIP CODE

5.	CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (FOR DOMESTIC ONLY)
	STREET ADDRESS
	CITY	STATE CA	ZIP CODE

6. CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS

¨        AN INDIVIDUAL RESIDING IN CALIFORNIA.

¨        A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO CALIFORNIA CORPORATIONS CODE SECTION 1505.

AGENT’S NAME:

7.	ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL
	ADDRESS
	CITY	STATE CA	ZIP CODE
8.	DESCRIBE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY.
9.	LIST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER. ATTACH ADDITIONAL PAGES, IF NECESSARY.

a.	NAME
	ADDRESS
	CITY	STATE	ZIP CODE

b.	NAME
	ADDRESS
	CITY	STATE	ZIP CODE

c.	NAME
	ADDRESS
	CITY	STATE	ZIP CODE

10.	CHIEF EXECUTIVE OFFICER (CEO), IF ANY:
	NAME
	ADDRESS
	CITY	STATE	ZIP CODE
11.	NUMBER OF PAGES ATTACHED, IF ANY:

12.	THIS STATEMENT IS TRUE, CORRECT, AND COMPLETE.
	Max B. Johnson		Vice President	3/16/2004
	TYPE OR PRINT NAME OF PERSON COMPLETING FORM	SIGNATURE	TITLE	DATE

DUE DATE: 05/31/2004
SEC/STATE FORM LLC-12R (REV. 01/03/03)	APPROVED BY SECRETARY OF STATE

	State of California Secretary of State STATEMENT OF INFORMATION (Limited Liability Company)	L
Filing Fee $20.00. If amendment, see instructions.			FILED in the office of the Secretary of State of the State of California MAR 15 2006
IMPORTANT —READ INSTRUCTIONS BEFORE COMPLETING THIS FORM
1.      LIMITED LIABILITY COMPANY NAME (Please do not alter if name is preprinted.)
200013210185 SHEA OTAY VILLAGE 11, LLC 655 BREA CANYON ROAD WALNUT CA 91788
			This Space For Filing Use Only

DUE DATE: 05/31/2006
FILE NUMBER AND STATE OR PLACE OF ORGANIZATION
2.      SECRETARY OF STATE FILE NUMBER	3.      STATE OR PLACE OF ORGANIZATION
200013210185	CA

NO CHANGE STATEMENT
x	If there has been no change in any of the information contained in the last Statement of Information filed with the Secretary of State, check the box and proceed to Item 13.
	If there have been any changes to the information contained in the last Statement of Information filed, or no Statement of Information has been previously filed, this form must be completed in its entirety.
COMPLETE ADDRESSES FOR THE FOLLOWING (Do not abbreviate the name of the city. Items 4 and 5 cannot be P.O. Boxes.)
4.	STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE	CITY AND STATE	ZIP CODE

5. CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (DOMESTIC ONLY) CITY STATE CA ZIP CODE

NAME AND COMPLETE ADDRESS OF THE CHIEF EXECUTIVE OFFICER, IF ANY

6. NAME ADDRESS CITY AND STATE ZIP CODE

NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER (Attach additional pages, if necessary.)

7. NAME ADDRESS CITY AND STATE ZIP CODE

8. NAME ADDRESS CITY AND STATE ZIP CODE

9. NAME ADDRESS CITY AND STATE ZIP CODE

AGENT FOR SERVICE OF PROCESS (If the agent is an individual, the agent must reside in California and Item 11 must be completed with a California address. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 11 must be left blank.)

10.	NAME OF AGENT FOR SERVICE OF PROCESS
11.	ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL	CITY	STATE CA	ZIP CODE
TYPE OF BUSINESS

12.	DESCRIBE THE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY
13.	THE INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT.
	Max B. Johnson		Vice President	3/7/06
	TYPE OR PRINT NAME OF PERSON COMPLETING FORM	SIGNATURE	TITLE	DATE

LLC-12R (REV 05/2005) APPROVED BY SECRETARY OF STATE

003205

EX-3.40

Exhibit 3.40

OPERATING AGREEMENT

OF

SHEA OTAY VILLAGE 11, LLC

This Operating Agreement (this “Agreement”) of Shea Otay Village 11, LLC, a California limited liability company (the “Company”), is entered into effective the 23rd day of April, 2002 by Shea Homes Limited Partnership, a California limited partnership (the “Member”), as sole member of the Company.

R E C I T A L S

WHEREAS, the Member caused the Company to be formed pursuant to the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”); and

WHEREAS, the Member, as sole member of the Company, desires to enter into this Agreement to define formally the terms of such limited liability company and the Member’s rights and obligations with respect thereto.

A G R E E M E N T

NOW, THEREFORE, the Member, as sole member of the Company, hereby agrees as follows:

1. Name. The name of the Company is Shea Otay Village 11, LLC.

2. Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

3. Office and Registered Agent. The Company shall continuously maintain an office and registered agent in the State of California as required by section 17057 of the Act. The address of the office of the Company in California is 655 Brea Canyon Road, Walnut, California 91789. The registered agent for service of process of the Company is Max B. Johnson, c/o J.F. Shea Co., Inc., 655 Brea Canyon Road, Walnut, California 91789.

4. Member. The name and the address of the Member is Shea Homes Limited Partnership, a California limited partnership, 655 Brea Canyon Road, Walnut, California 91789.

5. Management. Management of the Company is vested in the Member. Any two officers of the Member, acting together, are authorized, empowered and directed, in the name of and on behalf of the Company, and in the name of and on behalf of the Member, in its capacity as the sole member of the Company, to execute and deliver all agreements, instruments, certificates or other documents as may be deemed reasonably necessary or appropriate, in furtherance of or in connection with the business of the Company.

6. Term; Dissolution. The term of the Company commenced upon the filing of the Articles of Organization of the Company with the California Secretary of State. The Company shall be dissolved upon the first to occur of the following: (a) April 1, 2052, (b) the written consent of the Member, (c) an entry of a decree of judicial dissolution pursuant to section 17351 of the Act, or (d) any other event that requires or causes dissolution of the Company under the Act.

7. Capital Contributions. The Member has contributed or will contribute 100 percent of the capital of the Company. The Member may make further capital contributions to the Company but shall not be required to do so.

8. Tax Matters. During any period in which the Member is the only member of the Company, the following shall apply for federal income tax purposes and relevant state income tax purposes, but only for such purposes: (a) in accordance with Section 301.7701-3 of the Income Tax Regulations, the Company shall be disregarded as an entity separate from the Member; (b) all items of income, gain, loss, deduction and credit of the Company shall be treated as recognized directly by the Member; and (c) the assets and liabilities of the Company shall be treated as the assets and liabilities of the Member. During any period in which the Company has more than one member, the Company shall be treated as a partnership for federal income tax purposes and relevant state income tax purposes, but shall not be treated as a partnership for any other purpose.

9. Distributions. Distributions shall be made to the Member at such times and in such amounts as determined by the Member.

10. Assignments. The Member may assign in whole or in part its limited liability company interest in the Company.

11. Admission of Additional Members. Additional members may be admitted at any time with the consent of the Member. Upon the admission of one or more additional members, this Agreement shall be amended to reflect the agreement of the parties at that time.

12. Liability of Member. The Member shall not have any liability for the obligations or liabilities of the Company except to the extent required under the Act.

13. Amendment. This Agreement may be amended from time to time with the written consent of the Member.

14. Governing Law. This Agreement shall be governed by, and construed under, the laws of the State of California, all rights and remedies being governed by said laws.

IN WITNESS WHEREOF, the undersigned has duly executed this Agreement on the date first above written.

SHEA OTAY VILLAGE 11, LLC, a California limited liability company
	By:	Shea Homes Limited Partnership, a California limited partnership corporation
	Its:	Sole Member

By:	J.F. Shea Co., Inc., a Nevada corporation
Its:	General Partner

By:
	Max B. Johnson
Its:	Vice President

By:
	James G. Shontere
Its:	Secretary

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

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as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By:	JFS Management, L.P., its sole General Partner
		By: J.F. Shea Construction Management, Inc., its sole General Partner
		By:
		Name:	James G. Shontere
		Title:	Secretary
		By:
		Name:	Robert O’Dell
		Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By:	J.F. Shea L.P., its sole General Partner
		By:	JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’Dell
				Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By:	J.F. SHEA CO., INC., its Manager
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC
By:
By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.41

Exhibit 3.41

		State of California Kevin Shelley Secretary of State	File # 200419110160
	LIMITED LIABILITY COMPANY ARTICLES OF ORGANIZATION NOTE: A limited liability company is not permitted to render professional  services.              A $70.00 filing fee must accompany this form.
IMPORTANT – Read Instructions before completing this form.			This Space For Filing Use Only
1.	NAME OF THE LIMITED LIABILITY COMPANY (END THE NAME WITH THE WORDS “LIMITED LIABILITY COMPANY,” “LTD. LIABILITY CO.,” OR THE ABBREVIATIONS “LLC” OR “L.L.C.”) Shea Proctor Valley, LLC
2.	THE PURPOSE OF THE LIMITED LIABILITY COMPANY IS TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY FOR WHICH A LIMITED LIABILITY COMPANY MAY BE ORGANIZED UNDER THE BEVERLY-KILLEA LIMITED LIABILITY COMPANY ACT.
	INITIAL AGENT FOR SERVICE OF PROCESS - If the agent is an individual, the agent must reside in California and both Items 3 and 4 must be completed. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 3 must be completed (leave Item a blank).
3.	NAME OF THE INITIAL AGENT FOR SERVICE OF PROCESS Scott C. Smith, Esq.
4.	IF AN INDIVIDUAL, THE ADDRESS OF THE INITIAL AGENT FOR SERVICE OF PROCESS IN CALIFORNIA ADDRESS c/o Bingham McCutchen LLP, Three Embarcadero Center, Suite 1800
	CITY   San Francisco		STATE CA             ZIP CODE 94111
5.	THE LIMITED LIABILITY COMPANY WILL BE MANAGED BY: (CHECK ONLY ONE) þ       ONE MANAGER ¨       MORE THAN ONE MANAGER ¨       ALL LIMITED LIABILITY COMPANY MEMBER(S)
6.	ADDITIONAL INFORMATION SET FORTH ON THE ATTACHED PAGES, IF ANY, IS INCORPORATED HEREIN BY THIS REFERENCE AND MADE A PART OF THIS CERTIFICATE.
7.	TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY (FOR INFORMATIONAL PURPOSES ONLY) Ownership of interest in joint venture and development of real property.
8.	I DECLARE I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
	SIGNATURE OF ORGANIZER Scott C. Smith, Esq. TYPE OR PRINT NAME OF ORGANIZER		7/8/04 DATE

9.	RETURN TO:
	NAME	Liz Tu
	FIRM	Bingham Mc Cutchen LLP
	ADDRESS	Three Embarcadero Center, Suite 1800
	CITY/STATE	San Francisco, CA
	ZIP CODE	94111	RBD
LLC-1 (REV 06/2004)			APPROVED BY SECRETARY OF  STATE

		State of California Kevin Shelley Secretary of State	L 42	EC            This Space For Filing Use Only
		STATEMENT OF INFORMATION (Limited Liability Company)
Filing Fee $20.00. If amendment, see instructions.
IMPORTANT — READ INSTRUCTIONS BEFORE COMPLETING THIS FORM
1.      LIMITED LIABILITY COMPANY NAME (Please do not alter if name is preprinted.)          Shea Proctor Valley, LLC

FILE NUMBER AND STATE OR PLACE OF ORGANIZATION
2.      SECRETARY OF STATE FILE NUMBER	3.      STATE OR PLACE OF ORGANIZATION
200419110160	California
COMPLETE ADDRESSES FOR THE FOLLOWING (Do not abbreviate the name of the city. Items 4 and 5 cannot be P. O. Boxes)
4.      STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE	CITY AND STATE                                         ZIP CODE
10721 Treena Street, Suite 100	San Diego, CA                                                      92131
5.      CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (DOMESTIC ONLY) 655 Brea Canyon Road	CITY                                STATE                     ZIP CODE Walnut                                 CA                            91789
NAME AND COMPLETE ADDRESS OF THE CHIEF EXECUTIVE OFFICER, IF ANY

6.      NAME	ADDRESS	CITY AND STATE	ZIP CODE
NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER (Attach additional pages, if necessary.)

7.      NAME	ADDRESS	CITY AND STATE	ZIP CODE
Shea Homes Limited Partnership
	655 Brea Canyon Road,	Walnut, CA	91789
8.      NAME	ADDRESS	CITY AND STATE	ZIP CODE
9.      NAME	ADDRESS	CITY AND STATE	ZIP CODE

AGENT FOR SERVICE OF PROCESS (If the agent is an individual, the agent must reside in California and Item 11 must be completed with a California address. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 11 must be left blank.)
10.    NAME OF AGENT FOR SERVICE OF PROCESS Max B. Johnson
11.    ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL	CITY	STATE	ZIP CODE
655 Brea Canyon Road	Walnut	CA	91789
TYPE OF BUSINESS
12.    DESCRIBE THE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY Ownership of interest in joint venture and development of real property
13.    THE INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT.
Max B. Johnson          TYPE OR PRINT NAME OF PERSON COMPLETING THE FORM	SIGNATURE	Vice President TITLE	7/29/2004 DATE
DUE DATE:

LLC-12 (REV 06/2004) APPROVED BY SECRETARY OF STATE

EX-3.42

Exhibit 3.42

LIMITED LIABILITY COMPANY AGREEMENT

OF

SHEA PROCTOR VALLEY, LLC

This Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company (the “Company”), is entered into effective as of the 9^th day of July, 2004, by SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership (the sole Member of the Company).

RECITALS

The Member desired to form the Company (i) in order for it to become a member of Proctor Valley West Partners, LLC, a Delaware limited liability company (“PVW Partners”), (ii) to acquire from PVW Partners completed lots on the property commonly known as San Miguel Ranch (the “Property”), (iii) to construct, market and sell homes on the Property, and (iv) to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

Therefore, the Member formed a limited liability company under the California Beverly-Killea Limited Liability Company Act (Cal. Corp. Code § 17000 et. seq.), as amended from time to time (the “Act”) on the following terms and conditions:

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a California limited liability company by the filing of Articles of Organization (the “Articles”) pursuant to the Act with the California Secretary of State. A copy of the Articles is attached to this Agreement as Exhibit A.

1.2 Name. The name of the Company is “SHEA PROCTOR VALLEY, LLC” and all Company business shall be conducted under that name or such other names that comply with applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Articles, the purposes of the Company are to (i) become a member of PVW Partners, (ii) to acquire lots on the Property, (iii) to construct, market and sell homes on the Property, and (iv) to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Articles are filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The office of the Company required by the Act to be maintained in the State of California shall be located at 10721 Treena Street, Suite 100, San Diego, CA 92131, or such other office (which need not be a place of business of

the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be Max B. Johnson, 655 Brea Canyon Road, Walnut, CA 91789. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The California Beverly-Killea Limited Liability Company Act (Cal. Corp. Code § 17000 et. seq.), as amended from time to time

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Articles. The Articles of Organization of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. SHEA PROCTOR VALLEY, LLC, a California limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the LLC. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

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Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 17254 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 17254 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

Section 4 MANAGEMENT

4.1 Management by Member. The business and affairs of the Company shall be managed by the Member. The Member shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company. A third party may rely upon any document, agreement or instrument executed and delivered by the Member on behalf of the Company as the valid, binding and authorized obligation of the Company, without any duty of inquiry.

4.2 Officers. The Member may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Member may, from time to time, delegate to them. Unless the Member decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the California General Corporation Law, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 17101 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 17254 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

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Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Member.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii). Subject to the preceding sentence, the Member shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

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(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the California Secretary of State a certificate of cancellation in accordance with Section 17356 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of California.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

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9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A Articles of Organization

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership
	By:	J.F. Shea Co., Inc., a Nevada corporation, its General Partner
		By:
		Name:	Ronald L. Lakey
		Title:	Vice President
		By:
		Name:	Max B. Johnson
		Title:	Vice President

6

LIMITED LIABILITY COMPANY AGREEMENT

OF SHEA PROCTOR VALLEY, LLC

EXHIBIT A

Articles of Organization

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

3

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By:	JFS Management, L.P., its sole General Partner
		By: J.F. Shea Construction Management, Inc., its sole General Partner
		By:
		Name:	James G. Shontere
		Title:	Secretary
		By:
		Name:	Robert O’Dell
		Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By: J.F. SHEA CO., INC., its Manager
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By:	J.F. Shea L.P., its sole General Partner
		By:	JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’Dell
				Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC		J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:		By:
By:	Ronald L. Lakey	Name:	James G. Shontere
Its:	Vice President	Title:	Secretary
By:		By:
By:	James G. Shontere	Name:	Robert O’Dell
Title:	Secretary	Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.43

Exhibit 3.43

[SEAL]                                 ARTICLES OF INCORPORATION                                [SEAL]

OF

HIGHLANDS RANCH REAL ESTATE CORPORATION

The undersigned natural persons of the age of twenty-one (21) years or more, hereby associate themselves together to form a corporation, under and pursuant to the statutes of the State of Colorado, and adopt the following Articles of Incorporation:

ARTICLE I

The name of this Corporation shall be:

HIGHLANDS RANCH REAL ESTATE CORPORATION

ARTICLE II

A. The nature of the business of the Corporation and the objects and purposes to be transacted, promoted and carried on by it are:

1. To provide for maintenance, preservation and architectural control of the development known as Highlands Ranch, and to promote the health, safety and welfare of the residents of such community;

2. To engage in the business of and to act as general contractors and land development managers; to contract for and coordinate the development activities of subcontractors and others on lands owned by the Corporation or others; to engage in all activities, render all services, and handle and deal in all materials, supplies and products related or incidental to any and every phase of the building and construction trades;

3. To acquire by purchase, lease, or otherwise and to improve and develop real property. To erect dwellings, apartment houses, and other buildings, private or public, of all kinds, and to sell or rent the same. To rebuild, enlarge, alter, or improve any buildings or other structures held or occupied by the Corporation, and to carry on any lawful business therein or thereon. To lay out, grade, pave, and dedicate roads, streets avenues, highways, alloys, courts, paths, walks, parks, and playgrounds. To buy, sell, mortgage, exchanges, lease, let, hold for investment or otherwise, use, and operate real estate of all kind’s, improved or unimproved, and any right or interest therein.

4. To engage in any commercial, industrial, manufacturing or agricultural enterprises calculated or designed to be profitable to this Corporation and in conformity with the laws of the State of Colorado.

5. To generally engage in any lawful business.

The objects and purposes specified in each of the foregoing paragraphs shall not be limited or restricted by reference or inference from the terms of any other paragraph but each shall be regarded as an independent object and purpose.

B. In furtherance of the foregoing purposes, the Corporation shall have and may exercise all of the rights, powers and privileges now or hereafter conferred upon corporations organized under the laws of the state of Colorado. In addition, it may do everything necessary, suitable or proper for the accomplishment of any of its corporate purposes, including the following:

(a) To borrow money for any corporate purpose from its officers, directors or shareholders, upon fair and equitable terms and conditions.

(b) To acquire shares of its own capital stock, and on hold the same either as treasury stock, or to cancel the same in the manner provided by law; any stock so held in the treasury shall not be voted.

ARTICLE III

This Corporation shall have perpetual existence.

ARTICLE IV

A. The aggregate number of shares which the Corporation shall have authority to issue is Fifty Thousand (50,000) shares of common stock of no par value. The consideration for the issuance of shares may be paid in whole or in part in money, and other property, tangible or intangible, or in labor or in services actually performed for the Corporation.

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When payment of the consideration for which shares are to be issued shall have been received, such shares shall be deemed to be fully paid and not liable for any further call or assessment thereon.

B. Each shareholder of record shall have one vote for each share of stock standing in his name on the books of the Corporation and entitled to vote. In the election of directors, cumulative voting shall not be allowed.

C. Shareholders of the capital stock of this Corporation shall have the pre-emptive or preferential right to subscribe for any shares of the capital stock of this Corporation, whether now or hereafter authorized, and the right to acquire additional or treasury shares of the Corporation or securities convertible into shares or carrying stock purchase warranty or privileges.

D. The Board of Directors may, from time to time, distribute to the shareholders in partial liquidation, out of stated capital or capital surplus of the Corporation, a portion of its assets, in cash or property, subject to the limitations contained in the statutes of the State of Colorado.

ARTICLE V

The number of persons constituting the Board of Directors of the Corporation shall be fixed by the Bylaws of the Corporation. Directors need not be residents of the State of Colorado, nor shareholders of the Corporation, and shall exercise all the powers conferred on the Corporation by these Articles of Incorporation and by the laws of the State of Colorado. The initial Board of Directors shall consist of three (3) members, and the names and addresses of those persons who are to serve as Directors until the first annual meeting of shareholders, or until their successors shall have been elected and qualified, are as follows:

Philip J. Reilly 26137 La Paz Road Mission Viejo, California 92691

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James G. Toepfer	6900 5o. Yosemite Englewood, Colorado 80110
James L. Huessan	26137 La Paz Road Mission Viejo, California 92691

ARTICLE VI

No contract or other transaction of the Corporation with any other person, firm or corporation, or in which this Corporation is interested, shall be affected by reason of any of the directors or officers of this Corporation being interested, in their individual capacities, or as an officer or director of another corporation, individually or jointly with others as a party to such contract or transaction; provided that the fact of such interest is known or disclosed to the Board. Any member of the Board so interested may be counted in determining the existence of a quorum at which the matter is considered and may vote at the meeting at which this matter is taken up, as if he were not so interested.

ARTICLE VII

A. The address of the initial registered office of the Corporation is 1900 First National Bank Building, 621 Seventeenth Street, Denver, Colorado 80293.

B. The name of the initial registered agent for the Corporation at such address is Thomas T. Grimshaw.

ARTICLE VIII

Any director or officer or former director or officer of the Corporation shall be indemnified by the Corporation against all costs and expenses actually and reasonably incurred by his for advice or assistance concerning, or in connection with the defense of, any action, suit or proceeding, civil, criminal or administrative, except in relation to the liabilities under the Securities Act of 1933, so amended; the Securities Laws of the State of

-4-

Colorado; or other applicable Securities Laws, in which he is made a party by reason of being or having been a director or officer of the Corporation, whether or not he continues to be a director or officer at the tine of incurring such costs or expenses, except costs and expenses incurred in relation to matters as to which such director or officer shall have been derelict in the performance of his duty as such director or officer.

(a) in a matter which shall have been subject of a suit or proceeding in he shall have been finally adjudged in such suit or proceeding to have been derelict in the performance of his duty as such director or officer, or

(b) in a matter not falling within (a) next preceding if either all disinterested members of the Board of Directors or a committee of disinterested stockholders of the Corporation (excluding therefrom any director or officer) selected as hereinafter provided, shall determine that he is derelict.

The selection of the committee of stockholders provided above may be made by unanimous action of the disinterested directors or, if there be no disinterested director or directors, by the chief executive officer of the Corporation, provided that not less than two (2) stockholders shall be selected in any case. A director or stockholder shall be deemed disinterested in a matter if he has no interest therein other than as a director or stockholder of the Corporation, as the case may be. The foregoing shall not constitute exclusive tests as to dereliction and no determination as to dereliction shall be questioned on the ground that it is made otherwise than as provided above. The Corporation may pay the fees and expense of the stockholders or directors, as the case may be, incurred in connection with making a determination as above provided.

-5-

The foregoing indemnification shall include reimbursement of all costs and expenses reasonably incurred in settling any such claim asserted, suit or proceeding, when the so doing appears to be for the best interests of the Corporation, and shall be in addition to any rights to which any director or officer may otherwise be entitled as a matter of law.

ARTICLE IX

The officers of the Corporation shall be subject to the doctrine of corporate opportunities only insofar as it applies to business opportunities in which this Corporation has expressed an interest as determined from time to time by the Corporation’s Board of Directors, as evidenced by resolutions appearing in its minutes. When so delineated, opportunities within such areas of interest shall be disclosed promptly to the Board of Directors. Until such time as this Corporation, through its Board of Directors, has designated an area of interest, the officers shall be free to engage in such areas and to continue a business existing prior to the time that such an area of interest has bees designated.

ARTICLE X

The Corporation shall be entitled to treat the registered holder of any shares of the Corporation as the owner thereof for all purposes, including all rights derived from such shares, and shall not be bound to recognise any equitable or other claim to, or interest in, such shares or rights deriving from such shares, on the part of any other persons, including but without limiting the generality thereof, a purchaser, assignee or transferee of such shares or rights deriving from such shares, unless and until such purchaser, assignee, transferee or other person becomes a registered holder of such shares, whether or not the Corporation shall have either actual or constructive notice of the interest of such purchaser, assignee transferee or other person. The purchaser, assignee or transferee of any

-6-

of the shares of the Corporation shall not be entitled: (1) to receive notice of the meetings of the shareholders; (2) to vote at such meetings; (3) to examine a list of the shareholders; (4) to be paid dividends or other sums payable to shareholders; (5) to own, enjoy and exercise any other property or rights deriving from such shares against the Corporation, until such purchaser, assignee or transferee has become the registered holder of such shares.

ARTICLE XI

The names and addresses of the incorporators of this Corporation are as follows:

	Ralph L. Poucher	1900 First National Bank Building 621 Seventeenth Street Denver, Colorado 80293
	John J. Tipton	1900 First National Bank Building 621 Seventeenth Street Denver, Colorado 80293
	Charles W. Lilley	1900 First National Bank Building 621 Seventeenth Street Denver, Colorado 80293
	Executed this 27th day of September, 1979.
	RECORDED	Ralph L. Poucher
		John J. Tipton
SECRETARY OF STATES OFFICE
		Charles W. Lilley

STATE OF COLORADO	)
	)	ss.
CITY AND COUNTY OF DENVER	)

I, Leigh J. Newcomb, a Notary Public, in and for the City and County and State aforesaid, do hereby certify that on the 27th day of September, 1979, personally appeared before me Ralph L. Poucher, John J. Tipton and Charles W. Lilley, who are personally known to me to be the persons whose names are subscribed to the foregoing Articles of Incorporation, and who being by me first duly sworn declared that they were the persons who signed the foregoing document as Incorporators, that they signed the same as their free and voluntary act and deed, and that the statements contained therein are true.

	/s/ Leigh J. Newcomb
	Notary Public
My Commission Expires: July 8, 1981

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[SEAL]	MAIL TO: Colorado Secretary of State Corporations Office 1560 Broadway, Suite 200 Denver, Colorado 80202 (303) 866-2361
	ARTICLES OF AMENDMENT
	to the
	ARTICLES OF INCORPORATION	655956

Pursuant to the provisions of the Colorado Corporation Code, the undersigned corporation adopts the following Articles of Amendments to its Articles of Incorporation:

FIRST: The name of the corporation is Highlands Ranch Real Estate Corporation

SECOND: The following amendment to the Articles of Incorporation was adopted on January 14, 1986 as prescribed by the Colorado Corporation Code, in the manner marked with an X below:

¨ Such amendment was adopted by the board of directors where no shares have been issued.

x Such amendment was adopted by a vote of the shareholders. The number of shares voted for the amendment was sufficient for approval.

Subpart A, Article II of the Articles of Incorporation of Highlands Ranch Real Estate Corporation, as filed with the Colorado Secretary of State on September 27, 1979, shall be, and hereby is, amended by adding thereto a new subsection II. A.6. as follows:

6. To obtain and maintain a Colorado real estate license, to engage in the business of and to act as a real estate broker and to collect commissions and other fees in connection therewith.

THIRD: The manner, if not set forth is such amendment, in which any exchange, reclassification, or cancellation of issued shares provided for in the amendment shall be effected, is as follows: N/A

FOURTH: The manner in which such amendment effects a change in the amount of stated capital, and the amount of stated capital as changed by such amendment, are as follows: N/A

HIGHLANDS RANCH REAL ESTATE CORPORATION
By		(Note 1)
	James G. Toepfer
and		(Note 2)
	Paul B. Pressman, Asst
		(Note 3)

SS Form DFI (Rev. 1/86)	MAIL TO:	for office use only
	COLORADO SECRETARY OF STATE CORPORATIONS OFFICE	FILED-COLD. DEPT. OF STATE
	1560 Broadway, Suite 200 Denver, Colorado 80202 (303) 866-2361	724698 MY-7 87
SUBMIT ONE Filing fee 85.00 This document must be typewritten.	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH,	APR 30 1987
	DP0382547

Pursuant to the provisions of the Colorado Corporation Code, the Colorado Nonprofit Corporation Act and the Colorado Uniform Limited Partnership Act of 1981, the undersigned corporation or limited partnership organized under the laws of Colorado, submits the following statement for the purpose of changing its registered office or its registered agent, or both, in the state of Colorado:

First: The name of the corporation or limited partnership is:

Highlands Ranch Real Estate Corporation

Second: the address of its REGISTERED OFFICE is 8822 S. Ridgeline Blvd.

Highlands Ranch, CO 80126

Third: The name of its REGISTERED AGENT is Joseph B. Blake

Fourth: The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

Fifth: The address of its place of business in Colorado is 8822 S. Ridgeline Boulevard

Highlands Ranch, CO 80126 (Note 1)

By (Note 2)

Its     x     president

Its     ¨     authorized agent

Its     ¨     registered agent (Note 3)

Its     ¨     general partner

STATE OF Colorado

COUNTY OF Douglas

Subscribed and sworn to before me this      day of                     ,19        .

My commission expires                                     .

Notary Public (Note 4)

Address

Must be typed FILING FEE: $5.00 MUST SUBMIT TWO COPIES	Mail to: Secretary of State Corporations Section 1560 Broadway, Suite 200 Denver, CO 80202 (303) 894-2251 Fax (303) 894-2242 DPC-19871382547	For office use only
Please include a typed self-addressed envelope	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH

Pursuant to the provisions of the Colorado Business Corporation Act, the Colorado Nonprofit Corporation Act, the Colorado Uniform Limited Partnership Act of 1981 and the Colorado Limited Liability Company Act, the undersigned, organized under the laws of:

            _______________________________________________________________

submits the following statement for the purpose of changing its office or its registered agent, or both, in the state of Colorado:

FIRST:	The name of the corporation, limited partnership or limited liability company is:
	Highlands Ranch Real Estate Corporation	NC65
SECOND:	Street address of the current registered office is:
	8822 South Ridgeline Boulevard, Highlands Ranch, CO 80126
(Include City, State, Zip)
	and if changed, the NEW STREET ADDRESS is:
	300 West Plaza Drive, Suite 300, Highlands Ranch, CO 80126
(Include City, State, Zip)

THIRD:     The name of its current registered agent is:

and if changed, the NEW REGISTERED AGENT is:

Signature of NEW REGISTERED AGENT:

The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

FOURTH: If changing the principal place of business address ONLY, the new address is:

Signature
	Jeffrey H. Donelson
Title	Assistant Secretary

COMPUTER UPDATE COMPLETE

MJ

MUST BE TYPED FILING FEE: $5.00 MUST SUBMIT TWO COPIES	Mail to: Secretary of State Corporations Section 1560 Broadway, Suite 200 Denver, CO 80202 (303) 894-2251 Fax (303) 894-2242 DPC-19871382547	For office use only	003
Please include a typed self addressed envelope	STATEMENT OF CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT, OR BOTH

Pursuant to the provisions of the Colorado Business Corporation Act, the Colorado Nonprofit Corporation Act, the Colorado Uniform Limited Partnership Act of 1981 and the Colorado Limited Liability Company Act, the undersigned, organized under the laws of:

Colorado

submits the following statement for the purpose of changing its registered office or its registered agent, or both, in the state of Colorado:

FIRST:	The name of the corporation, limited partnership or limited liability company is:
	Highlands Ranch Real Estate Corporation
SECOND:	Street address of current REGISTERED OFFICE is:	300 West Plaza Drive, Suite 300
		Highlands Ranch, CO. 80126
(Include City, State, Zip)
	and if changed, the new street address is:	9135 S. Ridgeline Blvd. Highlands Ranch, CO. 80129
		(Include City, State, Zip)

THIRD:	The name of its current REGISTERED AGENT is: Bert Selva
	and if changed, the new registered agent is: Jeffrey H. Donelson
	Signature of New Registered Agent	______________________________
	Principal place of business	9135 S. Ridgeline Blvd. Highlands Ranch, CO. 80129
		(City, State, Zip)

The address of its registered office and the address of the business office of its registered agent, as changed, will be identical.

FOURTH: If changing the principal place of business address ONLY, the new address is

Signature
Title	Agent

COMPUTER UPDATE COMPLETE

Revised 7/97

CHANGE OF NAME
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION (PROFIT) Form 205 NOT VALID AFTER JUNE 30, 2004 Read about new Forms at www.sos.state.co.us Filing fee: $25.00 Deliver to: Colorado Secretary of State Business Division 1560 Broadway, Suite 200 Denver, CO 80202-5169 This document must be typed or machine printed Copies of filed documents may be obtained at www.sos.state.co.us	ABOVE SPACE FOR OFFICE USE ONLY

19871382547

Pursuant to § 7-110-106 and part 3 of article 90 of title 7, Colorado Revised Statutes (C.R.S.), these Articles of Amendment to its Articles of Incorporation are delivered to the Colorado Secretary of State for filing.

1. The name of the corporation is: Highlands Ranch Real Estate Corporation

(If changing the name of the corporation, indicate name of corporation BEFORE the name change)

2. The date the following amendment(s) to the Articles of Incorporation was adopted: 1/23/04

3. The text of each amendment adopted (include attachment if additional space needed):

Resolved that the name of the Corporation is hereby changed from “Highlands Ranch Real Estate Corporation” to “Shea Properties of Colorado, Inc.,” and that the Corporation adopt Shea Properties of Colorado as a tradename.

4. If changing the corporation name, the new name of the corporation is:

Shea Properties of Colorado, Inc.

5. If providing for an exchange, reclassification, or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself:

N/A

6. Indicate manner in which amendment(s) was adopted (mark only one):

¨ No shares have been issued or Directors elected – Adopted by Incorporator(s)

þ No shares have been issued but Directors have been elected – Adopted by the board of directors

¨ Shares have been issued but shareholder action was not required – Adopted by the board of directors

¨ The number of votes cast for the amendment(s) by each voting group entitled to vote separately on the amendment(s) was sufficient for approval by that voting group – Adopted by the shareholders

7. Effective date (if not to be effective upon filing) 3/9/04 (Not to exceed 90 days)

8. The (a) name or names, and (b) mailing address or addresses, of any one or more of the individuals who cause this document to be delivered for filing, and to whom the Secretary of State may deliver notice if filing of this document is refused, are:

Carol Janusz, 9135 Ridgeline Boulevard, Suite 100, Highlands Ranch, CO 80129

Please refer to § 7-90-301 (8), C.R.S

CERTIFICATE OF TRADENAME

Form 135 NOT VALID AFTER JUNE 30, 2004

Read about new Forms at www.sos.state.co.us

Filing fee: $10.00

Deliver to: Colorado Secretary of State

Business Division

1560 Broadway, Suite 200

Denver, CO 80202-5169

This document must be typed or machine printed.

Copies of filed documents may be obtained at www.sos.state.co.us

19871382547

Pursuant to § 7-71-101(2) and part 3 of article 90 of title 7, Colorado Revised Statutes (C.R.S.), this certificate regarding a tradename is delivered to the Colorado Secretary of State for filing.

1. The entity name is: Shea Properties of Colorado, Inc.

                        (as shown on the records of the Secretary of State)

organized under the laws of Colorado (state or country)

2. The location of its principal office is: 9135 Ridgeline Blvd., #100, Highlands Ranch, CO 80129

                                                                      (must be a complete address, including zip)

3. The name (other than its own entity’s name) under which the business is transacted is: Shea Properties of Colorado

4. A brief description of the kind of business transacted under the trade name is: Land sales, development and leasing, commercial brokerage activities.

5. The (a) name or names, and (b) mailing address or addresses, of any one or more of the individuals who cause this document to be delivered for filing, and to whom the Secretary of State may deliver notice if filing of this document is refused, are:

Carol Janusz, 9135 Ridgeline Blvd., #100, Highlands Ranch, CO 80129

Please refer to § 7-90-301 (8), C.R.S

EX-3.44

Exhibit 3.44

BYLAWS

OF

HIGHLANDS RANCH REAL ESTATE CORPORATION

ARTICLE I

Offices

The principal office of the Corporation shall be in the State of Colorado. The Corporation may have offices and places of business at such other places within or without the State of Colorado as shall be determined by the Directors.

The registered office of the Corporation required by the Colorado Corporation Act must be maintained in the State of Colorado and it may be, but need not be, identical with the principal office, if in the State of Colorado; and the address of the registered office may be changed from time to time as provided by Colorado statute.

ARTICLE II

Shareholders Meetings

1. Annual Meetings. The annual meeting of the Shareholders of this Corporation shall be held at a reasonable hour on the third Monday of the second month following the end of the Corporation’s fiscal year unless that day be a holiday, when it shall be held on the next business day following that day for the purpose of electing directors and for the transacting of such other corporate business as may come before the meeting.

2. Special Meetings. Special meetings of the Shareholders of the Corporation may be called at any time by the Chairman of the Board of Directors, if any, President or by resolution of the Board of Directors, and the President shall call a special meeting within ten (10) days of receipt of written request by the holders of not less than one-tenth (1/10) of the issued and outstanding stock of the Corporation. The notice or call of a special meeting shall state the purpose or purposes for which the meeting is called.

3. Place of Meeting. The person or persons calling the meeting may designate any place, either within or without the State of Colorado, as the place for any annual meeting or for any special meeting of the Shareholders of the Corporation. A waiver of notice signed by all Shareholders entitled to vote at a meeting may designate any place for such meeting. If no designation is made, or if a special meeting shall be called other than by the Board, the place of meeting shall be the principal office of the Corporation in Colorado.

4. Notice of Meeting. Written or printed notice stating the place, day and hour of the meeting shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the President, Secretary or the Officer or persons calling the meeting, to each Shareholder of record

capital stock is to be increased, at least thirty (30) days’ notice shall be given. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Shareholder at his address as it appears on the stock transfer books of the Corporation, with postage prepaid.

5. Waiver of Notice. Any Shareholder, either before, at, or after a Shareholders’ meeting, may waive notice of the meeting, and his waiver shall be deemed the equivalent of giving notice. Attendance at a Shareholders’ meeting, either in person or by proxy, of a person entitled to notice shall constitute a waiver of notice of the meeting unless he attends for the express purpose of objection to the transaction of business on the ground that the meeting was not lawfully called or convened.

6. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or entitled to receive payment of any dividend or in order to make a determination of Shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock transfer books shall be closed for the purpose of determining Shareholders entitled to notice of or to vote at a meeting of Shareholders such books shall be closed for at least ten (10) days immediately preceding said meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of Shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of Shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of Shareholders is to be taken. If the stock transfer books are not closed, and no record date is fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders, or Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of the stock transfer books, and the stated period of closing has expired.

7. Voting List. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least ten (10) days before each meeting of Shareholders, a complete list of the Shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the principal office of the Corporation, whether within or without the State of Colorado, and shall be subject to inspection by any Shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any Shareholder during the whole time of the meeting. The original stock

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transfer books shall be prima facie evidence as to who are the Shareholders entitled to examine such list or transfer books or to vote at any meeting of Shareholders.

8. Proxies. A Shareholder entitled to vote may vote in person or by proxy executed in writing by the Shareholder or by his attorney in fact. The proxy shall not be valid after eleven (11) months from the date of its execution unless a longer period is expressly stated in it.

9. Voting Rights. Each outstanding share, regardless of class, shall be entitled to one vote, and each fractional share shall be entitled to a corresponding fractional vote on each matter submitted to a vote at a meeting of Shareholders except to the extent that the voting rights of the shares of any class or classes are limited or denied by the Articles of Incorporation.

At each election for Directors every Shareholder entitled to vote at such election shall have the right to vote in person or by proxy the number of shares owned by him for as many persons as there are Directors to be elected and for whose election he has a right to vote, and cumulative voting in the election of such Directors shall not be permitted.

Neither treasury shares, nor shares of its own stock held by the Corporation in a fiduciary capacity shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the Bylaws of such corporation may prescribe or, in the absence of such provision, as the Board of Directors of such corporation may determine.

Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name.

Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed.

10. Quorum. The presence, in person or by proxy, of the holders of a majority of the shares outstanding and entitled to vote shall constitute a quorum at meetings of the Shareholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Shareholders unless the vote of a greater number or voting by classes is required by the statutes of the State of Colorado or the Articles of Incorporation. In the event any Shareholders withdraw from a duly organized meeting at which a quorum was initially present, the remaining shares represented shall constitute a quorum for the purpose of continuing to do business, and the affirmative vote of the majority of the remaining shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Shareholders unless the vote of a greater number or voting by classes is required by the statutes of the State of Colorado or the Articles of Incorporation.

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11. Adjournments. If less than a majority of the outstanding shares are represented at any meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Any meeting of the Shareholders may adjourn from time to time until its business is completed.

12. Informal Action By Shareholders. Any action required to be taken at a meeting of the Shareholders, or any other action which may be taken at a meeting of the Shareholders, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the Shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Shareholders and may be stated as such in any articles or documents filed with the Secretary of State of Colorado under the Colorado Corporation Act.

ARTICLE III

Board of Directors

1. Number, Qualifications and Term of Office. The business and affairs of the Corporation shall be managed by a Board of Directors consisting of from three to nine members, none of whom needs to be a resident of the State of Colorado or hold shares in this Corporation. Each Director, except one appointed to fill a vacancy, shall be elected at each Annual Meeting of Shareholders and shall hold such office until his successor shall be elected and shall qualify. No decrease in the number of Directors on the Board shall have the effect of shortening the term of any incumbent Director.

2. Vacancies. Any Director may resign at any time by giving written notice to the President or to the Secretary of the Corporation. Such resignation shall take effect at the time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any vacancy occurring on the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors though less than a quorum. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. remaining shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Shareholders unless the vote of a greater number or voting by classes is required by the statutes of the State of Colorado or the Articles of Incorporation.

3. Removal. At a meeting of Shareholders called for that purpose the entire Board of Directors or any individual Director may be removed from office without assignment of cause by the vote of the majority of the shares entitled to vote at an election of Directors.

4. Compensation. By resolution of the Board of Directors, any Director may be paid any one or more of the following: his expenses, if any, of attendance at meetings; a fixed sum

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for attendance at each meeting; or a stated salary as Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV

Meetings of the Board

1. Place of Meetings. The meetings of the Board of Directors may be held at the principal office of the Corporation or any place within the State of Colorado and at any place without the State of Colorado that a majority of the Board of Directors may from time to time by resolution appoint.

2. Regular Meetings. The Board of Directors shall meet each year immediately after, and at the same place as, the Annual Meeting of the Shareholders for the purpose of electing officers and transacting such business as may come before the meeting. The Board of Directors may provide, by resolution, for the holding of additional regular meetings without other notice than such resolution.

3. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, if any, the President or by a majority of the members of the Board of Directors.

4. Notice of Meetings. Notice of the regular meetings of the Board of Directors need not be given. Written notice of each special meeting, setting forth the time and the place of the meeting, shall be given to each Director not less than five (5) days prior to the time fixed for the meeting. This notice may be given either personally, or by sending a copy of the notice through the United States mail or by telegram, charges prepaid, to the address of each Director appearing on the books of the Corporation. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid thereon. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

5. Waiver of Notice. A Director may waive in writing notice of a special meeting of the Board of Directors either before, at, or after the meeting; and his waiver shall be deemed the equivalent of giving notice. Attendance of a Director at a meeting shall constitute waiver of notice of that meeting unless he attends for the express purpose of objecting to the transaction of business because the meeting has not been lawfully called or convened.

6. Quorum. At meetings of the Board of Directors a majority of the number of Directors fixed by these Bylaws shall be necessary to constitute a quorum for the transaction of business. If a quorum is present, the acts of the majority of Directors in attendance shall be acts of the Board.

7. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be deemed to

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have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.

8. Executive Committee. The Board of Directors may, by a resolution passed by a majority of the number of Directors fixed by these Bylaws, designate a majority of their number to constitute an Executive Committee, which shall have and may exercise all of the authority of the Board of Directors or such lesser authority as may be set forth in said resolution. No such delegation of authority shall operate to relieve the Board of Directors or any member of the Board from any responsibility imposed by law.

9. Informal Action by Directors. Any action required or permitted to be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Directors and may be stated as such in any articles or documents filed with the Secretary of State of Colorado under the Colorado Corporation Act.

ARTICLE V

Officers and Agents

1. General. The executive officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board held after each Annual Meeting of the Shareholders and shall consist of a President, a Secretary and a Treasurer, or a Secretary/Treasurer. One or more Vice Presidents, a Chairman of the Board, other officers, assistant officers, agents and employees that the Board of Directors may from time to time deem necessary may be elected by the Board of Directors or be appointed in a manner prescribed by the Board.

Two or more offices may be held by the same person except that one person shall not at the same time hold the offices of President and Vice President, or the offices of President and Secretary. Officers shall hold office until their successors are chosen and have qualified unless they are sooner removed from office as provided in these Bylaws.

2. General Duties. All officers and agents of the Corporation as between themselves and the Corporation shall have such authority and shall perform such duties in the management of the Corporation as may be provided in these Bylaws or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws. In all cases where the duties of any officer, agent or employee are not prescribed by the Bylaws or by the Board of Directors, such officer, agent or employee shall follow the orders and instructions of the President.

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3. Vacancies. When a vacancy occurs in one of the executive offices by a death, resignation or otherwise, it shall be filled by the Board of Directors. The officer so selected shall hold office until his successor is chosen and qualified.

4. Salaries. The Board of Directors shall fix the salaries of the officers of the Corporation. The salaries of other agents and employees of the Corporation may be fixed by the Board of Directors or by an officer to whom that function has been delegated by the Board.

5. Removal. Any officer or agent of this Corporation may be removed by the Board of Directors or by the Executive Committee, if any, whenever in its judgment the best interests of the Corporation may be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or an agent shall not of itself create contract rights.

6. Chairman of the Board. The Chairman of the Board shall preside as Chairman at meetings of the Shareholders and the Board of Directors. He shall, in addition, have such other duties as the Board may prescribe that he perform. At the request of the President, the Chairman of the Board may, in the case of the President’s absence, or inability to act, temporarily act in his place. In the case of death of the President or in the case of his absence or inability to act without having designated the Chairman of the Board to act temporarily in his place, the Chairman of the Board shall perform the duties of the President. If the Chairman of the Board shall be unable to act, all the Vice Presidents may exercise such powers and perform such duties.

7. President. The President shall be the chief executive officer of the Corporation and shall have general supervision of the business of the Corporation. In the event the position of Chairman of the Board shall not be occupied or the Chairman shall be absent or otherwise unable to act, the President shall preside at meetings of the Shareholders and Directors and shall discharge the duties of the presiding officer. The President shall present at each annual meeting of the Shareholders a report of the business of the Corporation of the preceding fiscal year and shall perform whatever other duties the Board of Directors may from time to time prescribe.

8. Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board of Directors may from time to time prescribe or as the President may from time to time delegate to him. At the request of the President, any Vice President may, in the case of the President’s absence, or inability to act, temporarily act in his place. In the case of the death of the President, or in the case of his absence or inability to act without having designated a Vice President to act temporarily in his place, the Vice President, or Vice Presidents, to perform the duties of the President shall be designated by the Board of Directors. If no such designation shall be made, all the Vice Presidents may exercise such powers and perform such duties.

9. The Secretary. The Secretary shall keep or cause to be kept in books provided for that purpose the minutes of the meetings of the Shareholders, Executive Committee, if any, and of the Board of Directors; shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; shall be custodian of the records and

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of the seal of the Corporation and see that the seal is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized and in accordance with the provisions of these Bylaws; and, in general, shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to him by the Board of Directors or by the President. In the absence of the Secretary or his inability to act, the assistant secretaries, if any, shall act with the same powers, subject to the same restrictions as are applicable to the Secretary.

10. The Treasurer. The Treasurer shall have custody of corporate funds and securities. He shall keep full and accurate accounts of receipts and disbursements and shall deposit all corporate monies and other valuable effects in the name and to the credit of the Corporation in a depository or depositories of the Corporation and shall render to the President or the Board of Directors whenever they may require an account of his transactions as Treasurer and of the financial condition of the Corporation. Such power given to the Treasurer to disburse the funds shall not, however, preclude any other officer or employee of the Corporation from also depositing and disbursing funds when authorized to do so by the Board of Directors. He shall, if required by the Board of Directors, give the Corporation a bond in such amount and with such surety or sureties as may be ordered by the Board of Directors for the faithful performance of duties of his office. He shall have such other powers and perform such other duties as may be from time to time prescribed by the Board of Directors or the President. In the absence of the Treasurer or his inability to act, the assistant treasurers, if any, shall act with the same authority and subject to the same restrictions, as are applicable to the Treasurer.

11. Delegation of Duties. Whenever an officer is absent, or whenever, for any reason, the Board of Directors may deem it desirable, the Board may delegate the powers and duties of an officer to any other officer or officers or to any Director or Directors.

ARTICLE VI

Share Certificates and the Transfer of Shares

1. Share Certificates. Subject to statutory requirements, the share certificates shall be in a form approved by the Board of Directors, consecutively numbered, and signed in the name of the Corporation by the President or the Vice-president and the Secretary or an assistant secretary and shall be sealed with the seal of the Corporation, or with a facsimile thereof. In case any officer who has signed such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. Any restriction upon the transfer of shares represented by a certificate issued by this Corporation, whether imposed by these Bylaws or by separate agreement, shall be noted on each certificate subject to such restriction.

2. Consideration for Shares. Shares shall be issued for such consideration, expressed in dollars, but not less than the stated value therefor, as shall be fixed from time to

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time by the Board of Directors. Treasury shares shall be disposed of for such consideration expressed in dollars as may be fixed from time to time by the Board. Such consideration may consist, in whole or in part, of money, other property, tangible or intangible, or in labor or services actually performed for the Corporation, but neither promissory notes nor future services shall constitute payment or part payment for shares.

3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of a certificate alleged to have been destroyed or lost if the owner makes an affidavit or affirmation of that fact and produces such evidence of loss or destruction as the Board may require. The Board, in its discretion, may as a condition precedent to issuing a new certificate, require the owner to give the Corporation a bond as indemnity against any claim that may be made against the Corporation on the certificate allegedly destroyed or lost.

4. Transfer of Shares. Shares of the Corporation shall only be transferred on its books upon the surrender to the Corporation of the share certificates duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer and such documentary stamps as may be required by law. In that event, the surrendered certificates shall be cancelled, new certificates issued to the persons entitled to them and the transaction recorded on the books of the Corporation.

5. Registered Shareholders. The Corporation shall be entitled to treat the holder of record of shares as the holder in fact and, except as otherwise provided by the laws of Colorado, shall not be bound to recognize any equitable or other claim to or interest in the shares.

6. Stock Ledger. An appropriate stock journal and ledger shall be kept by the Secretary or such registrars or transfer agents as the Directors by resolution may appoint in which all transactions in the shares of stock of the Corporation shall be recorded.

7. Restriction on Transfer. Transfer of the stock of the Corporation may be restricted by any written agreement of all Shareholders, and notice of such restriction shall be given on each certificate of stock issued.

ARTICLE VII

Seal and Fiscal Year

1. Seal. The Corporation shall have a seal in the form impressed on this paragraph of the Bylaws.

2. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors and set forth in the Minutes of the Directors. Said fiscal year may be changed from time to time by the Board of Directors in its discretion.

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ARTICLE VIII

Dividends

Dividends shall be declared and paid out of the net profits and surplus of the Corporation as often and at such times as the Board of Directors may determine, taking into account reserve, capital and other needs of the Corporation. No unclaimed dividend shall bear interest against the Company. Dividends of capital stock may also be declared when, in the judgment of the Board of Directors, it is considered proper for the best interests of the Corporation.

ARTICLE IX

Amendments

The Board of Directors may amend, supplement and repeal these Bylaws, and all such changes shall affect and be binding upon the holders of all shares heretofore as well as hereafter authorized, subscribed for or offered.

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EX-3.45

Exhibit 3.45

		State of California Bill Jones Secretary of State LIMITED LIABILITY COMPANY ARTICLES OF ORGANIZATION	File# 200109510013 FILED in the Office of the Secretary of State of the State of California MAR 22 2001
		A $70.00 filing fee must accompany this form. IMPORTANT – Read instructions before completing this form.
			BILL JONES, Secretary of State
			This Space For Filing Use Only
1.      Name of the limited liability company (end the name with the words “Limited Liability Company,” “ Ltd. Liability Co.,” or the abbreviations “LLC” or “L.L.C.”) SHEA RIVERMARK VILLAGE, LLC
2.      The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea limited liability company act.
3.      Name the agent for service of process and check the appropriate provision below: RONALD L. LAKEY which is
x       an individual residing in California. Proceed to item 4. ¨       a corporation which has filed a certificate pursuant to section 1505. Proceed to item 5.
4.      If an individual, California address of the agent for service of process: Address: 655 BREA CANYON RD. City: WALNUT                                                                      State: CA                                                     Zip Code: 91789
5.      The limited liability company will be managed by: (check one) x one manager ¨ more than one manager ¨ single member limited liability company ¨ all limited liability company members
6.      Other matters to be included in this certificate may be set forth on separate attached pages and are made a part of this certificate. Other matters may include the latest date on which the limited liability company is to dissolve.
7.      Number of pages attached, if any: -0-
8.      Type of business of the limited liability company. (For informational purposes only) REAL ESTATE DEVELOPMENT/SHOPPING CENTER
9.      DECLARATION: It is hereby declared that I am the person who executed this instrument, which execution is my act and deed.

	RONALD L. LAKEY
Signature of Organizer	Type or Print Name of Organizer
3/15/01
Date

10.    RETURN TO:
NAME	RONALD L. LAKEY
FIRM ADDRESS CITY/STATE	655 BREA CANYON ROAD WALNUT, CA, 91789
ZIP CODE
SEC/STATE (REV. 12/99)		FORM LLC-1 – FILING FEE $70.00 Approved by Secretary of State

	State of California Bill Jones Secretary of State
LIMITED LIABILITY COMPANY – STATEMENT OF INFORMATION
Filing Fee - Please see information section
IMPORTANT – Read Instructions Before Completing This Form
1.      LIMITED LIABILITY COMPANY NAME SHEA RIVERMARK VILLAGE, LLC 655 BREA CANYON ROAD WALNUT, CA 91789			This Space For Filing Use Only
2.      SECRETARY OF STATE FILE NUMBER		3.      JURISDICTION OF FORMATION
200109510013		CALIFORNIA

4.      STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE 655 BREA CANYON ROAD	CITY AND STATE WALNUT, CA	ZIP CODE 91789
5.      STREET ADDRESS IN CALIFORNIA OF OFFICE WHERE RECORDS ARE MAINTAINED 655 BREA CANYON ROAD	(FOR DOMESTIC ONLY) CITY WALNUT,     CA	ZIP CODE 91789

6.      CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS:

x       AN INDIVIDUAL RESIDING IN CALIFORNIA.

¨       A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO SECTION 1505 OF THE CALIFORNIA CORPORATIONS CODE.

AGENT’S NAME: RONALD L. LAKEY

7.      ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL	CITY	ZIP CODE
655 BREA CANYON ROAD	WALNUT,        CA	91789
8.      DESCRIBE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY.
REAL ESTATE DEVELOPMENT/SHOPPING CENTER
LIST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER AND CHIEF EXECUTIVE OFFICER (CEO), IF ANY. (CHECK THE APPROPRIATE DESIGNATION). ATTACH ADDITIONAL PAGES IF NECESSARY.

9.      NAME          SHEA HOMES LIMITED PARTNERSHIP			x MANAGER
ADDRESS   655 BREA CANYON ROAD			¨ MEMBER
CITY              WALNUT,	STATE CA	ZIP 91789	¨ CEO, IF ANY
10.    NAME			¨ MANAGER
ADDRESS			¨ MEMBER
CITY	STATE	ZIP	¨ CEO, IF ANY
11.    NUMBER OF PAGES ATTACHED, IF ANY.
12.    I DECLARE THAT THIS STATEMENT IS TRUE, CORRECT, AND COMPLETE.

	5/11/01
SIGNATURE OF INDIVIDUAL AUTHORIZED TO SIGN	DATE
RONALD L. LAKEY         VP	64
TYPE OR PRINT NAME AND TITLE OF PERSON SIGNING
DUE DATE:

SEC/STATE FORM LLC-12 (REV. 11/99) APPROVED BY SECRETARY OF STATE

	State of California Bill Jones Secretary of State
LIMITED LIABILITY COMPANY – STATEMENT OF INFORMATION
Filing Fee $20.00 – If Amendment, See Instructions
IMPORTANT- Read Instructions Before Completing This Form
1.      LIMITED LIABILITY COMPANY NAME: (Do not alter if name is preprinted.)
Shea Rivermark Village, LLC			49 EC	This Space For Filing Use Only
2.      SECRETARY OF STATE FILE NUMBER		3.      STATE OR PLACE OF ORGANIZATION
200109510013		California
4.      PRINCIPAL EXECUTIVE OFFICE STREET ADDRESS 655 Brea Canyon Road CITY Walnut		STATE CA	ZIP CODE 91789
5.      CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (FOR DOMESTIC ONLY) STREET ADDRESS 655 Brea Canyon Road
CITY     Walnut		STATE CA	ZIP CODE 91789
6.      CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS x       AN INDIVIDUAL RESIDING IN CALIFORNIA. ¨       A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO CALIFORNIA CORPORATIONS CODE SECTION 1505.          AGENT’S NAME: Max B. Johnson
7.      ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL ADDRESS 655 Brea Canyon
CITY     Walnut		STATE CA	ZIP CODE 91789
8.      DESCRIBE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY.          Real estate development/shopping center
9.      LIST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER. ATTACH ADDITIONAL PAGES, IF NECESSARY.
9a.    NAME           Shea Homes, Limited Partnership          ADDRESS   655 Brea Canyon Road
CITY             Walnut		STATE CA	ZIP CODE 91789
9b.    NAME          ADDRESS
CITY		STATE	ZIP CODE
9c.    NAME          ADDRESS
CITY		STATE	ZIP CODE
10.    CHIEF EXECUTIVE OFFICER (CEO), IF ANY
NAME ADDRESS
CITY		STATE	ZIP CODE
11.    NUMBER OF PAGES ATTACHED, IF ANY: 1
12.    THIS STATEMENT IS TRUE, CORRECT, AND COMPLETE.

	See attached
	TYPE OR PRINT NAME OF PERSON COMPLETING FORM	SIGNATURE	TITLE	DATE
DUE DATE:

SEC/STATE FORM LLC-12 (REV. 10/2001) APPROVED BY SECRETARY OF STATE

Shea Rivermark Village, LLC
	By:	Shea Homes Limited Partnership, a California lp
	Its:	Member
		By:	J.F.Shea Co., Inc.
		Its:	General Partner
			By:
				Max B. Johnson
			Its:	Vice President

	State of California Kevin Shelley Secretary of State STATEMENT OF INFORMATION (Limited Liability Company)	L 50
	Filing Fee $20.00. If amendment, see instructions.
IMPORTANT — READ INSTRUCTIONS BEFORE COMPLETING THIS FORM
1.      LIMITED LIABILITY COMPANY NAME (Please do not alter if name is preprinted.)
200109510013 SHEA RIVERMARK VILLAGE, LLC 655 BREA CANYON ROAD WALNUT CA 91789
		EC	This Space For Filing Use Only

DUE DATE: 03/31/2005
FILE NUMBER AND STATE OR PLACE OF ORGANIZATION
2.      SECRETARY OF STATE FILE NUMBER	3.      STATE OR PLACE OF ORGANIZATION
200109510013	CA
NO CHANGE STATEMENT
x       If there has been no change in any of the information contained in the last Statement of Information filed with the Secretary of  State, check the box and proceed to Item 13.            If there have been any changes to the information contained in the last Statement of Information filed, or no Statement of  Information has been previously filed, this form must be completed in its entirety.
COMPLETE ADDRESSES FOR THE FOLLOWING (Do not abbreviate the name of the city. Items 4 and 5 cannot be P.O. Boxes.)

4.      STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE		CITY AND STATE		ZIP CODE
5.      CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (DOMESTIC ONLY)		CITY	STATE	ZIP CODE
			CA
NAME AND COMPLETE ADDRESS OF THE CHIEF EXECUTIVE OFFICER, IF ANY
6.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER (Attach additional pages, if necessary.)
7.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
8.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
9.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
AGENT FOR SERVICE OF PROCESS (If the agent is an individual, the agent must reside in California and Item 11 must be completed with a California address. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 11 must be left blank.)
10.    NAME OF AGENT FOR SERVICE OF PROCESS
11.    ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL		CITY	STATE	ZIP CODE
			CA
TYPE  OF BUSINESS
12.    DESCRIBE THE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY
13.    THE INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT.

By:	Shea Homes Limited Partnership, Sole Member	By: J.F. Shea Co., Inc., General Partner
	Max B. Johnson		Vice President	1/28/05
	TYPE OR PRINT NAME OF PERSON COMPLETING THE FORM	SIGNATURE	TITLE	DATE

  LLC-12R (REV 09/2004)   APPROVED BY SECRETARY OF STATE

006536

	State of California Secretary of State STATEMENT OF INFORMATION (Limited Liability Company)	L 61
	Filing Fee $20.00. If amendment, see instructions.
IMPORTANT — READ INSTRUCTIONS BEFORE COMPLETING THIS FORM
1.      LIMITED LIABILITY COMPANY NAME (Please do not alter if name is preprinted.)
200109510013 SHEA RIVERMARK VILLAGE, LLC 655 BREA CANYON ROAD WALNUT CA 91789
		EC	This Space For Filing Use Only

DUE DATE: 03/31/2007
FILE NUMBER AND STATE OR PLACE OF ORGANIZATION
2.      SECRETARY OF STATE FILE NUMBER	3.      STATE OR PLACE OF ORGANIZATION
200109510013	CA
NO CHANGE STATEMENT
x       If there has been no change in any of the information contained in the last Statement of Information filed with the Secretary of  State, check the box and proceed to Item 13.            If there have been any changes to the information contained in the last Statement of Information filed, or no Statement of  Information has been previously filed, this form must be completed in its entirety.
COMPLETE ADDRESSES FOR THE FOLLOWING (Do not abbreviate the name of the city. Items 4 and 5 cannot be P.O. Boxes.)

4.      STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE		CITY AND STATE		ZIP CODE
5.      CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (DOMESTIC ONLY)		CITY	STATE	ZIP CODE
			CA
NAME AND COMPLETE ADDRESS OF THE CHIEF EXECUTIVE OFFICER, IF ANY
6.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER (Attach additional pages, if necessary.)
7.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
8.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
9.      NAME	ADDRESS	CITY AND STATE		ZIP CODE
AGENT FOR SERVICE OF PROCESS (If the agent is an individual, the agent must reside in California and Item 11 must be completed with a California address. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 11 must be left blank.)
10.    NAME OF AGENT FOR SERVICE OF PROCESS
11.    ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL		CITY	STATE	ZIP CODE
			CA
TYPE  OF BUSINESS
12.    DESCRIBE THE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY
13.    THE INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT.

Max B. Johnson		Vice President	3/23/07
TYPE OR PRINT NAME OF PERSON COMPLETING THE FORM	SIGNATURE	TITLE	DATE

  LLC-12R (REV 07/2006)   APPROVED BY SECRETARY OF STATE

EX-3.46

Exhibit 3.46

OPERATING AGREEMENT

OF

SHEA RIVERMARK VILLAGE, LLC

This Operating Agreement (this “Agreement”) of Shea Rivermark Village, LLC, a California limited liability company (the “Company”), is entered into this 22nd day of March, 2001 by Shea Homes Limited Partnership, a California limited partnership (the “Member”), as sole member of the Company.

R E C I T A L S

WHEREAS, the Member caused the Company to be formed pursuant to the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”); and

WHEREAS, the Member, as sole member of the Company, desires to enter into this Agreement to define formally the terms of such limited liability company and the Member’s rights and obligations with respect thereto.

A G R E E M E N T

NOW, THEREFORE, the Member, as sole member of the Company, hereby agrees as follows:

1. Name. The name of the Company is Shea Rivermark Village, LLC.

2. Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

3. Office and Registered Agent. The Company shall continuously maintain an office and registered agent in the State of California as required by section 17057 of the Act. The address of the office of the Company in California is 655 Brea Canyon Road, Walnut, California 91789. The registered agent for service of process of the Company is Max B. Johnson, c/o J.F. Shea Co., Inc., 655 Brea Canyon Road, Walnut, California 91789.

4. Member. The name and the address of the Member is Shea Homes Limited Partnership, 655 Brea Canyon Road, Walnut, California 91789.

5. Management. Management of the Company is vested in the Member. The officers of the Member are, and any two of them acting together are authorized, empowered and directed, in the name of and on behalf of the Company, and in the name of and on behalf of the Member, in its capacity as the sole member of the Company, to execute and deliver all agreements, instruments, certificates or other documents as may be deemed reasonably necessary or appropriate, in furtherance of or in connection with the business of the Company.

6. Term; Dissolution. The term of the Company commenced upon the filing of the Articles of Organization of the Company with the California Secretary of State. The Company shall be dissolved upon the first to occur of the following: (a) April 1, 2052, (b) the written consent of the Member, (c) an entry of a decree of judicial dissolution pursuant to section 17351 of the Act, or (d) any other event that requires or causes dissolution of the Company under the Act.

7. Capital Contributions. The Member has contributed or will contribute 100 percent of the capital of the Company. The Member may make further capital contributions to the Company but shall not be required to do so.

8. Tax Matters. During any period in which the Member is the only member of the Company, the following shall apply for federal income tax purposes and relevant state income tax purposes, but only for such purposes: (a) in accordance with Section 301.7701-3 of the Income Tax Regulations, the Company shall be disregarded as an entity separate from the Member; (b) all items of income, gain, loss, deduction and credit of the Company shall be treated as recognized directly by the Member; and (c) the assets and liabilities of the Company shall be treated as the assets and liabilities of the Member. During any period in which the Company has more than one member, the Company shall be treated as a partnership for federal income tax purposes and relevant state income tax purposes, but shall not be treated as a partnership for any other purpose.

9. Distributions. Distributions shall be made to the Member at such times and in such amounts as determined by the Member.

10. Assignments. The Member may assign in whole or in part its limited liability company interest in the Company.

11. Admission of Additional Members. Additional members may be admitted at any time with the consent of the Member. Upon the admission of one or more additional members, this Agreement shall be amended to reflect the agreement of the parties at that time.

12. Liability of Member. The Member shall not have any liability for the obligations or liabilities of the Company except to the extent required under the Act.

13. Amendment. This Agreement may be amended from time to time with the written consent of the Member.

14. Governing Law. This Agreement shall be governed by, and construed under, the laws of the State of California, all rights and remedies being governed by said laws.

IN WITNESS WHEREOF, the undersigned has duly executed this Agreement on the date first above written.

SHEA HOMES LIMITED PARTNERSHIP,
a California limited partnership
	By:	J. F. Shea Co., Inc.
		By:
		Its:	VP
		By:
		Its:	Secretary

AMENDED AND RESTATED OPERATING AGREEMENT

OF

SHEA RIVERMARK VILLAGE, LLC

This Amended and Restated Operating Agreement (this “Agreement”) of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company (the “Company”), is entered into effective as of July 30, 2007, by SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership (“Member”), as sole member of the Company, and SHEA PROPERTIES MANAGEMENT COMPANY, INC., a Delaware corporation (“SPMC”).

R E C I T A L S

WHEREAS, Member caused the Company to be formed pursuant to the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”); and

WHEREAS, Member executed that certain Operating Agreement of Shea Rivermark Village, LLC, dated as of March 22, 2001 (the “Original Operating Agreement”).

WHEREAS, Member was the manager of the Company pursuant to the Original Operating Agreement and now desires to appoint SPMC as the Manager of the Company. SPMC wishes to accept such appointment.

WHEREAS, Member, desires to amend and restate the Original Operating Agreement to reflect the foregoing, and SPMC desires to acknowledge and agree to its appointment as Manager. This Agreement supersedes the Original Operating Agreement in its entirety.

A G R E E M E N T

NOW, THEREFORE, Member, as sole member of the Company, and SMPC to acknowledge and agree to its appointment as Manager, hereby agree as follows:

Section 1. FORMATION

1.1 Name. The name of the Company is SHEA RIVERMARK VILLAGE, LLC.

1.2 Purpose. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act.

1.3 Office and Registered Agent. The Company shall continuously maintain an office and registered agent in the State of California as required by section 17057 of the Act. The address of the office of the Company in California is 655 Brea Canyon Road, Walnut, California 91789. The registered agent for service of process of the Company is Max B. Johnson, c/o J.F. Shea Co., Inc., 655 Brea Canyon Road, Walnut, California 91789.

1.4 Member. The name and the address of Member is Shea Homes Limited Partnership, 655 Brea Canyon Road, Walnut, California 91789.

1.5 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Beverly-Killea Limited Liability Company Act, as amended from time to time.

Certificate. The Articles of Organization of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2. CAPITALIZATION OF THE COMPANY

Member shall have no obligation to contribute additional capital to the Company. Member may elect to contribute cash or property to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from Member to the Company and may bear interest at a rate determined by Member.

Section 3. DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to Member in such amounts and at such times as Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 17254 of the Act. If Member receives a distribution from the Company which is determined to have been prohibited by Section 17254 of the Act, Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to Member.

Section 4. MANAGEMENT

4.1 Management by Manager. The business and affairs of the Company shall be managed by SPMC, as its statutory Manager. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

4.2 Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the California Corporation Code, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 17101 of the Act, Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 17250 of the Act, Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If Member is dissolved or terminated, the powers of Member may be exercised by its legal representative or successor. Upon the dissolution of Member, the Company shall not dissolve but shall continue in existence.

Section 6. NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7. ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from Member pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8. DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including Member) in the order of priority as provided by law, other than liabilities for distributions to Member; and

(2) The balance, if any, to Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if Member has a deficit or negative balance in Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), Member shall have no obligation to make any capital contribution to the Company, and the negative balance of Member’s capital account shall not be considered a debt owed by Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, Member shall prepare, execute and deliver to the California Secretary of State a certificate of cancellation in accordance with Section 17350 of the Act.

Section 9. GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the internal laws of the State of California without reference to choice of law or conflicts of law provisions.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A Articles of Organization

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, Member and SMPC have executed this Agreement as of the date set forth above.

MEMBER
SHEA HOMES LIMITED PARTNERSHIP,
a California limited partnership
By:
Name:	Stephen D. Stambaugh
Title:	Assistant Secretary
By:
Name:	Julia Guizan
Title:	Assistant Secretary

By executing below, SPMC hereby acknowledges and agrees to its appointment as Manager of the Company.

SPMC
SHEA PROPERTIES MANAGEMENT COMPANY, INC.,
a Delaware corporation
By:
Name:	Stephen D. Stambaugh
Title:	Assistant Secretary
By:
Name:	Julia Guizan
Title:	Assistant Secretary

EXHIBIT A

Articles of Organization

[attached hereto]

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

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as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By: JFS Management, L.P., its sole General Partner
		By: J.F. Shea Construction Management, Inc., its sole General Partner
		By:
		Name:	James G. Shontere
		Title:	Secretary
		By:
		Name:	Robert O’ Dell
		Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By: J.F. Shea L.P., its sole General Partner
		By: JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’ Dell
				Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’ Dell
Title:	Treasurer
SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By: J.F. SHEA CO., INC., its Manager
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’ Dell
Title:	Treasurer
SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’ Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC		J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:		By:
By:	Ronald L. Lakey	Name:	James G. Shontere
Its:	Vice President	Title:	Secretary
By:		By:
By:	James G. Shontere	Name:	Robert O’ Dell
Its:	Secretary	Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.47

Exhibit 3.47

CERTIFICATE OF FORMATION

OF

SHEA TONNER HILLS, LLC

The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is SHEA TONNER HILLS, LLC.

2. The address of the registered office and the name and the address of the registered agent of the limited liability company required to be maintained by Section 18-104 of the Delaware Limited Liability Company Act are National Registered Agents, Inc., 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901.

Executed on October 30, 2003.

Roger D. Ehlers, Authorized Person

Delaware Limited Liability Certificate of Formation 1/96 - 1

EX-3.48

Exhibit 3.48

LIMITED LIABILITY COMPANY AGREEMENT

OF

SHEA TONNER HILLS, LLC

This Limited Liability Company Agreement of Shea Tonner Hills, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of the 6th day of November, 2003, by Shea Homes Limited Partnership, a California limited partnership (the sole Member of the Company).

RECITALS

The Member desires to form the Company to engage in real estate development.

Therefore, the Member hereby forms a limited liability company under the Delaware Limited Liability Company Act (the “Act”) on the following terms and conditions:

Section 1. FORMATION

1.1 Formation of Company. The Company has been organized as a Delaware limited liability company by the filing of a Certificate of Formation pursuant to the Act with the Delaware Secretary of State.

1.2 Name. The name of the Company is “Shea Tonner Hills, LLC” and all Company business shall be conducted under that name or such other names that comply with applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to acquire a membership interest in Tonner Hills SSP, LLC, a Delaware limited liability company formed to acquire and develop certain real property in Brea, California, and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Delaware Limited Liability Company Act, as amended from time to time.

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. Shea Tonner Hills, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. Shea Homes Limited Partnership, a California limited partnership.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2. CAPITALIZATION OF THE COMPANY

2.1 Initial Contributions. Promptly following the formation of the Company, the Member shall contribute $1,000 in cash to the Company.

2.2 Additional Contributions. The Member shall have no obligation to contribute additional capital to the Company. If the Company does not have sufficient cash to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3. DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if such distribution is prohibited by Section 18-607 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 18-607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Allocations. All items of income, gain, loss, deduction and credit of the Company shall be allocated to the Member.

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Section 4. MANAGEMENT

4.1 Management by Member. The business and affairs of the Company shall be managed by the Member. The Member shall have full and complete authority, power, and discretion to manage and control the business, affairs, and properties of the Company.

4.2 Officers. The Member may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Member may, from time to time, delegate to them. Unless the Member decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the Delaware General Corporation Law, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5. INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 18-502 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6. MEETINGS OF MEMBERS

6.1 Meetings Not Required. The Company shall not be required to hold Member meetings.

Section 7. ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Member.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii). Subject to the preceding sentence, the Member shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8. DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

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(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Delaware Secretary of State a certificate of cancellation in accordance with Section 18-203 of the Act.

Section 9. GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

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9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

The Member has executed this Agreement as of the date set forth above.

SHEA HOMES LIMITED PARTNERSHIP,

a California limited partnership

By J.F. Shea LLC, a Delaware limited

liability company, Its General Partner

By
Title	Ronald L. Lakey, Vice President
By
Title	Max B. Johnson, Vice President

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OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By:	JFS Management, L.P., its sole General Partner
		By:	J.F. Shea Construction Management, Inc., its sole General Partner
			By:
			Name:	James G. Shontere
			Title:	Secretary
			By:
			Name:	Robert O’Dell
			Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By:	J.F. Shea L.P., its sole General Partner
		By:	JFS Management, L.P., its sole General Partner
			By:	J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’Dell
				Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By:	J.F. SHEA CO., INC., its Manager
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC		J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:		By:
By:	Ronald L. Lakey	Name:	James G. Shontere
Its:	Vice President	Title:	Secretary
By:		By:
By:	James G. Shontere	Name:	Robert O’Dell
Its:	Secretary	Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.49

Exhibit 3.49

ARTICLES OF ORGANIZATION

FOR

FLORIDA LIMITED LIABILITY COMPANY

ARTICLE I - Name:

The name of the Limited Liability Company is:

SHEA VICTORIA GARDENS, LLC

ARTICLE II - Address:

The mailing address and street address of the principal office of the Limited Liability Company is:

Principal Office Address:	Mailing Address:
655 Brea Canyon Road	655 Brea Canyon Road
Walnut CA 91789	Walnut CA 91789

ARTICLE III - Registered Agent, Registered Office, & Registered Agent’s Signature:

The name and the Florida street address of the registered agent are:

NRAI Services, Inc.

Name

2731 Executive Park Drive, Suite 4

Florida street address (P.O. Box NOT acceptable)

Weston                          FLORIDA 33331

City, State, and Zip

Having been named as registered agent and to accept service of process for the above stated limited liability

company at the place designated in this certificate. I hereby accept the appointment as registered agent and

agree to act in this capacity, I further agree to comply with the provisions of all statutes relating to the proper

and complete performance of my duties, and I am familiar with and accept the obligations of my position as

registered agent as provided for in Chapter 608, Florida Statutes.

NRAI Services, Inc.
By:
	Registered Agent’s Signature
	Louie Tamantini, Vice President

Page 1 of 2

(CONTINUED)

ARTICLE IV - Manager(s) or Managing Member(s):

The name and address of each Manager or Managing Member is as follows:

Title:	Name and Address:
“MGR” = Manager “MGRM” = Managing Member
MGRM	Shea Capital II, LLC
	655 Brea Canyon Road Walnut CA 91789
_______________
_______________
_______________

(Use attachment if necessary)

NOTE: An additional article must be added if an effective date is requested.

REQUIRED SIGNATURE:

Signature of a member or an authorized representative of a member.

(In accordance with section 608.408(3), Florida Statutes, the execution of this document constitutes an affirmation under the penalties of perjury that the facts stated herein are true.)

Paul E. Mosley

Typed or printed name of signee

Filing Fees:

$100.00 Filing Fee for Articles of Organization

$ 25.00 Designation of Registered Agent

$ 30.00 Certified Copy (Optional)

$   5.00 Certificate of Status (Optional)

Page 2 of 2

EX-3.50

Exhibit 3.50

LIMITED LIABILITY COMPANY AGREEMENT

OF

SHEA VICTORIA GARDENS, LLC

This Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC, a Florida limited liability company (the “Company”), is entered into effective as of the 11^th day of May, 2007, by Shea Capital II, LLC (the sole Member of the Company).

RECITALS

The Member desired to form the Company to complete infrastructure, construct and sell homes on real property contributed by Member and/or acquired by the Company in Florida.

Therefore, the Member formed a limited liability company under the Florida Limited Liability Company Act (the “Act”) on the following terms and conditions:

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a Florida limited liability company by the filing of a Certificate of Formation pursuant to the Act with the Florida Department of State. A copy of the Certificate is attached to this Agreement as Exhibit A.

1.2 Name. The name of the Company is “SHEA VICTORIA GARDENS, LLC” and all Company business shall be conducted under that name or such other names that comply with applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to complete infrastructure, construct and sell homes on real property contributed by Member and/or acquired by the Company in Florida, and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Florida shall be located at 2731 Executive Park Drive, Suite 4, Weston, Florida 33331, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 2731 Executive Park Drive, Suite 4, Weston, Florida 33331. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Florida Limited Liability Company Act, as amended from time to time.

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Articles of Organization of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. Shea Victoria Gardens, LLC, a Florida limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. Shea Capital II, LLC, a Delaware limited liability company.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the LLC. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 680.426 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 680.426 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

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Section 4. COMPANY MANAGEMENT

Shea Homes Limited Partnership as the Manager of the sole Member of the Company, hereby elects to have the Company be a Manager Managed Company as provided in Section 680.422 (c) of the Act.

4.1 Executive Committee. Authority of the executive Committee. The Member acknowledges that the Company shall be managed by or under the direction of an Executive Committee as Manager, in accordance with Section 680.422 (c) of the Act. Subject to any restrictions set forth in the Articles of Organization, this Agreement or the Act, all powers to control and manage the business and affairs of the Company and to bind the Company shall be exclusively vested in the Executive Committee, and the Executive Committee may exercise all powers of the Company and do all such lawful acts not inconsistent with the foregoing. In exercising its powers, the Executive Committee shall have the right and authority to take all actions that it deems necessary, useful or appropriate for the management and conduct of the Company’s business and affairs and in the pursuit of the purposes of the Company, including delegating the right and authority to take such actions to the Administrator and such Officers as are designated by the Executive Committee. The Executive Committee, in addition to the Administrator, shall be considered a manager for purposes of the Act.

4.1.1 Composition and Election of the Executive Committee; Decisions. The Executive Committee shall consist of three (3) members, each to be elected by the affirmative vote of the Members holding a majority of the Percentage Interests. The initial members of the Executive Committee shall be Richard C. Andreen, Jeffrey McQueen and Jeffrey S. Gersh. Any member of the Executive Committee may be removed as such, with or without cause, by the affirmative vote of the Members holding a majority of the Percentage Interests.

4.1.2 Meetings of the Executive Committee. (a) Meetings of the members of the Executive Committee may be called upon the request of any Member or any member of the Executive Committee. Members of the Executive Committee may vote in person, by proxy or by telephone at such meeting and may waive advance notice of such meeting. Each member of the Executive Committee shall have one vote. The vote or consent of 2 of the 3 members of the Executive Committee shall be required to constitute the act of the Executive Committee. Meetings may be conducted, in whole or in part, by telephone. Meetings are not required and the Executive Committee may conduct its business informally.

(b) The Executive Committee may act without a meeting and without a vote if at least 2 members consent to the proposed action in writing or by electronic transmission.

(c) Each member of the Executive Committee may authorize any Person or Persons to act for him on all matters in which he is entitled to participate, including voting at or participating in a meeting of the Executive Committee or consenting to actions of the Executive Committee as provided in Section 4.1.2 (b). An Executive Committee member’s authorization of his representative shall be delivered to the other members of the Executive Committee in writing or by electronic transmission. The Executive Committee member may revoke the authority of his representative or appoint another representative at his sole discretion by the same means.

(d) Each meeting of the Executive Committee shall be conducted by such individual as the Executive Committee deems appropriate, pursuant to such rules for the conduct of the meeting as the Executive Committee or such individual deems appropriate.

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4.1.3 Duties and Obligations of the Executive Committee. (a) The Executive Committee, by its own action or through the Officers or the Administrator, shall take all actions that may be necessary or appropriate for the (i) continuation of the Company’s valid existence as a limited liability company under the laws of the State of Florida and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Members or to enable the Company to conduct the business in which it is engaged, (ii) accomplishment of the Company’s purposes, including the acquisition, development, maintenance, preservation and operation of Property in accordance with the provisions of this Agreement and applicable laws and regulations, (iii) provision or arrangement for all of the Company’s management, reporting, financial, legal, tax and other services, and (iv) availability of the books and records of the Company for the Members’ inspection.

(b) The Executive Committee shall be under a fiduciary duty to conduct the affairs of the Company in the best interests of the Company and of the Members, including the safekeeping and use of all of the Property for the exclusive benefit of the Company.

4.1.4 Major Decisions. Notwithstanding any other provision of this Agreement, only the Executive Committee shall have the authority to authorize and approve the following acts with regard to the Company:

(a) any transfer or assignment of rights in the Company’s Property for other than a Company purpose;

(b) the incurrence, assumption, or other liability for any Debt or the creation of any liens on the Property of the Company other than (i) expenditures in the ordinary course of business, (ii) capital expenditures that are consistent with the Company’s strategic business plans and (iii) additional capital expenditures not in excess of $1,000,000;

(c) any loan or other advance of money to any Person or any guarantee of obligations of any Person in excess of $100,000 per occurrence and $1,000,000 in the aggregate;

(d) any act of Voluntary Bankruptcy;

(e) any distribution to any Member of any Property, other than as provided in this Agreement;

(f) any merger, consolidation, or sale of all or substantially all of the Company’s Property;

(g) the admission of any Member other than in accordance with Section 11 of this Agreement;

(h) discretionary distributions to the Members;

(i) any change in the Company’s independent accountants;

(j) an adoption of or change in a significant tax or accounting practice or principle of the Company, any significant tax or accounting election, or the adoption of any position for purposes of any tax return that will have a Material Adverse Effect on any Member (unless the making of such election is expressly contemplated by this Agreement); or

(k) a change in the Company’s Fiscal Year.

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4.1.5 Appointment of an Administrator. The Executive Committee shall have the authority, exercisable in its discretion, to hire a third party (the “Administrator”) to provide such services and management to the Company as the Executive Committee deems necessary or convenient, and authorize the Administrator to perform. The services may include management, reporting, financial, legal, tax and other services. The Administrator shall perform the services pursuant to a written contract, which will contain such terms and conditions as the Executive Committee deems appropriate. The Administrator may be an Affiliate of a Member. The Administrator shall report directly to the President of the Company, if such officer has been appointed, and ultimately to the Executive Committee. The Administrator, in addition to the Executive Committee, shall be considered a manager for purposes of the Act.

4.1.6 “Authorized Person” under the Act. Each member of the Executive Committee and the Administrator shall be an “authorized person” to file with the Florida Department of State certificates and other documents on behalf of the Company, as required or permitted by the Act.

Section 4.2 Officers-Designation; Qualifications.

4.2.1 The Executive Committee may, from time to time, designate one or more individuals to be officers of the Company (the “Officers”). The Officers of the Company shall include a President (the “President”) and may include such other officers as the Executive Committee or the President may, from time to time, deem necessary. Any Officer so designated shall have all authority necessary to implement the decisions of the Executive Committee, and such further authority as the Executive Committee may deem necessary or convenient to delegate to him or her. Any Person may hold any number of offices. No Officer need be a Member, a Florida resident or a United States citizen.

4.2.2 Removal and Resignation, Any Officer may be removed as such, with or without cause, by the Executive Committee or the President, at any time. Any Officer may resign as such at any time upon written notice to the Executive Committee or the President. Such resignation shall be made in writing and shall take effect at the time specified or, if no time is specified, at the time of its receipt by the Executive Committee or the President.

4.2.3 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Executive Committee or the President.

4.2.4 Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Executive Committee or the President.

4.2.5 Conflicting Authority. When in this Agreement the Executive Committee, the Administrator, the President, an Officer or any other Person are each given the right to act, the right of the Administrator, the President, such Officer or Person to act shall at all times be subject to the right, but not the obligation, of the Executive Committee to approve the act. If the acts of the Administrator, the President, the Officer or Person and the Executive Committee should conflict, the act of the Executive Committee shall govern. If the acts of the President, the Officer or Person and the Administrator should conflict, the act of the Administrator shall govern.

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4.2.6 Execution of Documents; Reliance by Third Parties. The execution of any document shall be authorized in accordance with the preceding provisions and the document may be signed by any two of the members of: the Executive Committee and/or the Officers. The preceding sentence notwithstanding, any third party may rely upon any document signed by any two of the members of the Executive Committee and/or the Officers as duly authorized and binding on the Company without any duty of inquiry.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 608.4228 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 608.426 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Executive Committee.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701 - 3(b)(1)(ii). Subject to the preceding sentence, the Executive Committee shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

8.1.1 Upon the election of the Member to dissolve the Company.

8.1.2 Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

6

8.3 Liquidation and Termination.

8.3.1 If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

8.3.2 To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

8.3.3 The balance, if any, to the Member.

8.3.4 After all of the assets of the Company have been distributed, the Company shall terminate.

8.3.5 Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Articles of Dissolution. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Florida Department of State for filing Articles of Dissolution in accordance with Sections 608.445 and 608.446 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Florida.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

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9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A             Articles of Organization

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

Shea Capital II, LLC, a Delaware limited liability company

By:	Shea Homes Limited Partnership, a California limited partnership Its sole Manager
By:		By:
	Max B. Johnson		Paul E. Mosley
	Authorized Agent		Authorized Agent

8

LIMITED LIABILITY COMPANY AGREEMENT

OF SHEA VICTORIA GARDENS, LLC

EXHIBIT A

Articles of Organization

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC	J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
	By:
	Name: James G. Shontere Title: Secretary
By: J.F. Shea L.P., its sole General Partner By: JFS Management, L.P., its sole General Partner By: J.F. Shea Construction Management, Inc., its sole General Partner	By:
	Name: Robert O’Dell Title: Treasurer SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC By: J.F. SHEA CO., INC., its Manager

By:		By:
Name: James G. Shontere Title: Secretary		Name: James G. Shontere Title: Secretary
By:		By:
Name: Robert O’Dell Title: Treasurer		Name: Robert O’Dell Title: Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC By: Shea Homes Limited Partnership, its Manager By: J.F. Shea L.P., its sole General Partner By: JFS Management, L.P., its sole General Partner By: J.F. Shea Construction Management, Inc., its sole General Partner	SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
	By:
	Name: James G. Shontere Title: Secretary
	By:
	Name: Robert O’Dell Title: Treasurer

By:
Name: James G. Shontere Title: Secretary
By:
Name: Robert O’Dell Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC		J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:		By:
By:	Ronald L. Lakey	Name:	James G. Shontere
Its:	Vice President	Title:	Secretary
By:		By:
By:	James G. Shontere	Name:	Robert O’Dell
Its:	Secretary	Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.51

Exhibit 3.51

CERTIFICATE OF FORMATION

OF

SH JUBILEE, LLC

The undersigned, an authorized natural person for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is:

SH JUBILEE, LLC

2. The address of the registered office and the name and the address of the registered agent of the limited liability company, required to be maintained, by Section 18-104 of the Delaware Limited Liability Company Act, are National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.

Executed on June 17, 2010

Paul E. Mosley, Authorized Person

EX-3.52

Exhibit 3.52

LIMITED LIABILITY COMPANY AGREEMENT

OF

SH JUBILEE, LLC

This Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of the 18^th day of June, 2010, by Shea Homes, Inc., a Delaware corporation (the sole Member of the Company).

RECITALS

The Member desired to form the Company to complete infrastructure, construct and sell homes on real property contributed by Member and/or acquired by the Company in Delaware.

Therefore, the Member formed a limited liability company under the Delaware Limited Liability Company Act (the “Act”) on the following terms and conditions:

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a Delaware limited liability company by the filing of a Certificate of Formation pursuant to the Act with the Delaware Secretary of State.

1.2 Name. The name of the Company is “SH JUBILEE, LLC” and all Company business shall be conducted under that name or such other names that comply with applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to complete infrastructure, construct and sell homes on real property contributed by Member and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, Delaware 19904, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, Delaware 19904. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Delaware Limited Liability Company Act, 6 Del. Code Ann. § 18-101, et seq., as amended from time to time (or any corresponding provisions of succeeding law).

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. SH Jubilee, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. Shea Homes, Inc., a Delaware corporation.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the LLC. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 18-607 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 18-607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

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Section 4. MANAGEMENT

4.1 Executive Committee. Authority of the executive Committee. The Member acknowledges that the Company shall be managed by or under the direction of an Executive Committee as Manager, in accordance with Section 18-402 of the Act. Subject to any restrictions set forth in the Articles of Organization, this Agreement or the Act, all powers to control and manage the business and affairs of the Company and to bind the Company shall be exclusively vested in the Executive Committee, and the Executive Committee may exercise all powers of the Company and do all such lawful acts not inconsistent with the foregoing. In exercising its powers, the Executive Committee shall have the right and authority to take all actions that it deems necessary, useful or appropriate for the management and conduct of the Company’s business and affairs and in the pursuit of the purposes of the Company, including delegating the right and authority to take such actions to the Administrator and such Officers as are designated by the Executive Committee. The Executive Committee, in addition to the Administrator, shall be considered a manager for purposes of the Act.

4.1.1 Composition and Election of the Executive Committee; Decisions. The Executive Committee shall consist of three (3) members, each to be elected by the affirmative vote of the Members holding a majority of the Percentage Interests. The initial members of the Executive Committee shall be Richard C. Andreen, Jeffrey McQueen and Richard J. Obernesser. Any member of the Executive Committee may be removed as such, with or without cause, by the affirmative vote of the Members holding a majority of the Percentage Interests.

4.1.2 Meetings of the Executive Committee. (a) Meetings of the members of the Executive Committee may be called upon the request of any Member or any member of the Executive Committee. Members of the Executive Committee may vote in person, by proxy or by telephone at such meeting and may waive advance notice of such meeting. Each member of the Executive Committee shall have one vote. The vote or consent of 2 of the 3 members of the Executive Committee shall be required to constitute the act of the Executive Committee. Meetings may be conducted, in whole or in part, by telephone. Meetings are not required and the Executive Committee may conduct its business informally.

(b) The Executive Committee may act without a meeting and without a vote if at least 2 members consent to the proposed action in writing or by electronic transmission.

(c) Each member of the Executive Committee may authorize any Person or Persons to act for him on all matters in which he is entitled to participate, including voting at or participating in a meeting of the Executive Committee or consenting to actions of the Executive Committee as provided in Section 4.1.2 (b). An Executive Committee member’s authorization of his representative shall be delivered to the other members of the Executive Committee in writing or by electronic transmission. The Executive Committee member may revoke the authority of his representative or appoint another representative at his sole discretion by the same means.

(d) Each meeting of the Executive Committee shall be conducted by such individual as the Executive Committee deems appropriate, pursuant to such rules for the conduct of the meeting as the Executive Committee or such individual deems appropriate.

4.1.3 Duties and Obligations of the Executive Committee. (a) The Executive Committee, by its own action or through the Officers or the Administrator, shall take all actions that may be necessary or appropriate for the (i) continuation of the Company’s valid existence as

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a limited liability company under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Members or to enable the Company to conduct the business in which it is engaged, (ii) accomplishment of the Company’s purposes, including the acquisition, development, maintenance, preservation and operation of Property in accordance with the provisions of this Agreement and applicable laws and regulations, (iii) provision or arrangement for all of the Company’s management, reporting, financial, legal, tax and other services, and (iv) availability of the books and records of the Company for the Members’ inspection.

(b) The Executive Committee shall be under a fiduciary duty to conduct the affairs of the Company in the best interests of the Company and of the Members, including the safekeeping and use of all of the Property for the exclusive benefit of the Company.

4.1.4 Major Decisions. Notwithstanding any other provision of this Agreement, only the Executive Committee shall have the authority to authorize and approve the following acts with regard to the Company:

(a) any transfer or assignment of rights in the Company’s Property for other than a Company purpose;

(b) the incurrence, assumption, or other liability for any Debt or the creation of any liens on the Property of the Company other than (i) expenditures in the ordinary course of business, (ii) capital expenditures that are consistent with the Company’s strategic business plans and (iii) additional capital expenditures not in excess of $1,000,000;

(c) any loan or other advance of money to any Person or any guarantee of obligations of any Person in excess of $100,000 per occurrence and $1,000,000 in the aggregate;

(d) any act of Voluntary Bankruptcy;

(e) any distribution to any Member of any Property, other than as provided in this Agreement;

(f) any merger, consolidation, or sale of all or substantially all of the Company’s Property;

(g) the admission of any Member other than in accordance with Section 11 of this Agreement;

(h) discretionary distributions to the Members;

(i) any change in the Company’s independent accountants;

(j) an adoption of or change in a significant tax or accounting practice or principle of the Company, any significant tax or accounting election, or the adoption of any position for purposes of any tax return that will have a Material Adverse Effect on any Member (unless the making of such election is expressly contemplated by this Agreement); or

(k) a change in the Company’s Fiscal Year.

4.1.5 Appointment of an Administrator. The Executive Committee shall have the authority, exercisable in its discretion, to hire a third party (the “Administrator”) to provide such services and management to the Company as the Executive Committee deems necessary or convenient, and authorize the Administrator to perform. The services may include management,

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reporting, financial, legal, tax and other services. The Administrator shall perform the services pursuant to a written contract, which will contain such terms and conditions as the Executive Committee deems appropriate. The Administrator may be an Affiliate of a Member. The Administrator shall report directly to the President of the Company, if such officer has been appointed, and ultimately to the Executive Committee. The Administrator, in addition to the Executive Committee, shall be considered a manager for purposes of the Act.

4.1.6 “Authorized Person” under the Act. Each member of the Executive Committee and the Administrator shall be an “authorized person” to file with the Delaware Department of State certificates and other documents on behalf of the Company, as required or permitted by the Act.

Section 4.2 Officers-Designation; Qualifications.

4.2.1 The Executive Committee may, from time to time, designate one or more individuals to be officers of the Company (the “Officers”). The Officers of the Company shall include a President (the “President”) and may include such other officers as the Executive Committee or the President may, from time to time, deem necessary. Any Officer so designated shall have all authority necessary to implement the decisions of the Executive Committee, and such further authority as the Executive Committee may deem necessary or convenient to delegate to him or her. Any Person may hold any number of offices. No Officer need be a Member, a Delaware resident or a United States citizen.

4.2.2 Removal and Resignation, Any Officer may be removed as such, with or without cause, by the Executive Committee or the President, at any time. Any Officer may resign as such at any time upon written notice to the Executive Committee or the President. Such resignation shall be made in writing and shall take effect at the time specified or, if no time is specified, at the time of its receipt by the Executive Committee or the President.

4.2.3 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Executive Committee or the President.

4.2.4 Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Executive Committee or the President.

4.2.5 Conflicting Authority. When in this Agreement the Executive Committee, the Administrator, the President, an Officer or any other Person are each given the right to act, the right of the Administrator, the President, such Officer or Person to act shall at all times be subject to the right, but not the obligation, of the Executive Committee to approve the act. If the acts of the Administrator, the President, the Officer or Person and the Executive Committee should conflict, the act of the Executive Committee shall govern. If the acts of the President, the Officer or Person and the Administrator should conflict, the act of the Administrator shall govern.

4.2.6 Execution of Documents; Reliance by Third Parties. The execution of any document shall be authorized in accordance with the preceding provisions and the document may be signed by any two of the members of: the Executive Committee and/or the Officers. The preceding sentence notwithstanding, any third party may rely upon any document signed by any two of the members of the Executive Committee and/or the Officers as duly authorized and binding on the Company without any duty of inquiry.

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Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 18-502 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Executive Committee.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701- 3(b)(l)(ii). Subject to the preceding sentence, the Executive Committee shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

8.1.1 Upon the election of the Member to dissolve the Company.

8.1.2 Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

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8.3 Liquidation and Termination.

8.3.1 If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

8.3.2 To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

8.3.3 The balance, if any, to the Member.

8.3.4 After all of the assets of the Company have been distributed, the Company shall terminate.

8.3.5 Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Articles of Dissolution. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Delaware Department of State for filing Articles of Dissolution in accordance with Section 18-203 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and

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effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A        Certificate of Formation

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

Shea Homes, Inc., a Delaware corporation
By:		By:
Name: James G. Shontere		Name: Robert R. O’Dell
Title:   Secretary		Title:   Vice President & Treasurer

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LIMITED LIABILITY COMPANY AGREEMENT

OF SH JUBILEE, LLC

EXHIBIT A

Certificate of Formation

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

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as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC

By: J.F. Shea L.P., its sole General Partner

By: JFS Management, L.P., its sole General Partner

By:	J.F. Shea Construction Management,
Inc., its sole General Partner
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC

By: Shea Homes Limited Partnership, its Manager

By: J.F. Shea L.P., its sole General Partner

By: JFS Management, L.P., its sole General Partner

By: J.F. Shea Construction

Management, Inc., its sole General

Partner

By:
Name:	James G. Shontere
Title:	Secretary

By:
Name:	Robert O’ Dell
Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’ Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole

Member of Shea GSW Holdings, LLC

By: J.F. SHEA CO., INC., its Manager

By:
Name: James G. Shontere
Title: Secretary
By:
Name: Robert O’Dell
Title: Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC

By:
Name: James G. Shontere
Title: Secretary
By:
Name: Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT

COMPANY, INC., as Manager of

215 Bayview Apartments, LLC, Shea Baker Ranch,

LLC and Shea Rivermark Village, LLC

By:

By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast

Cable Partners

By:

Name:	James G. Shontere
Title:	Secretary

By:

Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.53

Exhibit 3.53

CERTIFICATE OF FORMATION

OF

SH JUBILEE MANAGEMENT, LLC

The undersigned, an authorized natural person for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is:

SH JUBILEE MANAGEMENT, LLC

2. The address of the registered office and the name and the address of the registered agent of the limited liability company, required to be maintained, by Section 18-104 of the Delaware Limited Liability Company Act, are National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.

Executed on June 17, 2010

Paul E. Mosley, Authorized Person

EX-3.54

Exhibit 3.54

LIMITED LIABILITY COMPANY AGREEMENT

OF

SH JUBILEE MANAGEMENT, LLC

This Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of the 18^th day of June, 2010, by Shea Homes, Inc., a Delaware corporation (the sole Member of the Company).

RECITALS

The Member desired to form the Company to complete infrastructure, construct and sell homes on real property contributed by Member and/or acquired by the Company in Delaware.

Therefore, the Member formed a limited liability company under the Delaware Limited Liability Company Act (the “Act”) on the following terms and conditions:

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a Delaware limited liability company by the filing of a Certificate of Formation pursuant to the Act with the Delaware Secretary of State.

1.2 Name. The name of the Company is “SH JUBILEE MANAGEMENT, LLC” and all Company business shall be conducted under that name or such other names that comply with applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to complete infrastructure, construct and sell homes on real property contributed by Member and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, Delaware 19904, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, Delaware 19904. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Delaware Limited Liability Company Act, 6 Del. Code Ann. § 18-101, et seq., as amended from time to time (or any corresponding provisions of succeeding law).

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. SH Jubilee Management, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. Shea Homes, Inc., a Delaware corporation.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the LLC. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 18-607 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 18-607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

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Section 4. MANAGEMENT

4.1 Executive Committee. Authority of the executive Committee. The Member acknowledges that the Company shall be managed by or under the direction of an Executive Committee as Manager, in accordance with Section 18-402 of the Act. Subject to any restrictions set forth in the Articles of Organization, this Agreement or the Act, all powers to control and manage the business and affairs of the Company and to bind the Company shall be exclusively vested in the Executive Committee, and the Executive Committee may exercise all powers of the Company and do all such lawful acts not inconsistent with the foregoing. In exercising its powers, the Executive Committee shall have the right and authority to take all actions that it deems necessary, useful or appropriate for the management and conduct of the Company’s business and affairs and in the pursuit of the purposes of the Company, including delegating the right and authority to take such actions to the Administrator and such Officers as are designated by the Executive Committee. The Executive Committee, in addition to the Administrator, shall be considered a manager for purposes of the Act.

4.1.1 Composition and Election of the Executive Committee; Decisions. The Executive Committee shall consist of three (3) members, each to be elected by the affirmative vote of the Members holding a majority of the Percentage Interests. The initial members of the Executive Committee shall be Richard C. Andreen, Jeffrey McQueen and Richard J. Obernesser. Any member of the Executive Committee may be removed as such, with or without cause, by the affirmative vote of the Members holding a majority of the Percentage Interests.

4.1.2 Meetings of the Executive Committee. (a) Meetings of the members of the Executive Committee may be called upon the request of any Member or any member of the Executive Committee. Members of the Executive Committee may vote in person, by proxy or by telephone at such meeting and may waive advance notice of such meeting. Each member of the Executive Committee shall have one vote. The vote or consent of 2 of the 3 members of the Executive Committee shall be required to constitute the act of the Executive Committee. Meetings may be conducted, in whole or in part, by telephone. Meetings are not required and the Executive Committee may conduct its business informally.

(b) The Executive Committee may act without a meeting and without a vote if at least 2 members consent to the proposed action in writing or by electronic transmission.

(c) Each member of the Executive Committee may authorize any Person or Persons to act for him on all matters in which he is entitled to participate, including voting at or participating in a meeting of the Executive Committee or consenting to actions of the Executive Committee as provided in Section 4.1.2 (b). An Executive Committee member’s authorization of his representative shall be delivered to the other members of the Executive Committee in writing or by electronic transmission. The Executive Committee member may revoke the authority of his representative or appoint another representative at his sole discretion by the same means.

(d) Each meeting of the Executive Committee shall be conducted by such individual as the Executive Committee deems appropriate, pursuant to such rules for the conduct of the meeting as the Executive Committee or such individual deems appropriate.

4.1.3 Duties and Obligations of the Executive Committee. (a) The Executive Committee, by its own action or through the Officers or the Administrator, shall take all actions that may be necessary or appropriate for the (i) continuation of the Company’s valid existence as

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a limited liability company under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Members or to enable the Company to conduct the business in which it is engaged, (ii) accomplishment of the Company’s purposes, including the acquisition, development, maintenance, preservation and operation of Property in accordance with the provisions of this Agreement and applicable laws and regulations, (iii) provision or arrangement for all of the Company’s management, reporting, financial, legal, tax and other services, and (iv) availability of the books and records of the Company for the Members’ inspection.

(b) The Executive Committee shall be under a fiduciary duty to conduct the affairs of the Company in the best interests of the Company and of the Members, including the safekeeping and use of all of the Property for the exclusive benefit of the Company.

4.1.4 Major Decisions. Notwithstanding any other provision of this Agreement, only the Executive Committee shall have the authority to authorize and approve the following acts with regard to the Company:

(a) any transfer or assignment of rights in the Company’s Property for other than a Company purpose;

(b) the incurrence, assumption, or other liability for any Debt or the creation of any liens on the Property of the Company other than (i) expenditures in the ordinary course of business, (ii) capital expenditures that are consistent with the Company’s strategic business plans and (iii) additional capital expenditures not in excess of $1,000,000;

(c) any loan or other advance of money to any Person or any guarantee of obligations of any Person in excess of $100,000 per occurrence and $1,000,000 in the aggregate;

(d) any act of Voluntary Bankruptcy;

(e) any distribution to any Member of any Property, other than as provided in this Agreement;

(f) any merger, consolidation, or sale of all or substantially all of the Company’s Property;

(g) the admission of any Member other than in accordance with Section 11 of this Agreement;

(h) discretionary distributions to the Members;

(i) any change in the Company’s independent accountants;

(j) an adoption of or change in a significant tax or accounting practice or principle of the Company, any significant tax or accounting election, or the adoption of any position for purposes of any tax return that will have a Material Adverse Effect on any Member (unless the making of such election is expressly contemplated by this Agreement); or

(k) a change in the Company’s Fiscal Year.

4.1.5 Appointment of an Administrator. The Executive Committee shall have the authority, exercisable in its discretion, to hire a third party (the “Administrator”) to provide such services and management to the Company as the Executive Committee deems necessary or convenient, and authorize the Administrator to perform. The services may include management,

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reporting, financial, legal, tax and other services. The Administrator shall perform the services pursuant to a written contract, which will contain such terms and conditions as the Executive Committee deems appropriate. The Administrator may be an Affiliate of a Member. The Administrator shall report directly to the President of the Company, if such officer has been appointed, and ultimately to the Executive Committee. The Administrator, in addition to the Executive Committee, shall be considered a manager for purposes of the Act.

4.1.6 “Authorized Person” under the Act. Each member of the Executive Committee and the Administrator shall be an “authorized person” to file with the Delaware Department of State certificates and other documents on behalf of the Company, as required or permitted by the Act.

Section 4.2 Officers-Designation; Qualifications.

4.2.1 The Executive Committee may, from time to time, designate one or more individuals to be officers of the Company (the “Officers”). The Officers of the Company shall include a President (the “President”) and may include such other officers as the Executive Committee or the President may, from time to time, deem necessary. Any Officer so designated shall have all authority necessary to implement the decisions of the Executive Committee, and such further authority as the Executive Committee may deem necessary or convenient to delegate to him or her. Any Person may hold any number of offices. No Officer need be a Member, a Delaware resident or a United States citizen.

4.2.2 Removal and Resignation, Any Officer may be removed as such, with or without cause, by the Executive Committee or the President, at any time. Any Officer may resign as such at any time upon written notice to the Executive Committee or the President. Such resignation shall be made in writing and shall take effect at the time specified or, if no time is specified, at the time of its receipt by the Executive Committee or the President.

4.2.3 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Executive Committee or the President.

4.2.4 Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Executive Committee or the President.

4.2.5 Conflicting Authority. When in this Agreement the Executive Committee, the Administrator, the President, an Officer or any other Person are each given the right to act, the right of the Administrator, the President, such Officer or Person to act shall at all times be subject to the right, but not the obligation, of the Executive Committee to approve the act. If the acts of the Administrator, the President, the Officer or Person and the Executive Committee should conflict, the act of the Executive Committee shall govern. If the acts of the President, the Officer or Person and the Administrator should conflict, the act of the Administrator shall govern.

4.2.6 Execution of Documents; Reliance by Third Parties. The execution of any document shall be authorized in accordance with the preceding provisions and the document may be signed by any two of the members of: the Executive Committee and/or the Officers. The preceding sentence notwithstanding, any third party may rely upon any document signed by any two of the members of the Executive Committee and/or the Officers as duly authorized and binding on the Company without any duty of inquiry.

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Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 18-502 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Executive Committee.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701- 3(b)(l)(ii). Subject to the preceding sentence, the Executive Committee shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

8.1.1 Upon the election of the Member to dissolve the Company.

8.1.2 Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

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8.3 Liquidation and Termination.

8.3.1 If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

8.3.2 To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

8.3.3 The balance, if any, to the Member.

8.3.4 After all of the assets of the Company have been distributed, the Company shall terminate.

8.3.5 Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Articles of Dissolution. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Delaware Department of State for filing Articles of Dissolution in accordance with Section 18-203 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and

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effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A Certificate of Formation

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

Shea Homes, Inc.,

a Delaware corporation

By: By:

Name:	James G. Shontere	Name:	Robert R. O’Dell
Title:	Secretary	Title:	Vice President & Treasurer

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LIMITED LIABILITY COMPANY AGREEMENT OF

SH JUBILEE MANAGEMENT, LLC

EXHIBIT A

Certificate of Formation

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

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as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [        ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC

By:  J.F. Shea L.P., its sole General Partner

By:  JFS Management, L.P., its sole General Partner

By:	J.F. Shea Construction Management,
Inc., its sole General Partner
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole

Member of Shea GSW Holdings, LLC

By: J.F. SHEA CO., INC., its Manager

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC

By: Shea Homes Limited Partnership, its Manager

By: J.F. Shea L.P., its sole General Partner

By: JFS Management, L.P., its sole

General Partner

By: J.F. Shea Construction

Management, Inc., its sole General Partner

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC		J.F. SHEA CO., INC., as Manager of Coast Cable Partners
		By:
By:		Name: James G. Shontere Title: Secretary
By:	Ronald L. Lakey
Its:	Vice President
By:		By:
By:	James G. Shontere	Name: Robert O’Dell
Its:	Secretary	Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.55

Exhibit 3.55

CERTIFICATE OF FORMATION

OF

SHI JV HOLDINGS, LLC

This Certificate of Formation of SHI JV Holdings, LLC (the “LLC”), dated as of October 8, 2010, is being duly executed and filed by Kevin H. Yonei, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq).

FIRST: The name of the limited liability company formed hereby is:

SHI JV Holdings, LLC

SECOND: The address of the registered office of the LLC in the State of Delaware is c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, County of Kent, DE 19904.

THIRD: The name and address of the registered agent for service of process on the LLC in the State of Delaware is National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, County of Kent, DE 19904.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first above written.

/s/ Kevin H. Yonei

Kevin H. Yonei, Authorized Person

EX-3.56

Exhibit 3.56

LIMITED LIABILITY COMPANY AGREEMENT

OF

SHI JV HOLDINGS, LLC

This Limited Liability Company Agreement (this “Agreement”) of SHI JV HOLDINGS, LLC (the “Company”), dated as of October 12, 2010, is entered into by Shea Homes, Inc., a Delaware corporation, as the sole member (the “Member”).

The Member hereby forms a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del.C. § 18-101, et seq.), as amended from time to time (the “Act”), and hereby agrees as follows:

Article 1. Name. The name of the limited liability company formed hereby is:

SHI JV HOLDINGS, LLC

Article 2. Filing of Certificates. Kevin H. Yonei is hereby designated an “authorized person” within the meaning of the Act, and shall execute, deliver and file the Certificate of Formation of the Company with the Secretary of State of the State of Delaware. Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, his powers as an “authorized person” shall cease, and the Member shall thereupon become the designated “authorized person” within the meaning of the Act.

Article 3. Purpose. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary or incidental to the foregoing.

Article 4. Registered Agent and Office. The Company’s registered agent and office in the State of Delaware is c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, County of Kent, Dover, Delaware 19904.

Article 5. Member. The name and the mailing address of the Member are as follows:

Shea Homes, Inc.

655 Brea Canyon Road

Walnut, CA 91789

Article 6. Management.

The business and affairs of the Company shall be managed by a “manager” of the Company within the meaning of the Act (the “Manager”). The Manager shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes of the Company described herein, including all powers, statutory or otherwise, possessed by a manager of a limited liability company under the laws of the State of Delaware. The Manager has the authority to bind the Company. Except as otherwise provided in this Agreement, the Member shall not have the authority to bind the Company.

The Member shall appoint the Manager and may remove the Manager at any time with or without cause. A person appointed as Manager shall serve until the earlier of such person’s death, disqualification, resignation or removal, and upon the occurrence of any such event, the Member shall promptly appoint a replacement Manager. Each person serving as Manager shall be required to execute an acknowledgment of this Agreement, which acknowledgment may be a counterpart signature page to this Agreement. The Member hereby appoints Moreno Petrini as the initial Manager. Notwithstanding any other provision of this Agreement, the Manager is authorized to execute and deliver any document on behalf of the Company without any vote or consent of any other person.

1

Article 7. Officers; Administrator.

7.1 Designation; Qualifications. The Manager may, from time to time, designate one or more individuals to be officers of the Company (the “Officers”). The Officers of the Company shall include a President (the “President”) and may include such other officers as the Manager or the President may, from time to time, deem necessary. Any Officer so designated shall have all authority necessary to implement the decisions of the Manager, and such further authority as the Manager may deem necessary or convenient to delegate to him or her. Any Person may hold any number of offices. No Officer need be a Member, a Delaware resident or a United States citizen.

7.2 Removal and Resignation. Any Officer may be removed as such, with or without cause, by the Manager or the President, at any time. Any Officer may resign as such at any time upon written notice to the Manager or the President. Such resignation shall be made in writing and shall take effect at the time specified or, if no time is specified, at the time of its receipt by the Manager or the President.

7.3 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Manager or the President.

7.4 Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Manager or the President.

7.5 Conflicting Authority. When in this Agreement the Manager, the Administrator, the President, an Officer or any other Person are each given the right to act, the right of the Administrator, the President, such Officer or Person to act shall at all times be subject to the right, but not the obligation, of the Manager to approve the act. If the acts of the Administrator, the President, the Officer or Person and the Manager should conflict, the act of the Manager shall govern. If the acts of the President, the Officer or Person and the Administrator should conflict, the act of the Administrator shall govern.

7.6 Execution of Documents; Reliance by Third Parties. The execution of any document shall be authorized in accordance with the preceding provisions and the document may be signed by any two of the members of: the Manager and/or the Officers. The preceding sentence notwithstanding, any third party may rely upon any document signed by any two of the members of the Manager and/or the Officers as duly authorized and binding on the Company without any duty of inquiry.

Article 8. Rights of Secured Party.

8.1 Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

2

8.2 Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

8.3 All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

8.4 Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

8.5 At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor members of the Manager will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

8.6 The provisions of this Article 8 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members, Managers and their respective successors and assigns.

8.7 At all times prior the Termination Date, none of the provisions of this Article 8 or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.

Article 9. Dissolution. The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following: (a) the fiftieth anniversary of the date hereof, (b) the written act of the Member, or (c) the entry of a decree of judicial dissolution under Section 18-802 of the Act.

Article 10. Capital Contributions. The Member is deemed admitted as a member of the Company upon its execution and delivery of this Agreement. The Member shall make such capital contributions to the Company at such times, and in such amounts, as the Member shall unanimously agree. The Member shall not be obligated to contribute any capital to the Company, but may make capital contributions from time to time. The Member shall have no obligation to any third party to make capital contributions to the Company.

3

Article 11. Distributions. Distributions shall be made to the Member in such amounts as shall be unanimously determined by the Member after the payment of expenses, liabilities and other obligations of the Company.

Article 12. Admission of Additional Members. One or more additional members of the Company may be admitted to the Company by the Member.

Article 13. Limited Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and neither any Member nor the Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member or acting as manager of the Company.

Article 14. Indemnification of Member. To the fullest extent permitted by applicable law, the Member and its respective employees, agents, affiliates and assigns shall be entitled to indemnification from the Company for any loss, damage or claim incurred by reason of any act or omission performed or omitted in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred by this Agreement.

Article 15. Governing Law. This Agreement shall be governed by, and construed under, the laws of the State of Delaware, all rights and remedies being governed by said laws.

[Signature page follows.]

4

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Limited Liability Company Agreement on the date first written above.

MEMBER:
SHEA HOMES, INC.
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert R. O’Dell
Title:	VP & Treasurer

[SIGNATURE PAGE TO LLC AGREEMENT OF SHI JV HOLDINGS, LLC]

EX-3.57

Exhibit 3.57

CERTIFICATE OF FORMATION

OF

SHLP JV HOLDINGS, LLC

This Certificate of Formation of SHLP JV Holdings, LLC (the “LLC”), dated as of October 8, 2010, is being duly executed and filed by Kevin H. Yonei, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq).

FIRST: The name of the limited liability company formed hereby is:

SHLP JV Holdings, LLC

SECOND: The address of the registered office of the LLC in the State of Delaware is c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, County of Kent, DE 19904.

THIRD: The name and address of the registered agent for service of process on the LLC in the State of Delaware is National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, County of Kent, DE 19904.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first above written.

/s/ Kevin H. Yonei

Kevin H. Yonei, Authorized Person

EX-3.58

Exhibit 3.58

LIMITED LIABILITY COMPANY AGREEMENT

OF

SHLP JV HOLDINGS, LLC

This Limited Liability Company Agreement (this “Agreement”) of SHLP JV HOLDINGS, LLC (the “Company”), dated as of October 12, 2010, is entered into by Shea Homes Limited Partnership, a California limited partnership, as the sole member (the “Member”).

The Member hereby forms a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del.C. § 18-101, et seq.), as amended from time to time (the “Act”), and hereby agrees as follows:

Article 1. Name. The name of the limited liability company formed hereby is:

SHLP JV HOLDINGS, LLC

Article 2. Filing of Certificates. Kevin H. Yonei is hereby designated an “authorized person” within the meaning of the Act, and shall execute, deliver and file the Certificate of Formation of the Company with the Secretary of State of the State of Delaware. Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, his powers as an “authorized person” shall cease, and the Member shall thereupon become the designated “authorized person” within the meaning of the Act.

Article 3. Purpose. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary or incidental to the foregoing.

Article 4. Registered Agent and Office. The Company’s registered agent and office in the State of Delaware is c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, County of Kent, Dover, Delaware 19904.

Article 5. Member. The name and the mailing address of the Member are as follows:

Shea Homes Limited Partnership

655 Brea Canyon Road

Walnut, CA 91789

Article 6. Management.

The business and affairs of the Company shall be managed by a “manager” of the Company within the meaning of the Act (the “Manager”). The Manager shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes of the Company described herein, including all powers, statutory or otherwise, possessed by a manager of a limited liability company under the laws of the State of Delaware. The Manager has the authority to bind the Company. Except as otherwise provided in this Agreement, the Member shall not have the authority to bind the Company.

The Member shall appoint the Manager and may remove the Manager at any time with or without cause. A person appointed as Manager shall serve until the earlier of such person’s death, disqualification, resignation or removal, and upon the occurrence of any such event, the Member shall promptly appoint a replacement Manager. Each person serving as Manager shall be required to execute an acknowledgment of this Agreement, which acknowledgment may be a counterpart signature page to this Agreement. The Member hereby appoints Moreno Petrini as the initial Manager. Notwithstanding any other provision of this Agreement, the Manager is authorized to execute and deliver any document on behalf of the Company without any vote or consent of any other person.

1

Article 7. Officers; Administrator.

7.1 Designation; Qualifications. The Manager may, from time to time, designate one or more individuals to be officers of the Company (the “Officers”). The Officers of the Company shall include a President (the “President”) and may include such other officers as the Manager or the President may, from time to time, deem necessary. Any Officer so designated shall have all authority necessary to implement the decisions of the Manager, and such further authority as the Manager may deem necessary or convenient to delegate to him or her. Any Person may hold any number of offices. No Officer need be a Member, a Delaware resident or a United States citizen.

7.2 Removal and Resignation. Any Officer may be removed as such, with or without cause, by the Manager or the President, at any time. Any Officer may resign as such at any time upon written notice to the Manager or the President. Such resignation shall be made in writing and shall take effect at the time specified or, if no time is specified, at the time of its receipt by the Manager or the President.

7.3 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Manager or the President.

7.4 Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Manager or the President.

7.5 Conflicting Authority. When in this Agreement the Manager, the Administrator, the President, an Officer or any other Person are each given the right to act, the right of the Administrator, the President, such Officer or Person to act shall at all times be subject to the right, but not the obligation, of the Manager to approve the act. If the acts of the Administrator, the President, the Officer or Person and the Manager should conflict, the act of the Manager shall govern. If the acts of the President, the Officer or Person and the Administrator should conflict, the act of the Administrator shall govern.

7.6 Execution of Documents; Reliance by Third Parties. The execution of any document shall be authorized in accordance with the preceding provisions and the document may be signed by any two of the members of: the Manager and/or the Officers. The preceding sentence notwithstanding, any third party may rely upon any document signed by any two of the members of the Manager and/or the Officers as duly authorized and binding on the Company without any duty of inquiry.

Article 8. Rights of Secured Party.

8.1 Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

2

8.2 Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

8.3 All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

8.4 Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

8.5 At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor members of the Manager will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

8.6 The provisions of this Article 8 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members, Managers and their respective successors and assigns.

8.7 At all times prior the Termination Date, none of the provisions of this Article 8 or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.

Article 9. Dissolution. The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following: (a) the fiftieth anniversary of the date hereof, (b) the written act of the Member, or (c) the entry of a decree of judicial dissolution under Section 18-802 of the Act.

Article 10. Capital Contributions. The Member is deemed admitted as a member of the Company upon its execution and delivery of this Agreement. The Member shall make such capital contributions to the Company at such times, and in such amounts, as the Member shall unanimously agree. The Member shall not be obligated to contribute any capital to the Company, but may make capital contributions from time to time. The Member shall have no obligation to any third party to make capital contributions to the Company.

3

Article 11. Distributions. Distributions shall be made to the Member in such amounts as shall be unanimously determined by the Member after the payment of expenses, liabilities and other obligations of the Company.

Article 12. Admission of Additional Members. One or more additional members of the Company may be admitted to the Company by the Member.

Article 13. Limited Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and neither any Member nor the Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member or acting as manager of the Company.

Article 14. Indemnification of Member. To the fullest extent permitted by applicable law, the Member and its respective employees, agents, affiliates and assigns shall be entitled to indemnification from the Company for any loss, damage or claim incurred by reason of any act or omission performed or omitted in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred by this Agreement.

Article 15. Governing Law. This Agreement shall be governed by, and construed under, the laws of the State of Delaware, all rights and remedies being governed by said laws.

[Signature page follows.]

4

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Limited Liability Company Agreement on the date first written above.

MEMBER: SHEA HOMES LIMITED PARTNERSHIP
By:	J.F. Shea L.P., its sole General Partner
By:	JFS Management, L.P., its sole General Partner
By: J.F. Shea Construction Management, Inc., its sole General Partner

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert R. O’Dell
Title:	VP & Treasurer

[SIGNATURE PAGE TO LLC AGREEMENT OF SHLP JV HOLDINGS, LLC]

EX-3.59

Exhibit 3.59

	Mail to: Secretary of State	For office use only                031
	Corporations Section
	1560 Broadway, Suite 200
	Denver, CO 80202
	(303) 894-2251
MUST BE TYPED	Fax (303) 894-2242
FILING FEE: $50.00
MUST SUBMIT TWO COPIES
Please include a typed	ARTICLES OF ORGANIZATION
self-addressed envelope

I/We the undersigned natural person(s) of the age of eighteen years or more, acting as organizer(s) of a limited liability company under the Colorado Limited Liability Company Act, adopt the following Articles of Organization for such limited liability company:

FIRST:	The name of the limited liability company is:             Tower 104 Gathering, LLC
SECOND:	Principal place of business (if known):                       300 West Plaza Drive, Suite 300, Highlands Ranch,                         Colorado 80129
THIRD:	The street address of the initial registered office of the limited liability company is:                                                             300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129
	The mailing address (if different from above) of the initial registered office of the limited liability company is:
	The name of its proposed registered agent in Colorado at that address is:                             Jeffrey H. Donelson
FOURTH:	X The management is vested in managers (check if appropriate)
FIFTH:	The names and business addresses of the initial manager or managers or if the management is vested in the members, rather than managers, the names and addresses of the member or members are:

	NAME	ADDRESS (include zip codes)
	J. F. Shea Co., Inc. a Nevada corporation	300 West Plaza Drive, Suite 300 Highlands Ranch, Colorado 80219
SIXTH:	The name and address of each organizer is:
	NAME	ADDRESS (include zip code)
	Dennett L. Hutchinson	303 East Seventeenth Avenue, Suite 805 Denver, Colorado 80203

Signed		Signed
	Organizer	Organizer

FILED

DONETTA DAVIDSON

COLORADO SECRETARY OF STATE

CHANGE OF
R.O.R.A AMENDMENT TO THE ARTICLES OF ORGANIZATION FOR A COLORADO LIMITED LIABILITY COMPANY AND STATEMENT OF CHANGE OF REGISTERED OFFICE

Pursuant to the provisions of the Colorado Limited Liability Company Act, TOWER 104 GATHERING, LLC, a Colorado limited liability company (the “Company”), whose current principal place of business is 300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129, hereby amends the Articles of Organization for the Company to correct certain erroneous statements in the Articles of Organization, and also submits the following statements for the purpose of changing its registered office in the State of Colorado, as follows:

FIRST: The address of the PRINCIPAL PLACE OF BUSINESS of the Company is hereby changed to: 9135 South Ridgeline Boulevard, Suite 100, Highlands Ranch, Colorado 80129.

SECOND: The name and address of the INITIAL MANAGER of the Company is hereby changed to:

NAME	ADDRESS
Shea Homes Limited Partnership, a California limited partnership d/b/a Shea Homes	9135 South Ridgeline Boulevard Suite 100 Highlands Ranch, Colorado 80129

THIRD: The street address of the REGISTERED OFFICE of the Company, which currently is 300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129, is hereby changed to the following new address: 9135 South Ridgeline Boulevard, Suite 100, Highlands Ranch, Colorado 80129.

The name of the initial registered agent of the Company in Colorado at such new address set forth above shall continue to be Jeffrey H. Donelson.

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes, as Manager of TOWER GATHERING, LLC, a Colorado limited liability company
By:	J. F. SHEA, CO., INC., a Nevada corporation, its general partner

By:
Name:	Jeffrey De Willis
Title:	Assistant Secretary
By:
Name:	Jeffrey M. Donerson
Title:	Assistant Secretary

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EX-3.60

Exhibit 3.60

OPERATING AGREEMENT

of

TOWER 104 GATHERING, LLC,

a Colorado limited liability company

April 6, 2001

TABLE OF CONTENTS

	Page
RECITALS		1
AGREEMENT		1
ARTICLE 1 GENERAL		1
1.1 Purpose of the Company		1
1.2 Powers		1
1.3 Duration		1
ARTICLE 2 OFFICES		1
2.1 Principal Place of Business		1
2.2 Registered Office and Agent		1
ARTICLE 3 MEMBER		2
3.1 Initial Member		2
3.2 Admission of Additional Members		2
3.3 Meetings of Members		2
ARTICLE 4 MANAGER		2
4.1 Powers		2
4.2 Number		2
4.3 Appointment		2
ARTICLE 5 FINANCIAL MATTERS		3
5.1 Initial Capital Contribution		3
5.2 Additional Capital Contributions		3
5.3 Interest on Capital Contributions		3
5.4 Profits and Losses		3
5.5 Distributions		3
5.6 Limits on Distributions		3
5.7 Taxpayer Identification Number		3
5.8 Checks, Drafts, Etc		3
5.9 Fiscal Year		3
ARTICLE 6 DISSOLUTION, WINDING UP AND TERMINATION		3
6.1 Events of Dissolution		3
6.2 Winding Up		3
6.3 Termination		4

- i -

ARTICLE 7 MISCELLANEOUS	4
7.1 Successor and Assigns	4
7.2 Governing Law	4
7.3 Severability	4

- ii -

OPERATING AGREEMENT

of

TOWER 104 GATHERING, LLC

This OPERATING AGREEMENT of TOWER 104 GATHERING, LLC is made as of the 6^th day of April, 2001, by TOWER 104 GATHERING, LLC, a Colorado limited liability company (the “Company”), and SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes (“Shea Homes”), as its sole member and its sole manager.

RECITALS

A. The Company was formed pursuant to the Colorado Limited Liability Company Act, Article 80 of Title 7 of the Colorado Revised Statutes (as from time to time amended, the “Act”), on April 6, 2001, by the filing of Articles of Organization (as amended from time to time, the “Articles”) in the office of the Colorado Secretary of State.

B. The Company and its sole member and its manager desire to enter into this limited liability company agreement pursuant to the Act.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

GENERAL

1.1. Purpose of the Company. The purpose of the Company is to engage in the transaction of any lawful business.

1.2. Powers. The Company shall have all of the powers of a limited liability company under the Act.

1.3. Duration. The Company shall have perpetual existence unless it is dissolved pursuant to Article 9 of this Agreement or pursuant to provisions of the Act not varied by this Agreement.

ARTICLE 2

OFFICES

2.1. Principal Place of Business. The principal place of business of the Company shall be as determined by the manager from time to time. The initial principal place of business shall be as stated in the Articles.

2.2. Registered Office and Agent. The Company shall at all times have and maintain in the State of Colorado a registered office and a registered agent for service of process whose business office is identical with the registered office. The initial registered agent and the initial registered office are as specified in the Articles. The manager may change the registered office of the Company, the

- 1 -

registered agent of the Company, or both, upon making the filings with the office of the Colorado Secretary of State as required by the Act. The registered agent may change the address of the registered office of the Company upon notice to the Company and upon making the filings with the office of the Colorado Secretary of State as required by the Act.

ARTICLE 3

MEMBER

3.1. Initial Member. Shea Homes shall be the sole member of the Company.

3.2. Admission of Additional Members. A party may be admitted as an additional member of the Company only upon the consent of the member. Upon the admission of any additional member, such member shall execute this Agreement, as amended to take into account the interest of such additional member and otherwise as may be agreed by the member and such additional member.

3.3. Meetings of Members. No annual or other meetings of the Company or its members shall be required. Except as otherwise expressly provided in this Agreement, all action of the member shall be taken by consent of the member, in writing or as otherwise manifested.

ARTICLE 4

MANAGER

4.1. Powers. The management of the Company shall be vested in a manager, who shall exercise all powers except to the extent member consent, approval or other action is required by the Act, this Agreement or the member by written notice to the manager. The manager shall have no right to make contributions to the Company and shall not share in the profits and losses of, or in distributions from, the Company, in its capacity as manager. The manager shall receive no compensation for its services as such except as may otherwise be agreed by the member and the manager.

4.2. Number. There shall be one manager. The number of managers may be increased or decreased (whether or not such decrease shall have the effect of shortening the term of any incumbent manager) at any time by action of the member. The manager need not be a member.

4.3. Appointment. The manager shall be appointed by the member and shall serve until the member is removed or resigns. The manager may be removed, with or without cause, at any time, by written notice to the manager. The manager may resign, at any time, by written notice to the member. The Articles state that J. F. Shea Co., Inc., a Nevada corporation (“J. F. Shea”) shall be the initial manager of the Company. The Company has determined, however, that Shea Homes shall be the manager of the Company and the manager has executed an amendment to the Articles to reflect the same. Shea Homes, as the sole Member of the Company, hereby consents to such amendment.

- 2 -

ARTICLE 5

FINANCIAL MATTERS

5.1. Initial Capital Contribution. As its initial capital contribution, the member has contributed to the Company the assets listed on Schedule A to this Agreement.

5.2. Additional Capital Contributions. The member may, but shall not be required to, make any additional capital contributions to the Company.

5.3. Interest on Capital Contributions. No interest shall be paid on any contribution to the capital of the Company.

5.4. Profits and Losses. For United States federal and applicable state income tax purposes, all profits and losses of the Company shall be allocated to the member.

5.5. Distributions. All distributions of cash or other assets of the Company shall be made to the member, subject to Section 5.6 below, as requested by the member. The member shall have the right to demand to receive distributions from the Company in forms other than cash.

5.6. Limits on Distributions. The Company shall not make a distribution to the member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the Company, other than liabilities to the member on account of its limited liability company interest,exceed the fair value of the assets of the Company, or to the extent otherwise limited by the Act or other applicable law.

5.7. Taxpayer Identification Number. For federal income tax purposes and, to the extent permitted by applicable law, all other purposes, the taxpayer or other identification number of the Company shall be the same as the taxpayer or other identification number of the member.

5.8. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Company shall be signed or endorsed by the manager.

5.9. Fiscal Year. The fiscal year of the Company shall be the same as the fiscal year of the member.

ARTICLE 6

DISSOLUTION, WINDING UP AND TERMINATION

6.1. Events of Dissolution. The Company shall be dissolved only upon the consent of the member or as provided in the Act.

6.2. Winding Up. Upon the dissolution of the Company, the manager shall file a statement of intent to dissolve in the office of the Colorado Secretary of State in accordance with the Act. Upon the filing of the statement of intent to dissolve, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its business, and the Company shall be wound up by

- 3 -

the manager or any one or more other persons appointed by the member for such purpose, as liquidating trustee. Company assets shall be distributed in the following order:

(a) to creditors in the manner required by the Act; and

(b) the balance to the member.

6.3. Termination. Upon the completion of winding up, the Company shall terminate, and the liquidating trustee shall file articles of dissolution in the office of the Colorado Secretary of State in accordance with the Act.

ARTICLE 7

MISCELLANEOUS

7.1. Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their successors and permitted assigns.

7.2. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado without regard to the principles applicable to conflicts of laws.

7.3. Severability. Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

[Remainder of Page Intentionally Left Blank]

- 4 -

IN WITNESS WHEREOF, this Agreement has been executed as of the 6^th day of April, 2001.

COMPANY:
TOWER 104 GATHERING, LLC, a Colorado limited liability company
By:	SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes, its manager
	By:	J. F. SHEA, CO., INC., a Nevada corporation, its general partner

By:
Name:	Jeffrey D. Willis
Title:	Assistant Secretary
By:
Name:	Jeffrey W. Donelson
Title:	Assistant Secretary

SHEA HOMES:
SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes
	By:	J. F. SHEA, CO., INC., a Nevada corporation, its general partner

By:
Name:	Jeffrey D. Willis
Title:	Assistant Secretary
By:
Name:	Jeffrey W. Donelson
Title:	Assistant Secretary

- 5 -

SCHEDULE A

TO

OPERATING AGREEMENT

Initial Capital Contribution

Schedule A-1

Approximately 9 miles of 6” and 3” steel pipe and 2” poly pipe plus currently existing meter runs and related valves, etc. located in certain sections of Township 2 South; Range 66 & 67 West, Adams County, Colorado. (See attached map.)

Price – $3,000.00

FILED - CUSTOMER COPY

DONETTA DAVIDSON

COLORADO SECRETARY OF STATE

CHANGE OF
R.O.R.A AMENDMENT TO THE ARTICLES OF ORGANIZATION FOR A COLORADO LIMITED LIABILITY COMPANY AND STATEMENT OF CHANGE OF REGISTERED OFFICE

Pursuant to the provisions of the Colorado Limited Liability Company Act, TOWER 104 GATHERING, LLC, a Colorado limited liability company (the “Company”), whose current principal place of business is 300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129, hereby amends the Articles of Organization for the Company to correct certain erroneous statements in the Articles of Organization, and also submits the following statements for the purpose of changing its registered office in the State of Colorado, as follows:

FIRST: The address of the PRINCIPAL PLACE OF BUSINESS of the Company is hereby changed to: 9135 South Ridgeline Boulevard, Suite 100, Highlands Ranch, Colorado 80129.

SECOND: The name and address of the INITIAL MANAGER of the Company is hereby changed to:

NAME	ADDRESS
Shea Homes Limited Partnership, a	9135 South Ridgeline Boulevard
California limited partnership d/b/a	Suite 100
Shea Homes	Highlands Ranch, Colorado 80129

THIRD: The street address of the REGISTERED OFFICE of the Company, which currently is 300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129, is hereby changed to the following new address: 9135 South Ridgeline Boulevard, Suite 100, Highlands Ranch, Colorado 80129.

The name of the initial registered agent of the Company in Colorado at such new address set forth above shall continue to be Jeffrey H. Donelson.

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea

Homes, as Manager of TOWER

GATHERING, LLC, a Colorado limited

liability company

By:         J. F. SHEA, CO., INC., a Nevada         corporation, its general partner

By:
Name:	Jeffrey D. Willis
Title:	Assistant Secretary
By:
Name:	JEFFREY H. DONELSON
Title:	Assistant Secretary

- 1 -

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to“Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

2

as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [        ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

3

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as

the sole Member of Monty Green Holdings, LLC,

Shea Tonner Hills, LLC, Shea Ninth and Colorado,

LLC, Shea Brea Development, LLC, Shea Otay

Village 11, LLC and Shea Proctor Valley, LLC, as

the Manager of Tower 104 Gathering, LLC, Tower

104 Oil, LLC and Walden Village Partners, LLC,

and as a member of Shea Capital II, LLC

By:  J.F. Shea L.P., its sole General Partner

By:  JFS Management, L.P., its sole General Partner

By:	J.F. Shea Construction Management,
Inc., its sole General Partner
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA GSW INVESTMENTS, LLC, as the sole

Member of Shea GSW Holdings, LLC

By: J.F. SHEA CO., INC., its Manager

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC

By: Shea Homes Limited Partnership, its Manager

By: J.F. Shea L.P., its sole General Partner

By: JFS Management, L.P., its sole General Partner

By: J.F. Shea Construction

Management, Inc., its sole General Partner

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC

By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

16

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC		J.F. SHEA CO., INC., as Manager of Coast Cable Partners
		By:
By:		Name: James G. Shontere Title: Secretary
By:	Ronald L. Lakey
Its:	Vice President
By:		By:
By:	James G. Shontere	Name: Robert O’Dell
Its:	Secretary	Title: Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.61

Exhibit 3.61

	Mail to: Secretary of State	For office use only                            031
	Corporations Section
	1560 Broadway, Suite 200
	Denver, CO 80202
	(303) 894-2251
	Fax (303) 894-2242
MUST BE TYPED FILING FEE: $50.00 MUST SUBMIT TWO COPIES
Please include a typed	ARTICLES OF ORGANIZATION
self-addressed envelope

I/We the undersigned natural person(s) of the age of eighteen years or more, acting as organizer(s) of a limited liability company under the Colorado Limited Liability Company Act, adopt the following Articles of Organization for such limited liability company:

FIRST:	The name of the limited liability company is: Tower 104 Oil, LLC
SECOND:	Principal place of business (if known): 300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129
THIRD:	The street address of the initial registered office of the limited liability company is: 300 West Plaza Drive. Suite 300, Highlands Ranch, Colorado 80129
	The mailing address (if different from above) of the initial registered office of the limited liability company is:
	The name of its proposed registered agent in Colorado at that address is: Jeffrey H. Donelson
FOURTH:	x  The management is vested in managers (check if appropriate)
FIFTH:	The names and business addresses of the initial manager or managers or if the management is vested in the members, rather than managers, the names and addresses of the member or members are:
	NAME J. F. Shea Co., Inc. a Nevada corporation	ADDRESS (include zip codes) 300 West Plaza Drive, Suite 300 Highlands Ranch, Colorado 80219
SIXTH:	The name and address of each organizer is:
	NAME Dennett L. Hutchinson	ADDRESS (include zip code) 303 East Seventeenth Avenue, Suite 805 Denver, Colorado 80203

Signed		Signed
	Organizer		Organizer

CHANGE OF R.O.R.A AMENDMENT TO THE ARTICLES OF ORGANIZATION FOR A COLORADO LIMITED LIABILITY COMPANY AND STATEMENT OF CHANGE OF REGISTERED OFFICE

NCGS

Pursuant to the provisions of the Colorado Limited Liability Company Act, TOWER 104 OIL, LLC, a Colorado limited liability company (the “Company”), whose current principal place of business is 300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129, hereby amends the Articles of Organization for the Company to correct certain erroneous statements in the Articles of Organization, and also submits the following statements for the purpose of changing its registered office in the State of Colorado, as follows:

FIRST: The address of the PRINCIPAL PLACE OF BUSINESS of the Company is hereby changed to: 9135 South Ridgeline Boulevard, Suite 100, Highlands Ranch, Colorado 80129.

SECOND: The name and address of the INITIAL MANAGER of the Company is hereby changed to:

NAME	ADDRESS
Shea Homes Limited Partnership, a	9135 South Ridgeline Boulevard
California limited partnership d/b/a	Suite 100
Shea Homes	Highlands Ranch, Colorado 80129

THIRD: The street address of the REGISTERED OFFICE of the Company, which currently is 300 West Plaza Drive, Suite 300, Highlands Ranch, Colorado 80129, is hereby changed to the following new address: 9135 South Ridgeline Boulevard, Suite 100, Highlands Ranch, Colorado 80129.

The name of the initial registered agent of the Company in Colorado at such new address set forth above shall continue to be Jeffrey H. Donelson.

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes, as Manager of TOWER 104 OIL, LLC, a Colorado limited liability company
By:	J. F. SHEA, CO., INC., a Nevada corporation, its general partner
	By:
	Name:	Jeffrey D. Willis
	Title:	Assistant Secretary
	By:
	Name:	Jeffrey H. Donelson
	Title:	Assistant Secretary

DLH\Public\SheaBH\BHmin\AmAOOil-verl	- 1 -	COMPUTER UPDATE COMPLETE
October 23, 2001		MW

EX-3.62

Exhibit 3.62

OPERATING AGREEMENT

of

TOWER 104 OIL, LLC,

a Colorado limited liability company

April 6, 2001

TABLE OF CONTENTS

		Page
RECITALS			1
AGREEMENT			1
ARTICLE 1	GENERAL		1
1.1	Purpose of the Company		1
1.2	Powers		1
1.3	Duration		1
ARTICLE 2	OFFICES		1
2.1	Principal Place of Business		1
2.2	Registered Office and Agent		1
ARTICLE 3	MEMBER		2
3.1	Initial Member		2
3.2	Admission of Additional Members		2
3.3	Meetings of Members		2
ARTICLE 4	MANAGER		2
4.1	Powers		2
4.2	Number		2
4.3	Appointment		2
ARTICLE 5	FINANCIAL MATTERS		3
5.1	Initial Capital Contribution		3
5.2	Additional Capital Contributions		3
5.3	Interest on Capital Contributions		3
5.4	Profits and Losses		3
5.5	Distributions		3
5.6	Limits on Distributions		3
5.7	Taxpayer Identification Number		3
5.8	Checks, Drafts, Etc.		3
5.9	Fiscal Year		3
ARTICLE 6	DISSOLUTION, WINDING UP AND TERMINATION		3
6.1	Events of Dissolution		3
6.2	Winding Up		3
6.3	Termination		4

- i -

ARTICLE 7	MISCELLANEOUS	4
7.1	Successor and Assigns	4
7.2	Governing Law	4
7.3	Severability	4

- ii -

OPERATING AGREEMENT

of

TOWER 104 OIL, LLC

This OPERATING AGREEMENT of TOWER 104 OIL, LLC is made as of the 6^th day of April, 2001, by TOWER 104 OIL, LLC, a Colorado limited liability company (the “Company”), and SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes (“Shea Homes”), as its sole member and its sole manager.

RECITALS

A. The Company was formed pursuant to the Colorado Limited Liability Company Act, Article 80 of Title 7 of the Colorado Revised Statutes (as from time to time amended, the “Act”), on April 6, 2001, by the filing of Articles of Organization (as amended from time to time, the “Articles”) in the office of the Colorado Secretary of State.

B. The Company and its sole member and its manager desire to enter into this limited liability company agreement pursuant to the Act.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

GENERAL

1.1. Purpose of the Company. The purpose of the Company is to engage in the transaction of any lawful business.

1.2. Powers. The Company shall have all of the powers of a limited liability company under the Act.

1.3. Duration. The Company shall have perpetual existence unless it is dissolved pursuant to Article 9 of this Agreement or pursuant to provisions of the Act not varied by this Agreement.

ARTICLE 2

OFFICES

2.1. Principal Place of Business. The principal place of business of the Company shall be as determined by the manager from time to time. The initial principal place of business shall be as stated in the Articles.

2.2. Registered Office and Agent. The Company shall at all times have and maintain in the State of Colorado a registered office and a registered agent for service of process whose business office is identical with the registered office. The initial registered agent and the initial registered office are as specified in the Articles. The manager may change the registered office of the Company, the

- 1 -

registered agent of the Company, or both, upon making the filings with the office of the Colorado Secretary of State as required by the Act. The registered agent may change the address of the registered office of the Company upon notice to the Company and upon making the filings with the office of the Colorado Secretary of State as required by the Act.

ARTICLE 3

MEMBER

3.1. Initial Member. Shea Homes shall be the sole member of the Company.

3.2. Admission of Additional Members. A party may be admitted as an additional member of the Company only upon the consent of the member. Upon the admission of any additional member, such member shall execute this Agreement, as amended to take into account the interest of such additional member and otherwise as may be agreed by the member and such additional member.

3.3. Meetings of Members. No annual or other meetings of the Company or its members shall be required. Except as otherwise expressly provided in this Agreement, all action of the member shall be taken by consent of the member, in writing or as otherwise manifested.

ARTICLE 4

MANAGER

4.1. Powers. The management of the Company shall be vested in a manager, who shall exercise all powers except to the extent member consent, approval or other action is required by the Act, this Agreement or the member by written notice to the manager. The manager shall have no right to make contributions to the Company and shall not share in the profits and losses of, or in distributions from, the Company, in its capacity as manager. The manager shall receive no compensation for its services as such except as may otherwise be agreed by the member and the manager.

4.2. Number. There shall be one manager. The number of managers may be increased or decreased (whether or not such decrease shall have the effect of shortening the term of any incumbent manager) at any time by action of the member. The manager need not be a member.

4.3. Appointment. The manager shall be appointed by the member and shall serve until the member is removed or resigns. The manager may be removed, with or without cause, at any time, by written notice to the manager. The manager may resign, at any time, by written notice to the member. The Articles state that J. F. Shea Co., Inc., a Nevada corporation (“J. F. Shea”) shall be the initial manager of the Company. The Company has determined, however, that Shea Homes shall be the manager of the Company and the manager has executed an amendment to the Articles to reflect the same. Shea Homes, as the sole Member of the Company, hereby consents to such amendment.

- 2 -

ARTICLE 5

FINANCIAL MATTERS

5.1. Initial Capital Contribution. As its initial capital contribution, the member has contributed to the Company the assets listed on Schedule A to this Agreement.

5.2. Additional Capital Contributions. The member may, but shall not be required to, make any additional capital contributions to the Company.

5.3. Interest on Capital Contributions. No interest shall be paid on any contribution to the capital of the Company.

5.4. Profits and Losses. For United States federal and applicable state income tax purposes, all profits and losses of the Company shall be allocated to the member.

5.5. Distributions. All distributions of cash or other assets of the Company shall be made to the member, subject to Section 5.6 below, as requested by the member. The member shall have the right to demand to receive distributions from the Company in forms other than cash.

5.6. Limits on Distributions. The Company shall not make a distribution to the member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the Company, other than liabilities to the member on account of its limited liability company interest, exceed the fair value of the assets of the Company, or to the extent otherwise limited by the Act or other applicable law.

5.7. Taxpayer Identification Number. For federal income tax purposes and, to the extent permitted by applicable law, all other purposes, the taxpayer or other identification number of the Company shall be the same as the taxpayer or other identification number of the member.

5.8. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Company shall be signed or endorsed by the manager.

5.9. Fiscal Year. The fiscal year of the Company shall be the same as the fiscal year of the member.

ARTICLE 6

DISSOLUTION, WINDING UP AND TERMINATION

6.1. Events of Dissolution. The Company shall be dissolved only upon the consent of the member or as provided in the Act.

6.2. Winding Up. Upon the dissolution of the Company, the manager shall file a statement of intent to dissolve in the office of the Colorado Secretary of State in accordance with the Act. Upon the filing of the statement of intent to dissolve, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its business, and the Company shall be wound up by the manager or any one or more other persons appointed by the member for such purpose, as liquidating trustee. Company assets shall be distributed in the following order:

(a) to creditors in the manner required by the Act; and

- 3 -

(b) the balance to the member.

6.3. Termination. Upon the completion of winding up, the Company shall terminate, and the liquidating trustee shall file articles of dissolution in the office of the Colorado Secretary of State in accordance with the Act.

ARTICLE 7

MISCELLANEOUS

7.1. Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their successors and permitted assigns.

7.2. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado without regard to the principles applicable to conflicts of laws.

7.3. Severability. Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

[Remainder of Page Intentionally Left Blank]

- 4 -

IN WITNESS WHEREOF, this Agreement has been executed as of the 6^Ih day of April, 2001.

COMPANY:
TOWER 104 OIL, LLC, a Colorado limited liability company
By:	SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes, its manager
	By:	J. F. SHEA, CO., INC., a Nevada corporation, its general partner
		By:
		Name:	Jeffrey D. Willis
		Title:	Assistant Secretary
		By:
		Name:	Jeffrey H. Donelson
		Title:	Assistant Secretary
SHEA HOMES:
SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership d/b/a Shea Homes
By:	J. F. SHEA, CO., INC., a Nevada corporation, its general partner
	By:
	Name:	Jeffrey D. Willis
	Title:	Assistant Secretary
	By:
	Name:	Jeffrey H. Donelson
	Title:	Assistant Secretary

- 5 -

SCHEDULE A

TO

OPERATING AGREEMENT

Initial Capital Contribution

Schedule A-1

Assets

ADAMS COUNTY, COLORADO

Wells

1. Custy #1 and #3, Section l5, Township 2 South, Range 66 West

2. State AB 1, 2 and 4, Section 16, Township 2 South, Range 66 West

Leases

1.	Lessor:	Kenneth J. Custy, et ux
	Lessee:	Karen K. Clair
	Dated:	December 30, 1981
	Recorded:	Book 2613, Page 347
	Lands:	Township 2 South, Range 66 West
		Section 15:     W/2 containing 320 acres, more or less
2.	Lessor:	Kenneth J. Custy, et al
	Lessee:	Karen K. Clair
	Dated:	April 20, 1992
	Recorded:	Book 2657, Page 908
	Lands:	Township 2 South. Range 66 West
		Section 15:     E/2 containing 320 acres, more or less
3.	Lessor:	State of Colorado 70/8160-S
	Lessee:	Pan American Petroleum Corporation
	Dated:	June 2, 1970
	Recorded:	Book 1974, Page 711
	Lands:	Township 2 South, Range 66 West
		Section 16:     S/2, NE/4

The gathering lines and associated easements owned by Seller which service or have serviced the aforesaid wells and leases, including the pipeline that extends to the north of the State AB Lease through Sections 16, 9 and 4 of Township 2 South, Range 66 West as general depicted in Exhibit C.

All equipment and other property rights appurtenant to the wells and leases.

Thorofare’s Working and Net Revenue Interests

Well Name	Thorofare ‘Working Interest	Thorofare Net Revenue Interest
Custy #1	.26134044	.21782489
Custy #3	.22870659	.18639643
State of CO AB #1, #2, #4	.30000000	.26250000

Price = $40,000.00

Map of Gathering System and Oil and Gas Wells

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement” in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

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as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:	J.F. Shea L.P., its sole General Partner
	By:	JFS Management, L.P., its sole General Partner
		By: J.F. Shea Construction Management, Inc., its sole General Partner
		By:
		Name:	James G. Shontere
		Title:	Secretary
		By:
		Name:	Robert O’Dell
		Title:	Treasurer

SHEA CAPITAL II, LLC, as the sole Member of Tirlogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By:	J.F. Shea L.P., its sole General Partner
		By: JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’Dell
				Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer
SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By: J.F. SHEA CO., INC., its Manager
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name: Title:	James G. Shontere Secretary
By:
Name: Title:	Robert O’Dell Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bay view Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC
By:
By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.63

Exhibit 3.63

	State of California Kevin Shelley Secretary of State LIMITED LIABILITY COMPANY ARTICLES OF ORGANIZATION	File # 200435610103
NOTE:	A limited liability company is not permitted to render professional services.
A $70.00 filing fee must accompany this form.
IMPORTANT – Read instructions before completing this form.		This Space For Filing Use Only

1.       NAME OF THE LIMITED LIABILITY COMPANY (END THE NAME WITH THE WORDS “LIMITED LIABILITY COMPANY,” “LTD. LIABILITY CO.,” OR THE ABBREVIATIONS “LLC” OR “L.L.C.”)

Trilogy Antloch, LLC

2.       THE PURPOSE OF THE LIMITED LIABILITY COMPANY IS TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY FOR WHICH A LIMITED LIABILITY COMPANY MAY BE ORGANIZED UNDER, THE BEVERLY-KILLEA LIMITED LIABILITY COMPANY ACT.

INITIAL AGENT FOR SERVICE OF PROCESS - If the agent is an Individual, the agent must reside in California and both Item 3 and 4 must be completed. If the agent is a corporation the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 3 must be completed (leave Item 4 blank).

  3.       NAME OF THE INITIAL AGENT FOR  SERVICE OF PROCESS   Max B. Johnson

4.       IF AN INDIVIDUAL, THE ADDRESS OF THE INITIAL AGENT FOR SERVICE OF PROCESS IN CALIFORNIA

  ADDRESS   655 Brea Canyon Road

CITY    Walnut                                                                                          STATE     CA        ZIP CODE 91789

5.       THE LIMITED LIABILITY COMPANY WILL BE MANAGED BY: (CHECK ONLY ONE)

x       ONE MANAGER

¨       MORE THAN ONE MANAGER

¨       ALL LIMITED LIABILITY COMPANY MEMBER(S)

6.       ADDITIONAL INFORMATION SET FORTH ON THE ATTACHED PAGES, IF ANY, IS INCORPORATED HEREIN BY THIS REFERENCE AND MADE A PART OF THIS CERTIFICATE,

7.       TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY (FOR INFORMATIONAL PURPOSES ONLY)

 residential development

8.       I DECLARE I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.

	December 17, 2004
SIGNATURE OF ORGANIZER	DATE
Ronald L. Lakey
TYPE OR PRINT NAME OF ORGANIZER

9.       RETURN TO:

 NAME            [                                                                                                                   ]

 FIRM

 ADDRESS

 CITY/STATE

 ZIP CODE      [                                                                                                                  ]

LLC-1 (REV 06/2004) APPROVED BY SECRETARY OF STATE

	State of California Secretary of State	L
	STATEMENT OF INFORMATION (Limited Liability Company)	58
	Filing Fee $20.00. If amendment, see instructions.
	IMPORTANT — READ INSTRUCTIONS BEFORE COMPLETING THIS FORM
1.     LIMITED LIABILITY COMPANY NAME (Please do not alter if name is preprinted.)         Trilogy Antioch, LLC
			AEC
			This Space For Filing Use Only

DUE DATE:

FILE NUMBER AND STATE OR PLACE OF ORGANIZATION

2.     SECRETARY OF STATE FILE NUMBER	3.     STATE OR PLACE OF ORGANIZATION
200435610103	California
COMPLETE ADDRESSES FOR THE FOLLOWING (Do not abbreviate the name of the city. Items 4 and 5 cannot be P.O. Boxes.)

4.     STREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE		CITY AND STATE		ZIP CODE
655 Brea Canyon Road		Walnut, CA		91789
5.     CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (DOMESTIC ONLY)		CITY	STATE	ZIP CODE
655 Brea Canyon Road		Walnut	CA	91789
NAME AND COMPLETE ADDRESS OF THE CHIEF EXECUTIVE OFFICER, IF ANY
6.     NAME	ADDRESS	CITY AND STATE		ZIP CODE
NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, OR IF NONE HAVE BEEN APPOINTED OR ELECTED, PROVIDE THE NAME AND ADDRESS OF EACH MEMBER (Attach additional pages, if necessary.)
7.     NAME	ADDRESS	CITY AND STATE		ZIP CODE
Shea Capital I, LLC	655 Brea Canyon Road	Walnut, CA		91789
8. NAME	ADDRESS	CITY AND STATE		ZIP CODE
9. NAME	ADDRESS	CITY AND STATE		ZIP CODE
AGENT FOR SERVICE OF PROCESS (If the agent is an individual, the agent must reside in California and Item 11 must be completed with a California address. If the agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations Code section 1505 and Item 11 must be left blank.)
10.   NAME OF AGENT FOR SERVICE OF PROCESS
Max B. Johnson
11.   ADDRESS OF AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN  INDIVIDUAL		CITY	STATE	ZIP CODE
655 Brea Canyon Road		Walnut	CA	91789
TYPE OF BUSINESS
12.   DESCRIBE THE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY
residential development
13.   THE INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT.

Max B. Johnson		Vice President	6/7/05
TYPE OR PRINT NAME OF PERSON COMPLETING THE FORM	SIGNATURE	TITLE	DATE

  LLC-12 (REV 03/2005) APPROVED BY SECRETARY OF STATE

EX-3.64

Exhibit 3.64

OPERATING AGREEMENT

OF

TRILOGY ANTIOCH, LLC

This Operating Agreement (this “Agreement”) of TRILOGY ANTIOCH, LLC, a California limited liability company (the “Company”), is entered into effective as of the 3rd day of June, 2005, by Shea Capital I, LLC, a Delaware limited liability company (the sole Member of the Company).

RECITALS

The Member desired to form the Company to complete infrastructure and construct homes on real property contributed by Member.

Therefore, the Member formed a limited liability company under the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”); and

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a California limited liability company by the filing of an Articles of Organization pursuant to the Act with the California Secretary of State. A Copy of the Articles are attached to this Agreement as Exhibit A.

1.2 Name. The name of the Company is TRILOGY ANTIOCH, LLC and all Company business shall be conducted under that name or such other names that comply with the applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to complete infrastructure and construct homes on real property contributed by Member, and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of California shall be located at 655 Brea Canyon Road, Walnut, California 91789, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be Max B. Johnson, 655 Brea Canyon Road, Walnut, California 91789. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Beverly-Killea Limited Liability Company Act, as amended from time to time.

Agreement. This Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Articles of Organization of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. TRILOGY ANTIOCH, LLC, a California limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. Shea Capital I, LLC, a Delaware limited liability company.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 17254 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 17254 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

Section 4 MANAGEMENT

4.1 Management by Manager. The business and affairs of the Company shall be managed by the Shea Capital I, LLC, a Delaware limited liability company as its statutory Manager. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

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4.2 Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the California Corporation Code, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 17101 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 17250 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(l)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

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8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the California Secretary of State a certificate of cancellation in accordance with Section 17350 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of California.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

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9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A             Articles of Organization

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

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Shea Capital I, LLC, a Delaware limited liability company

By:	Shea Homes Limited Partnership, a California limited partnership
Its:	Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership
	Its:	General Partner
		By:	JFS Management, L.P. a Delaware limited partnership
		Its:	General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation
			Its:	General Partner
				By:
					Paul E. Mosley
				Its:	Vice President
				By:
					Max B. Johnson
				Its:	Vice President

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OPERATING AGREEMENT

OF TRILOGY ANTIOCH, LLC

EXHIBIT A

Articles of Organization

7

AMENDED AND RESTATED OPERATING AGREEMENT

OF

TRILOGY ANTIOCH, LLC

This Operating Agreement (this “Agreement”) of TRILOGY ANTIOCH, LLC, a California limited liability company (the “Company”), is entered into effective as of the 1^st day of October, 2005, by Shea Capital II, LLC, a Delaware limited liability company (the sole Member of the Company).

RECITALS

Company was formed to complete infrastructure and construct homes on real property contributed by Member; and

Company was formed under the provisions of the Beverly-Killea Limited Liability Company Act as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of California (the “Act”).

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a California limited liability company by the filing of an Articles of Organization pursuant to the Act with the California Secretary of State. A copy of the Articles are attached to this Agreement as Exhibit A.

1.2 Name. The name of the Company is TRILOGY ANTIOCH, LLC and all Company business shall be conducted under the name or such other names that comply with the applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to complete infrastructure and construct homes on real property contributed by Member, and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of California shall be located at 655 Brea Canyon Road, Walnut, California 91789, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be Max B. Johnson, 655 Brea Canyon Road, Walnut, California 91789. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Beverly-Killea Limited Liability Company Act, as amended from time to time.

Agreement. This Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Articles of Organization of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. TRILOGY ANTIOCH, LLC, a California limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. Shea Capital II, LLC, a Delaware limited liability company.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the Company. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 17254 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 17254 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

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Section 4 MANAGEMENT

4.1 Management by Manager. The business and affairs of the Company shall be managed by the Shea Capital II, LLC, a Delaware limited liability company, as its statutory Manager. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

4.2 Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the California Corporation Code, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 17101 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 17250 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

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(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the California Secretary of State a certificate of cancellation in accordance with Section 17350 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of California.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

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9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A             Articles of Organization

9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

SIGNATURE PAGE TO FOLLOW

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Shea Capital II, LLC, a Delaware limited liability company
	By:	Shea Homes Limited Partnership, a California limited partnership
	Its:	Manager
		By:	J.F. Shea, L.P.,
			a Delaware limited partnership
		Its:	General Partner
			By:	JFS Management, L.P.
			Its:	a Delaware limited partnership General Partner
				By:	J.F. Shea Construction Management, Inc., a California corporation
				Its:	General Partner
					By:
					Name:	Robert R. O’Dell
					Title:	Treasurer
					By:
					Name:	Paul E. Mosley
					Title:	Vice President

SIGNATURE PAGE OF AMENDED AND RESTATED OPERATING AGREEMENT OF TRILOGY ANTIOCH, LLC EFFECTIVE AS OF THE 1^ST DAY OF OCTOBER, 2005

6

AMENDED AND RESTATED OPERATING AGREEMENT

OF

TRILOGY ANTIOCH, LLC

EXHIBIT A

Articles of Organization

7

ACKNOWLEDGEMENT

The undersigned, Shea Capital I, LLC, a Delaware limited liability company, acknowledges and agrees that all of its interest in Trilogy Antioch, LLC, a California corporation, has been transferred and assigned to Shea Capital II, LLC, a Delaware corporation. The undersigned agrees to execute such further documents or instruments as are reasonably required in order to evidence such transfer and assignment.

Date: October 1, 2005

Shea Capital I, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership
Its:	Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership
	Its:	General Partner
		By:	JFS Management, L.P. a Delaware limited partnership
		Its:	General Partner
			By:	J.F. Shea Construction Management, Inc. a California corporation
			Its:	General Partner
				By:
				Name:	Robert R. O’Dell
				Title:	Treasurer
				By:
				Name:	Paul E. Mosley
				Title:	Vice President

OMNIBUS AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT/OPERATING AGREEMENT

OF EACH OF

215 BAYVIEW APARTMENTS, LLC,

COAST CABLE PARTNERS,

HAWKERBLUE, LLC,

MONTY GREEN HOLDINGS, LLC,

SERENADE AT NATOMAS, LLC,

SH CASCADES, LLC,

SH JUBILEE, LLC,

SH JUBILEE MANAGEMENT, LLC,

SHEA BAKER RANCH, LLC

SHEA BREA DEVELOPMENT, LLC,

SHEA CAPITAL II, LLC,

SHEA GSW HOLDINGS, LLC,

SHEA GSW INVESTMENTS, LLC,

SHEA OTAY VILLAGE 11, LLC,

SHEA PROCTOR VALLEY, LLC,

SHEA RIVERMARK VILLAGE, LLC,

SHEA LA QUINTA LLC,

SHEA NINTH AND COLORADO, LLC,

SHEA TONNER HILLS, LLC,

SHEA VICTORIA GARDENS, LLC,

TRILOGY ANTIOCH, LLC,

TOWER 104 GATHERING, LLC,

TOWER 104 OIL, LLC,

TRW BTS ONE, LLC,

AND

WALDEN VILLAGE PARTNERS, LLC

November 5, 2010

This Omnibus Amendment (this “Amendment”) to the Operating Agreement of 215 BAYVIEW APARTMENTS, LLC, a California limited liability company; the Agreement of Partnership of COAST CABLE PARTNERS, a California general partnership; the Operating Agreement of HAWKERBLUE, LLC, a California limited liability company; the First Amended and Restated Operating Agreement of MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company; the Operating Agreement of SERENADE AT NATOMAS, LLC, a California limited liability company; the Limited Liability Company Agreement of SH CASCADES, LLC, a Florida limited liability company; the Limited Liability Company Agreement of SH JUBILEE, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company; the Operating Agreement of SHEA BAKER RANCH, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company; the Amended and Restated Limited Liability Company Agreement of SHEA CAPITAL II, LLC, a Delaware limited liability company; the Operating Agreement of SHEA GSW HOLDINGS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA GSW INVESTMENTS, LLC, a Colorado limited liability company; the Operating Agreement of SHEA LA QUINTA LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company; the Operating

Agreement of SHEA OTAY VILLAGE 11, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA PROCTOR VALLEY, LLC, a California limited liability company; the Amended and Restated Operating Agreement of SHEA RIVERMARK VILLAGE, LLC, a California limited liability company; the Limited Liability Company Agreement of SHEA TONNER HILLS, LLC, a Delaware limited liability company; the Limited Liability Company Agreement of SHEA VICTORIA GARDENS, LLC a Florida limited liability company; the Operating Agreement of TOWER 104 GATHERING, LLC, a Colorado limited liability company; the Operating Agreement of TOWER 104 OIL, LLC, a Colorado limited liability company; the Amended and Restated Operating Agreement of TRILOGY ANTIOCH, LLC, a California limited liability company; the Operating Agreement of TRW BTS ONE, LLC, a Colorado limited liability company; and the Operating Agreement of WALDEN VILLAGE PARTNERS, LLC, a California limited liability company (collectively, such limited liability companies, the “Companies”, and such operating agreements and limited liability company agreements, the “Agreements”) is made and entered into the date first written above by the undersigned, constituting all of the members of the Companies (collectively, the “Members”).

RECITALS

A. The Members have previously entered into the respective Agreements.

B. The Members now desire to amend the respective Agreements, in accordance with the terms thereof, to provide for the equity interests in each Company to be certificated.

AGREEMENT

NOW THEREFORE, in consideration of their mutual promises, covenants and agreements, and notwithstanding anything to the contrary in the Agreements, the parties hereto do hereby promise, covenant and agree as follows:

1. Recitals and Capitalized Terms. The Recitals set forth hereinabove are hereby incorporated for reference as though fully rewritten herein. Unless otherwise set forth herein, all capitalized terms shall have the same meaning as set forth in the respective Agreements. All references to “Agreement“ in each of the Agreements shall be deemed to refer to such Agreement as modified by this Amendment.

2. Certificate of Limited Liability Company Interests. Each of the Agreements shall be amended by inserting a new article in the appropriate numerical order at the end of each Agreement as follows:

“ARTICLE [    ]

RIGHTS OF SECURED PARTY

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, if any interests in the Company (the “Membership Interests”) have been pledged or are subject to the granting of a security interest or other encumbrance therein (a “Pledge”) by the holder thereof (the beneficiary of a Pledge being referred to herein as a “Secured Party”), (a) all rights and remedies of such Secured Party (including but not limited to voting rights) with respect to the Membership Interests contained in any document, agreement or instrument giving effect to or governing such Pledge and the rights and remedies associated therewith (a “Security Document”) shall be given effect by the Company and the Members, (b) the Company and the Members shall take all such action and shall execute and deliver all such agreements, documents or instruments

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as may be required by the terms and conditions of the Security Document and (c) if the Secured Party becomes the holder of such Membership Interests, then, at such time, the Secured Party shall have all of the rights associated with such Membership Interests under this Agreement and applicable law.

“Section [    ] Notwithstanding anything to the contrary contained in this Agreement, all restrictions on transfer and assignability of any Membership Interests shall be inapplicable, and of no force and effect, as to any transfer of any Membership Interest to a Secured Party in connection with any exercise of rights or remedies by the Secured Party in accordance with the Security Document or as may be permitted by applicable law. Contemporaneously with any transfer of any Member’s Membership Interests to the Secured Party, the transferor Member shall cease to be a member of the Company.

“Section [    ] All of the Membership Interests shall be evidenced by a certificate showing the name of the Member and the percentage of Membership Interests held by that Member. Each Membership Interest certificate shall be signed by an officer of the Company or of its manager or managing member, as the case may be, and such certificates may be signed in counterparts.

“Section [    ] Each of the Membership Interest certificates representing the Members’ interest in the Company shall constitute a “security” within the meaning of (A) Article 8 of the Uniform Commercial Code (including Section 8-102(a) thereof) as in effect from time to time in the state of organization of the Company and (B) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company and in its Membership Interests for all purposes shall be personal property. The Members have no interest in specific Company property.

“Section [    ] At all times prior to the termination of any Pledge of the Membership Interests in accordance with the Security Document (the date of such termination, the “Termination Date”), neither the Members nor [Managers/Directors] will, without the prior written consent of the Secured Party, (i) amend this Agreement to provide that any Membership Interests (x) shall not be evidenced by a certificate or (y) shall not be securities governed by Article 8 of the Uniform Commercial Code or (ii) otherwise “opt out” of Article 8 of the Uniform Commercial Code.

“Section [    ] The provisions of this Article [    ] shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and any future Members [or Managers/Directors] and their respective successors and assigns.

“Section [    ] At all times prior the Termination Date, none of the provisions of this Article [    ] or any other provision of this Agreement may be amended in any way which alters, limits, restricts or adversely affects a Secured Party’s ability to exercise its rights with respect to the Membership Interests, without the prior written consent of such Secured Party.”

3. Miscellaneous. All other terms and provisions of each Agreement which are not expressly amended hereby are hereby ratified, affirmed and approved. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instruments. Facsimile signatures shall be valid as if manually signed.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the date first set forth above.

SHEA HOMES LIMITED PARTNERSHIP, as the sole Member of Monty Green Holdings, LLC, Shea Tonner Hills, LLC, Shea Ninth and Colorado, LLC, Shea Brea Development, LLC, Shea Otay Village 11, LLC and Shea Proctor Valley, LLC, as the Manager of Tower 104 Gathering, LLC, Tower 104 Oil, LLC and Walden Village Partners, LLC, and as a member of Shea Capital II, LLC
By:		J.F. Shea L.P., its sole General Partner
		By:		JFS Management, L.P., its sole General Partner
				By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’Dell
				Title:	Treasurer
SHEA CAPITAL II, LLC, as the sole Member of Trilogy Antioch, LLC and Shea Victoria Gardens, LLC
By:	Shea Homes Limited Partnership, its Manager
	By:	J.F. Shea L.P., its sole General Partner
		By: JFS Management, L.P., its sole General Partner
			By: J.F. Shea Construction Management, Inc., its sole General Partner
				By:
				Name:	James G. Shontere
				Title:	Secretary
				By:
				Name:	Robert O’Dell
				Title:	Treasurer

J.F. SHEA CO., INC., as the sole Member of Shea GSW Investments, LLC and as the Manager of Hawkerblue, LLC
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer
SHEA GSW INVESTMENTS, LLC, as the sole Member of Shea GSW Holdings, LLC
By: J.F. SHEA CO., INC., its Manager
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer
SHEA HOMES, INC., as the sole Member of Serenade at Natomas, LLC, SH Cascades, LLC, Shea La Quinta, LLC, SH Jubilee, LLC and SH Jubilee Management, LLC, and as a member of Shea Capital II, LLC, and as the sole Member and Manager of TRW BTS One, LLC
By:
Name: Title:	James G. Shontere Secretary
By:
Name: Title:	Robert O’Dell Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

SHEA PROPERTIES MANAGEMENT COMPANY, INC., as Manager of 215 Bayview Apartments, LLC, Shea Baker Ranch, LLC and Shea Rivermark Village, LLC
By:
By:	Ronald L. Lakey
Its:	Vice President
By:
By:	James G. Shontere
Its:	Secretary

J.F. SHEA CO., INC., as Manager of Coast Cable Partners
By:
Name:	James G. Shontere
Title:	Secretary
By:
Name:	Robert O’Dell
Title:	Treasurer

Signature Page to Omnibus Amendment to LLC Agreements

EX-3.65

Exhibit 3.65

FORM B C A-47

BEFORE ATTEMPTING TO EXECUTE THESE BLANKS BE SURE TO READ CAREFULLY

THE INSTRUCTIONS ON THE BACK THEREOF.   (THESE ARTICLES MUST BE FILED IN DUPLICATE) C

	}
STATE OF ILLINOIS,
		ss.
Cook         COUNTY
TO Alan J. Dixon, Secretary of State

The undersigned, 6092 10

Name	Number	Street	City	State
Susan Greene, 444 North Michigan Avenue, #2300, Chicago, I11, 6011

being one or more natural persons of the age of twenty-one years or more or a corporation, and having subscribed to shares of the corporation to be organized pursuant hereto, for the purpose of forming a corporation under “The Business Corporation Act” of the State of Illinois, do hereby adopt the following Articles of Incorporation:

ARTICLE ONE

PAID

The name of the corporation hereby incorporated is: UDC Advisory Services, Inc.

JUL 28 1977
ALAN J. DIXON
Secretary of State

ARTICLE TWO

The address of its initial registered office in the State of Illinois is: 444 North Michigan Avenue, #2 Street, in the City of Chicago (60611) County of Cook and the name of its initial Registered Agent at said address is: Arnold M. Flank

(Zip Code)

ARTICLE THREE

The duration of the corporation is: perpetual

ARTICLE FOUR

The purpose or purposes for which the corporation is organized are:

To engage in consultant, advisory and any other services in connection with the investment in real estate or right or interest in real estate of any kind, whether of a rental nature or otherwise on its own behalf and on behalf of others.

To act as principal, agent, or broker, and on commission or otherwise: to buy, sell, exchange, lease, let, grant, or take licenses in respect of, improve, develop, repair, manage, maintain, and operate real property of every kind, corporeal and incorporeal, and every kind of estate, right, or interest therein or pertaining thereto. Generally to do everything suitable, proper, and conducive to the successful conduct of a real estate agency and brokerage business in all its branches and departments.

(SEE ATTACHED)

ARTICLE FIVE

PARAGRAPH 1: The aggregate number of shares which the corporation is authorized to issue is 1,000,000 divided into one (1) classes. The designation of each class, the number of shares of each class, and the par value, if any, of the shares of each class, or a statement that the shares of any class are without par value are as follows:

Class	Series (If any)		Number of Shares		Par value per share or statement that shares are without par value
Common		None		1,000,000	$0.01 Par Value

PARAGRAPH 2: The preferences, qualifications, limitations, restrictions and the special or relative rights it respect of the shares of each class are:

None, and no holder of stock of the corporation shall, as such holder, have any preemptive right to subscribe for or to purchase:

(a) any stock of any class, now or hereafter authorized, or any warrants, options, or other instruments that shall confer upon the holders thereof the right to subscribe for or purchase or receive from the corporation any stock of any class which the corporation may issue or sell, whether or not the same shall be exchangeable for any stock of the corporation of any class:

-or-

ARTICLE IV

(CONTINUED)

To purchase, exchange, acquire, lease, own, mortgage encumber, improve, or cause to be improved, use, lend, borrow, produce, manufacture, assemble, construct, operate, service, maintain, convey and otherwise dispose of, sell, handle, import, export, subdivide, plat, trade and deal in any property, real, personal or mixed, choses in action, or any interest therein, either directly or indirectly, as licensee or franchisee, individually or in association with other individuals, corporations, partnerships, or entities whether for the account of the corporation, or as agent or representative for other individuals, partnerships, firms, corporations, or entities, whether public, governmental, or private, and generally to engage in and conduct any form of manufacturing, mercantile, service or real estate enterprise or business as may be necessary or convenient in connection with any business of the corporation not contrary to the Illinois Business Corporation Act, within the State of Illinois, and in the various other states, territories, and dependencies of the United States, in the District of Columbia, and in any or all foreign countries, not as real estate brokers.

To do each and every thing necessary, suitable or proper for the accomplishment of any of the purposes or the attainment of any one or more of the objects herein enumerated either alone, or in association with, or as agent or representative for, other corporations (whether public, governmental or private), partnerships, individuals, or entities.

The enumeration herein of the objects and purposes of the corporation shall be construed as powers as well as objects and purposes, and shall not be deemed to exclude by inference any powers, objects or purposes which the corporation is empowered to exercise, whether expressly by force of the laws of the State of Illinois now or hereafter in effect, or impliedly by the reasonable construction of the said laws.

All officers who actively participate in the brokerage business for the corporation and all salesmen employed by the corporation who hold a current Certificate of Registration issued by the Department of Registration and Education.

my         gation which the corporation may issue or sell that shall be convertible into or exchangeable for any shares of the capital stock of the corporation of any class or to which shall be attached or shall appertain any options, or other instruments the right to subscribe for or purchase or receive from the corporation any shares of its capital stock of any class or classes now or hereafter authorized; and any such stock, warrants, bonds, options, or other obligations may be offered for sale, sold and issued by the Board of Directors to any persons, firms, corporations or others upon such terms as the Directors in their absolute discretion may deem advisable.

ARTICLE SIX

The class and number of shares which the corporation proposes to issue without further report to the Secretary of State, and the consideration (expressed in dollars) to be received by the corporation therefor, are:

Class of shares	Number of shares		Total consideration to be received therefor:
Common		1,000	$	100,000.00
			$

[NOTARY SEAL]

ARTICLE SEVEN

The corporation will not commence business until at least one thousand dollars has been received as consideration for the issuance of shares.

ARTICLE EIGHT

The number of directors to be elected at the first meeting of the shareholders is: one (1)

ARTICLE NINE

PARAGRAPH 1: It is estimated that the value of all property to be owned by the corporation for the following year wherever located will be $                

PARAGRAPH 2: It is estimated that the value of the property to be located within the State of Illinois during the following year will be $                

PARAGRAPH 3: It is estimated that the gross amount of business which will be transacted by the corporation during the following year will be $                

PARAGRAPH 4: It is estimated that the gross amount of business which will be transacted at or from places of business in the State of Illinois during the following year will be $                

NOTE: If all the property of the corporation is to be located in this State and all of its business is to be transacted at or from places of business in this State, or if the incorporators elect to pay the initial franchise tax on the basis of its entire stated capital and paid-in surplus, then the information called for in Article Nine need not be stated.

	}	Incorporators
Susan Greene

NOTE: There may be one or more incorporators. Each incorporator shall be either a corporation, domestic or foreign, or a natural person of the age of twenty-one years or more. If a corporation acts as incorporator, the name of the corporation and state of incorporation shall be shown and the execution must be by its President or Vice-President and verified by him, and the corporate seal shall be affixed and attested by its Secretary or an Assistant Secretary.

OATH AND ACKNOWLEDGMENT

STATE OF ILLINOIS	}	ss.
Cook        County

I, Lee R. Barlakoff, A-Notary Public, do hereby certify that on the 14th day of July 1927 Susan Greene personally appeared before me and being first duly sworn by me acknowledged the signing of the foregoing document in the respective capacities therein set forth and declared that the statements therein contained are true.

IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above written.

[NOTARY SEAL]             Place (NOTARIAL SEAL)             Here
	Notary Public

FORM BCA 5.10/5.20 (rev. Dec. 2003)

STATEMENT OF CHANGE OF

REGISTERED AGENT AND/OR

REGISTERED OFFICE

Business Corporation Act

Jesse White, Secretary of State Department of Business Services Springfield, IL 62756 Telephone (217) 782-3647 www.cyberdriveillinois.com	FILED MAY 24 2004 JESSE WHITE SECRETARY OF STATE
Remit payment in the form of a check or money order payable to the Secretary of State.

                                                                               File # 51218221 Filing Fee: $25.00 Approved:

                     Submit in duplicate                      Type or Print clearly in black ink                      Do not write above this line                     

1.      CORPORATE NAME: UDC ADVISORY SERVICES, INC.

2. STATE OR COUNTRY OF INCORPORATION: ILLINOIS

3. Name and address of the registered agent and registered office as they appear on the records of the office of the Secretary of State (before change):

Registered Agent	National Registered Agents, Inc.
	First Name             Middle Name             Last Name

Registered Office	208 South LaSalle Street, Suite 1855
	Number          Street             Suite No. (A P.O. Box alone is not acceptable)
	Chicago, IL 60604, County of Cook
	City                     ZIP Code                      County

4. Name and address of the registered agent and registered office shall be (after all changes herein reported):

Registered Agent	National Registered Agents, Inc.
	First Name             Middle Name             Last Name

Registered Office	200 West Adams Street
	Number             Street                 Suite No. (A P.O. Box alone is not acceptable)
	Chicago, IL 60606, County of Cook
	City                     ZIP Code                         County

5. The address of the registered office and the address of the business office of the registered agent, as changed, will be identical.

6. The above change was authorized by: (“X” one box only)

a. ¨ By resolution duly adopted by the board of directors.         (Note 5)

b. þ By action of the registered agent.                                         (Note 6)

SEE REVERSE SIDE FOR SIGNATURES(S).

C-135.17

7. (If authorized by the board of directors, sign here. See Note 5)

The undersigned corporation has caused this statement to be signed by a duly authorized officer who affirms, under penalties of perjury, that the facts stated herein are true.

Dated	_________________________________________________,
	(Month & Day)	(Year)	(Exact Name of Corporation)
	(Any Authorized Officer’s Signature)
	(Type or Print Name and Title)

(If change of registered office by registered agent, sign here. See Note 6)

The undersigned, under penalties of perjury, affirms that the facts stated herein are true.

				National Registered Agents, Inc.
Dated	April 25	,	2004	by:
	(Month & Day)		(Year)		(Signature of Registered Agent of Record)

Robert K. Rowell, Vice President

(Type or print name. If the registered agent is a corporation, type or print the name and title of the officer who is signing on its behalf.)

NOTES

1. The registered office may, but need not be the same as the principal office of the corporation. However, the registered office and the office address of the registered agent must be the same.

2. The registered office must include a street or road address; a post office box number alone is not acceptable.

3. A corporation cannot act as its own registered agent.

4. If the registered office is changed from one county to another, then the corporation must file with the recorder of deeds of the new county a certified copy of the articles of incorporation and a certified copy of the statement of change of registered office. Such certified copies may be obtained ONLY from the Secretary of State.

5. Any change of registered agent must be by resolution adopted by the board of directors. This statement must then be signed by a duly authorized officer.

6. The registered agent may report a change of the registered office of the corporation for which he or she is registered agent. When the agent reports such a change, this statement must be signed by the registered agent. If a corporation is acting as the registered agent, a duly authorized officer of such corporation must sign this statement.

EX-3.66

Exhibit 3.66

BY-LAWS

OF

UDC ADVISORY SERVICES, INC.

ARTICLE I

OFFICES

The corporation shall continuously maintain in the State of Illinois a registered office and a registered agent whose office is identical with such registered office, and may have other offices within or without the state.

ARTICLE II

SHAREHOLDERS

SECTION 1. ANNUAL MEETING. An annual meeting of the shareholders shall be held on the third Friday in July of each year for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day.

SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be called either by the president, by the board of directors or by the holders of not less than one-fifth of all the outstanding shares of the corporation, for the purpose or purposes stated in the call of the meeting.

SECTION 3. PLACE OF MEETING. The board of directors may designate any place, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be at

SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, data, and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than forty days before the date of the meeting, or in the case of a merger or consolidation not less than twenty nor more than forty days before the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the records of the corporation, with postage thereon prepaid. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.

SECTION 5. FIXING OF RECORD DATE. For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend, or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the board of directors of the corporation may fix in advance a record date which shall not be more than forty days and, for a meeting of shareholders, not less than ten days, or in the case of a merger or consolidation not less than twenty days, before the date of such meeting. If no record date is fixed, the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be the date on which notice of the meeting is mailed, and the record date for the determination of shareholders for any other purpose shall be the date on which the board of directors adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting.

SECTION 6. VOTING LISTS. The officer or agent having charge of the transfer books for shares of the corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of the shareholder, which list, for a period of ten days prior to such meeting, shall be kept on file at the registered office of the corporation and shall be open to inspection by any shareholder for any purpose germane to the meeting, at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and may be inspected by any shareholder during the whole time of the meeting. The original share ledger or transfer book, or a duplicate thereof kept in this State, shall be prima facie evidence as to who are the shareholders entitled to examine such list or share ledger or transfer book or to vote at any meeting of shareholders.

SECTION 7. QUORUM. The holders of a majority of the outstanding shires of the corporation, present in person or represented by proxy, shall constitute a quorum at any meeting of shareholders; provided that if less than a majority of the outstanding shares are represented at said meeting, a majority of the shares so represented may adjourn the meeting at any time without further notice. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by The Business Corporation Act, the articles of incorporation or these by-laws. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting. Withdrawal of shareholders from any meeting shall not cause failure of a duly constituted quorum at that meeting.

SECTION 8. PROXIES. Each shareholder entitled to vote at a meeting of shareholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.

SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of class, shall be entitled to one vote upon each matter submitted to vote at a meeting of shareholders.

SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine.

Shares standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by his administrator, executor, court appointed guardian, or conservator, either in person or by proxy without a transfer of such shares into the name of such administrator, executor, court appointed guardian, or conservator. Shares standing in the name of a trustee may be voted by him, either in person or by proxy.

Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

Any number of shareholders may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their share, for a period not to exceed ten years, by entering

into a written voting trust agreement specifying the terms and conditions of the voting trust, and by transferring their shares to such trustee or trustees for the purpose of the agreement. Any such trust agreement shall not become effective until a counterpart of the agreement is deposited with the corporation at its registered office. The counterpart of the voting trust agreement so deposited with the corporation shall be subject to the same right of examination by a shareholder of the corporation, in person or by agent or attorney, as are the books and records of the corporation, and shall be subject to examination by any holder of a beneficial interest in the voting trust, either in person or by agent or attorney, at any reasonable time for any proper purpose.

Shares of its own stock belonging to this corporation shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time, but shares of its own stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares at any given time.

SECTION 11. CUMULATIVE VOTING. In all elections for directors, every shareholder shall have the right to vote, in person or by proxy, the number of shares owned by him, for as many persons as there are directors to be elected, or to cumulate said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares shall equal, or to distribute them on the same principle among as many candidates as he shall see fit.

SECTION 12. INSPECTORS. At any meeting of shareholders, the presiding officer may, or upon the request of any shareholder shall appoint one or more persons as inspectors for such meeting.

Such inspectors shall ascertain and report the number of shares represented at the meeting, based upon their determination of the validity and effect of proxies; count all votes and report the results; and do such other acts as are proper to conduct the election and voting with impartiality and fairness to all the shareholders.

Each report of an inspector shall be in writing and signed by him or by a majority of them if there be more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

SECTION 13. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.

SECTION 14. VOTING BY BALLOT. Voting on any question or in any election may be by voice unless the presiding officer shall order or any shareholder shall demand that voting be by ballot.

ARTICLE III

DIRECTORS

SECTION 1. GENERAL POWERS. The business of the corporation shall be managed by its board of directors.

SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the corporation shall be two. Each director shall hold office until the next annual meeting of shareholders or until his successor shall have been elected and qualified. Directors need not be residents of Illinois or shareholders of the corporation. The number of directors may be increased or decreased from time to time by the amendment of this section; but no decrease shall have the effect of shortening the term of any incumbent director.

SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors shall be held without other notice than this by-law, immediately after the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than, such resolution.

SECTION 4. SPECIAL MEETINGS. Special meetings of the board of directors may be called by or at the request of the president or any two directors. The person or persons authorized to call special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors called by them.

SECTION 5. NOTICE. Notice of any special meeting shall be given at least      days previous thereto by written notice to each director at his business address. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegram company. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

SECTION 6. QUORUM. A majority of the number of directors fixed by these by-laws shall constitute a quorum for transaction of business at any meeting of the board of directors, provided that if less than a majority of such number of directors are present at said meeting, a majority of the directors present may adjourn the meeting at any time withour further notice.

SECTION 7. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by statute, these by-laws, or the articles of incorporation.

SECTION 8. VACANCIES. Any vacancy occurring in the board of directors and any directorship to be filled by reason of an increase in the number of directors, may be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose.

SECTION 9. ACTION WITHOUT A MEETING. Unless specifically prohibited by the articles of incorporation or by-laws, any action required to be taken at a meeting of the board of directors, or any other action which may be taken at a meeting of the board of directors, or of any committee thereof may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all the directors entitled to vote with respect to the subject matter thereof, or by all the members of such comittee, as the case may be. Any such consent signed by all the directors or all the members of the committee shall have the same effect as a unanimous vote, and may be stated as such in any document filed with the Secretary of State or with anyone else.

SECTION 10. COMPENSATION. The board of directors, by the affirmative vote of a majority of directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers, or otherwise. By resolution of the board of directors the directors may be paid their expenses, if any, of attendance at each meeting of the board. No such payment previously mentioned in this section shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

SECTION 11. PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

SECTION 12. EXECUTIVE COMMITTEE. The board of directors, by resolution adopted by a majority of the number of directors fixed by the by-laws or otherwise, may designate two or more directors to constitute an executive committee, which committee, to the extent provided in such resolution, shall have and exercise all of the authority of the board of directors in the management of the corporation, except as otherwise required by law. Vacancies in the membership of the committee shall be filled by the board of directors at a regular or special meeting of the board of directors. The executive committee shall keep regular minutes of its proceedings and report the same to the board when required.

ARTICLE IV

OFFICERS

SECTION 1. NUMBER. The officers of the corporation shall be a president, one or more vice-presidents (the number thereof to be determined by the board of directors), a treasurer, a secretary, and such assistant treasurers, assistant secretaries or other officers as may be elected by the board of directors. Any two or more offices may be held by the same person, except the offices of president and secretary.

SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Vacancies may be filled or new offices created and filled at any meeting of the board of directors. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Election of an officer shall not of itself create contract rights.

SECTION 3. REMOVAL. Any officer elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

SECTION 4. PRESIDENT. The president shall be the principal executive officer of the corporation. Subject to the direction and control of the board of directors, he shall be in charge of the business of the corporation; he shall see that the resolutions and directions of the board of directors are carried into effect except in those instances in which that responsibility is specifically assigned to some other person by the board of directors; and, in general, he shall discharge all duties incident to the office of president and such other duties as may be prescribed by the board of directors from time to time. He shall preside at all meetings of the shareholders and of the board of directors. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation or a different mode of execution is expressly prescribed by the board of directors or these by-laws, he may execute for the corporation certificates for its shares, and any contracts, deeds, mortgages, bonds, or other instruments which the board of directors has authorized to be executed, and he may accomplish such execution either under or without the seal of the corporation and either individually or with the secretary, any assistant secretary, or any other officer thereunto authorized by the board of directors, according to the requirements of the form of the instrument. He may vote all securities which the corporation is entitled to vote except as and to the extent such authority shall be vested in a different officer or agent of the corporation by the board of directors.

SECTION 5. THE VICE-PRESIDENTS. The vice-president (or in the event there be more than one vice-president, each of the vice-presidents) shall assist the president in the discharge of his duties as the president may direct and shall perform such other duties as from time to time may be assigned to him by the president or by the board of directors. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the board of directors, or by the president if the board of directors has not made such a designation, or in the absence of any designation, then in the order of seniority of tenure as vice-president) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation or a different mode of execution is expressly prescribed by the board of directors or these by-laws, the vice-president (or each of them if there are more than one) may execute for the corporation certificates for its shares and any contracts, deeds, mortgages, bonds or other instruments which the board of directors has authorized to be executed, and he may accomplish such execution either under or without the seal of the corporation and either individually or with the secretary, any assistant secretary, or any other officer thereunto authorized by the board of directors, according to the requirements of the form of the instrument.

SECTION 6. THE TREASURER. The treasurer shall be the principal accounting and financial officer of the corporation. He shall: (a) have charge of and be responsible for the maintenance of adequate books of account for the corporation; (b) have charge and custody of all funds and securities of the corporation, and be responsible therefor and for the receipt and disbursement thereof; and (c) perform all the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the board of directors. If required by the board of directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the board of directors may determine.

SECTION 7. THE SECRETARY. The secretary shall: (a) record the minutes of the shareholders’ and of the board of directors’ meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation; (d) keep a register of the post-office address of each shareholder which shall be furnished to the secretary by such shareholder; (e) sign with the president, or a vice-president, or any other officer thereunto authorized by the board of directors, certificates for shares of the corporation, the issue of which shall have been authorized by the board of directors, and any contracts, deeds, mortgages, bonds, or other instruments which the board of directors has authorized to be executed, according to the requirements of the form of the instrument, except when a different mode of execution is expressly prescribed by the board of directors or these by-laws; (f) have general charge of the stock transfer books of the corporation; (g) perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the board of directors.

SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The assistant treasurers and assistant secretaries shall perform such duties as shall be assigned to them by the treasurer or the secretary, respectively, or by the president or the board of directors. The assistant secretaries may sign with the president, or a vice-president, or any other officer thereunto authorized by the board of directors, certificates for shares of the corporation, the issue of which shall have been authorized by the board of directors, and any contracts, deeds, mortgages, bonds, or other instruments which the board of directors has authorized to be executed, according to the requirements of the form of the instrument, except when a different mode of execution is expressly prescribed by the board of directors or these by-laws. The assistant treasurers shall respectively, if required by the board of directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the board of directors shall determine.

SECTION 9. SALARIES. The salaries of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation.

ARTICLE V

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1. CONTRACTS. The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

SECTION 2. LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances.

SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board of directors.

SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the board of directors may select.

ARTICLE VI

CERTIFICATES FOR SHARES AND

THEIR TRANSFER

SECTION l. CERTIFICATES FOR SHARES. Certificates representing shares of the corporation shall be signed by the president or a vice-president or by such officer as shall be designated by resolution of the board of directors and by the secretary or an assistant secretary, and shall be sealed with the seal or a facsimile of the seal of the corporation. If both of the signatures of the officers be by facsimile, the certificate shall be manually signed by or on behalf of a duly authorized transfer agent or clerk. Each certificate representing shares shall be consecutively numbered or otherwise identified, and shall also state the name of the person to whom issued, the number and class of shares (with designation of series, if any), the date of issue, that the corporation is organized under Illinois law, and the par value or a statement that the shares are without par value. If the corporation is authorized and does issue shares of more than one class or of series within a class, the certificate shall also contain such information or statement as may be required by law.

The name and address of each shareholder, the number and class of shares held and the date on which the certificates for the shares were issued shall be entered on the books of the corporation. The person in whose name shares stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation.

SECTION 2. LOST CERTIFICATES. If a certificate representing shares has allegedly been lost or destroyed the board of directors may in its discretion, except as may be required by law, direct that a new certificate be issued upon such indemnification and other reasonable requirements as it may impose.

SECTION 3. TRANSFERS OF SHARES. Transfers of shares of the corporation shall be recorded on the books of the corporation and, except in the case of a lost or destroyed certificate, on surrender for cancellation of the certificate for such shares. A certificate presented for transfer must be duly endorsed and accompanied by proper guaranty of signature and other appropriate assurances that the endorsement is effective.

ARTICLE VII

FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the board of directors.

ARTICLE VIII

DIVIDENDS

The board of directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its articles of incorporation.

ARTICLE IX

SEAL

The corporate seal shall have inscribed thereon the name of the corporation and the words “Corporate Seal, Illinois”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

ARTICLE X

WAIVER OF NOTICE

Whenever any notice is required to be given under the provisions of these by-laws or under the provisions of the articles of incorporation or under the provisions of The Business Corporation Act of the State of Illinois, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE XI

AMENDMENTS

The power to make, alter, amend, or repeal the by-laws of the corporation shall fee vested in the board of directors, unless reserved to the shareholders by the articles of incorporation. The by-laws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of Incorporation.

SUGGESTION FOR INDEMNIFICATION - BY-LAW

INDEMNIFICATION OF OFFICERS,

DIRECTORS, EMPLOYEES AND AGENTS

SECTION 1. The corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment or settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

SECTION 2. The corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

SECTION 3. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in sections 1 and 2, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

SECTION 4. Any indemnification under sections 1 and 2 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in sections 1 and 2. Such determination shall be made (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the shareholders.

SECTION 5. The indemnification provided by this article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any contract, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

SECTION 6. The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this article.

NOTE: Attorneys are well advised to keep in mind that there is no statutory authority for the inclusion in the by-laws of indemnification provisions.

EX-3.67

Exhibit 3.67

666012        0023

ARTICLES OF INCORPORATION

OF

UDC HOMES CONSTRUCTION, INC.

1. Name: The name of the corporation (hereinafter called “Corporation”) shall be UDC Homes Construction, Inc.

2. Purpose: The purpose for which this Corporation is organized is the transaction of any and all lawful business for which corporations may be incorporated under the laws of the State of Arizona, as they may be amended from time to time.

3. Initial Business: The Corporation initially intends to conduct the business of construction activities in the State of Arizona; provided, however, that such initial intention shall in no manner whatever limit the character of the business which the Corporation may ultimately conduct.

4. Authorized Capital: The authorized capital stock of this Corporation shall be 100 shares of common stock, par value $1.00 per share.

5. Statutory Agent: The name and address of the initial statutory agent of the Corporation is Ronald E. Lowe, Esq., Lowe & Berman, P.A., 2901 North Central Avenue, Suite 1100, Phoenix, Arizona 85012.

6. Known Place of Business: The known place of business of the Corporation shall initially be 4812 South Mill Avenue, Tempe, Arizona 85282, but a different and other offices and places for conducting business, both within and without the State of Arizona, may be established from time to time by the Board of Directors.

7. Board of Directors: The initial Board of Directors shall consist of two (2) directors. The persons who are to serve as directors until the first annual meeting of the shareholders or until their successors are elected and qualified are: Richard C. Kraemer, 4812 South Mill Avenue, Tempe, Arizona 85282 and Robert H. Daskal, 4812 South Mill Avenue, Tempe, Arizona 85282. Otherwise, the number of persons to serve on the Board of Directors shall be fixed by the Bylaws of the Corporation.

8. Quorum: A quorum at any meeting of the Board of Directors shall consist of a majority of the number of directors then serving, but not less than two (2) directors, provided that if and when a Board of Directors comprised of one member is authorized, or in the event that only one director is then serving, then one director shall constitute a quorum.

9. Incorporators: The names and addresses of the incorporators of the Corporation are:

Robert H. Daskal

4812 South Mill Avenue

Tempe, Arizona 85282

Gina M. Self

4812 South Mill Avenue

Tempe, Arizona 85282

All powers, duties and responsibilities of the incorporators shall cease at the time of filing of these Articles of Incorporation with the Arizona Corporation Commission.

10. Distributions From Capital Surplus: The Board of Directors of the Corporation may, from time to time, distribute on a pro rata basis to its shareholders out of the capital surplus of the Corporation a portion of its assets, in cash or in property.

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11. Indemnification of Officers, Directors, Employees and Agents: Subject to the further provisions hereof, the Corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to legal fees, judgments, penalties, fines, and amounts paid in settlement or compromise, which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as a director, officer, employee, or agent of the Corporation, whether or not any action is or has been filed against them and whether or not any settlement or compromise is approved by a court. Indemnification shall be made by the Corporation whether the legal action brought or threatened is by or in the right of the Corporation or by any other person. Whenever any existing or former director, officer, employee, or agent shall report to the President of the Corporation or the Chairman of the Board of Directors that he or she has incurred or may incur expenses, including but not limited to legal fees, judgments, penalties, fines, and amounts paid in settlement or compromise in a legal action brought or threatened against him or her for or on account of any action or omission alleged to have been committed by him or her while acting within the scope of his or her employment or service as a director, officer, employee or^: agent of the Corporation, the Board of Directors shall, at its next regular or at a special meeting held within a reasonable time thereafter, determine in good faith whether, in regard to the matter involved in the action or contemplated action, such person acted, failed to act or refused to act willfully, or acted with gross negligence or with fraudulent

3

or criminal intent. If the Board of Directors determines in good faith that such person did not act, fail to act, refuse to act willfully, or act with gross negligence or with fraudulent or criminal intent in regard to the matter involved in the action or contemplated action, indemnification shall be mandatory and shall be automatically extended as specified herein, provided, however, that the Corporation shall have the right to refuse indemnification in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the Corporation, at its own expense and through counsel of its own choosing to defend him or her in the action.

12. Repurchase of Shares: The Board of Directors of the Corporation may, from time to time, cause the Corporation to purchase its own shares to the extent of the unreserved and unrestricted earned and capital surplus of the Corporation.

13. Dividends: The Board of Directors may authorize the payment of dividends to the holders of shares of any class of stock payable in shares of any other class.

IN WITNESS WHEREOF, we, the undersigned, have hereunder set our hands this 26 day of February, 1992.

Robert H. Daskal

Gina M. Self

4

STATE OF ARIZONA

NOTICE OF ACCEPTANCE

OF APPOINTMENT OF STATUTORY AGENT

OF

UDC HOMES CONSTRUCTION, INC.

TO: Arizona Corporation Commission

1200 West Washington Street

Phoenix, Arizona 85007

You are hereby notified that the undersigned has accepted the position of Statutory Agent of:

UDC HOMES CONSTRUCTION, INC.

DATED: 2/26/92

Ronald E. Lowe, Esq.

2901 North Central Avenue

Suite 1100

Phoenix, Arizona 85012

Ronald E. Lowe

CONSENT TO USE OF NAME

STATE OF ARIZONA

TO:	Arizona Corporation Commission
	P.O. Box 6019 1200 West Washington Phoenix, Arizona 85009 Attention: Incorporating Division
RE:	Consent to Use of Name “UDC HOMES CONSTRUCTION, INC.”

You are hereby notified that (i) UDC-Universal Development L.P., a Delaware limited partnership doing business in Arizona as UDC Homes Limited Partnership, (ii) UDC Development Limited Partnership, an Arizona limited partnership, (iii) UDC Homes Construction Limited Partnership, an Arizona limited partnership, (iv) UDC Corporation, a Delaware corporation, in its own capacity and as general partner of UDC-Universal Development L.P., as general partner of UDC Development Limited Partnership, and as general partner UDC Homes Construction Limited Partnership, (v) UDC Advisory Services, Inc., an Illinois corporation, and (vi) UDC Mortgage Corporation, an Arizona corporation, hereby grant UDC Homes Construction, Inc., an Arizona corporation, consent to the use by the above-named corporation of the name “UDC HOMES CONSTRUCTION, INC.”

UDC-UNIVERSAL DEVELOPMENT L.P., a Delaware limited partnership doing business in Arizona as UDC HOMES LIMITED PARTNERSHIP
By	UDC CORPORATION, a Delaware corporation, general partner
By
Its	EVP

UDC DEVELOPMENT LIMITED PARTNERSHIP, an Arizona limited partnership
By UDC CORPORATION, a Delaware corporation, general partner
By
Its	EVP
UDC HOMES CONSTRUCTION LIMITED PARTNERSHIP, an Arizona limited partnership
By UDC CORPORATION, a Delaware corporation, general partner
By
Its	EVP
UDC CORPORATION, a Delaware corporation
By
Its	EVP

2

UDC ADVISORY SERVICES, INC., an Illinois corporation
By
Its	PRER
UDC MORTGAGE CORPORATION, an Arizona corporation
By
Its	EXECUTIVE VICE PRESIDENT

254002014030

3

6 6 6 0 1 2         0 0 2 3

20007411

FILED

ARIZONA

SECRETARY OF STATE

September 11, 1987

CERTIFICATE OF LIMITED PARTNERSHIP OF UDC HOMES CONSTRUCTION LIMITED PARTNERSHIP made as of the 1st day of September, 1987, by and between UDC CORPORATION, a Delaware corporation (hereinafter referred to as the “General Partner”), and UDC-UNIVERSAL DEVELOPMENT L.P., a Delaware limited partnership doing business in the State of Arizona as UDC Homes Limited Partnership (hereinafter referred to as the “Limited Partner”) (the General Partner and the Limited Partner being sometimes hereinafter referred to as the “Partners”).

WHEREAS, the General Partner and the Limited Partner have executed a Limited partnership Agreement (hereinafter the “Limited Partnership Agreement”) in furtherance of their desire to form an Arizona limited partnership to be known as UDC Homes Construction Limited Partnership (herein after the “Partnership”).

THE OFFICE OF THE SECRETARY OF STATE

HEREBY DISCLAIMS ANY REPRESENTATION

THAT THESE DOCUMENTS, FILED PURSUANT TO THE [ILLEGIBLE] LIMITED PARTNERSHIP ACT, [ILLEGIBLE]

ARIZONA SECRETARY OF STATE

WHEREAS, the General Partner and the Limited Partner desire to complete the process of forming the Partnership by executing this Certificate of Limited Partnership in duplicate and filing same with the Secretary of State of the State of Arizona.

NOW, THEREFORE, the undersigned hereby certify that:

1. Name. The name of the Partnership is UDC Homes Construction Limited Partnership (hereinafter the “Partnership”).

2. Character of Business. The character of the business of the Partnership is to engage in construction activities in the State of Arizona and to engage in such other lawful activities as the General Partner desires to engage.

3. Office. The address of the Partnership’s office required to be maintained by A.R.S. §29-304 is 4820 South Mill Avenue, Tempe, Arizona 85282.

4. Statutory Agent. The name and address of the agent of the Partnership for service of process required to be maintained by A.R.S. §29-304 is Ronald E. Lowe, Steptoe & Johnson, 3300 North Central Avenue, Suite 1650, Phoenix, Arizona 85012.

5. Partners. The name and business address of the sole general partner of the Partnership is UDC Corporation, a Delaware corporation, 4820 South Mill Avenue, Tempe,

2

Arizona 85282. The name and business address of the sole limited partner of the partnership is UDC-Universal Development L.P., a Delaware limited partnership doing business in the State of Arizona as UDC Homes Limited Partnership, 4820 South Mill Avenue, Tempe, Arizona 85282.

6. Contributions. The General Partner and the Limited Partner have made capital contributions of $1,000.00 and $99,000.00, respectively. Neither the Limited Partner nor the General Partner have agreed to make any additional capital contribution to the Partnership and the Limited Partner shall not be obligated to make any additional contribution to the Partnership. The General Partner has agreed to manage the Partnership.

7. Assignment. Neither the General Partner nor the Limited Partner may assign, pledge, encumber, sell or otherwise dispose of its interest in the Partnership or any part thereof without the written consent of the other Partner.

8. Withdrawal. The Limited Partner does not have the right to withdraw from (or otherwise terminate its membership in) the Partnership, except as is provided in paragraph 7 above. The General Partner, under certain circumstances, does have the right to resign and may be removed in the event of the General Partner’s gross negligence, self-dealing or embezzlement, whereupon the Partnership is to be liquidated and its business activities terminated

3

(unless a new General Partner is appointed pursuant to paragraph 17 of the Limited Partnership Agreement). The proceeds available subsequent to the liquidation of the Partnership’s business are to be applied and distributed in the following order of priority:

(a) To the payment of debts and liabilities of the Partnership (other than any unsecured loans or advances that may have been made by either of the Partners to the Partnership) and the expenses of liquidation.

(b) To the setting up of any reserves which the General Partner (or the liquidation committee appointed in accordance with the Limited Partnership Agreement) deems reasonably necessary for any contingent or unforeseen liabilities or obligations of the Partnership.

(c) To the repayment of any loans or advances that may have been made by any of the Partners to the Partnership.

Any remaining proceeds available from the liquidation of the Partnership’s business shall be distributed as follows: One percent (1%) thereof shall be distributed to the General Partner and ninety-nine percent (99%) thereof shall be distributed to the Limited Partner.

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9. Distributions. Cash and cash equivalents and other assets held by the Partnership which the General Partner determines are in excess of an amount necessary to provide a reasonable reserve for accomplishing the purpose of the Partnership shall be paid as capital distributions as follows:

(a) One percent (1%) of all distributions shall be made to the General Partner; and

(b) Ninety-nine percent (99%) of all distributions shall be made to the Limited Partner.

The foregoing and other provisions of this Certificate of Limited Partnership set forth the rights of the Partners to receive (and of the General Partner to make) distributions of property.

10. Events of Dissolution. The partnership is to be terminated and dissolved upon the expiration of the term of the Partnership (December 31, 2015), unless extended by all of the Partners, or upon the retirement, resignation, dissolution, liquidation, bankruptcy or insolvency of the General Partner (unless a new General Partner is appointed pursuant to the Partnership Agreement), or upon the occurrence of any event requiring termination or dissolution under the Arizona Uniform Limited Partnership Act as amended from time to time. Upon the occurrence of an event described above, the General Partner (or in the event there is no General Partner, a liquidation committee described in

5

the Limited Partnership Agreement) shall proceed to the liquidation of the Partnership and the termination of its activities and the distribution of monies and assets in a manner similar to that described in paragraph 8 above.

11. Continuance of Business. There is only one General Partner and thus no remaining General Partner has the right to continue the business of the Partnership upon the happening of an event of withdrawal of a General Partner. There is, however, a right in the Limited Partner to appoint a new General Partner.

IN WITNESS WHEREOF, the parties, constituting all of the Partners of the Partnership, first being duly sworn upon their oath, hereby execute the foregoing Certificate of Limited Partnership as of the 1st day of September, 1987.

UDC CORPORATION, a Delaware corporation
By
	Its	Vice President
		General Partner

1.3003

6

UDC-UNIVERSAL DEVELOPMENT L.P., a Delaware limited partnership doing business in the State of Arizona as UDC Homes Limited Partnership
By	UDC CORPORATION, a Delaware corporation, general partner
By
	Its	Vice President
		Limited Partner

1.3003

7

STATE OF ARIZONA	)
	)	ss.
County of Maricopa	)

On this 1st day of September, 1987, before me, the undersigned officer, personally appeared Boyd L. Gillilan, who acknowledged himself to be Vice President of UDC CORPORATION, a Delaware corporation, and that he, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

Notary Public

My Commission Expires:

STATE OF ARIZONA	)
	)	ss.
County of Maricopa	)

On this 1st day of September, 1987, before me, the undersigned officer, personally appeared Boyd L. Gillilan who acknowledged himself to be Vice President of UDC CORPORATION, a Delaware corporation, general partner of UDC-UNIVERSAL DEVELOPMENT L.P., a Delaware limited partnership doing business in the State of Arizona as UDC Homes Limited Partnership, and that he, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself.

IN WITNESS WHEREOF, I hereunto set my band and official seal.

Notary Public

My Commission Expires:

1.3003

8

CONSENT TO USE OF NAME

STATE OF ARIZONA

TO:	The Honorable Rose Mofford
	Secretary of State
	1700 West Washington Street
	Capital West Wing, 7th Floors
	Phoenix, Arizona 85007
	Attention: Limited Partnership Division
RE:	Consent to Use of Name “UDC Homes Construction Limited Partnership”

You are hereby notified that UDC-Universal Development L.P., a Delaware limited partnership doing business in Arizona as UDC Homes Limited Partnership and UDC Corporation, a Delaware corporation, in its own capacity and as general partner of UDC-Universal Development L.P., hereby grants UDC Homes Construction Limited Partnership, an Arizona limited partnership, consent to the use by the above-named limited partnership of the name “UDC Homes Construction Limited Partnership.”

UDC-UNIVERSAL DEVELOPMENT L.P., a Delaware limited partnership doing business in Arizona as UDC HOMES LIMITED PARTNERSHIP
	By	UDC CORPORATION, a Delaware corporation, general partner
	By
	Its	Vice President

UDC CORPORATION, a Delaware corporation
By
Its	Vice President

3.0904

2

EX-3.68

Exhibit 3.68

BYLAWS

OF

UDC HOMES CONSTRUCTION, INC.

INDEX TO BYLAWS

ARTICLE I	OFFICES AND CORPORATE SEAL	1
Section 1	Principal Office	1
Section 2	Other Offices	1
Section 3	Corporate Seal	1
ARTICLE II	SHAREHOLDERS
Section 1	Shareholders’ Meetings	1
Section 2	Annual Meetings	2
Section 3	Special Meetings of Shareholders	2
Section 4	List of Shareholders	2
Section 5	Notice of Shareholders’ Meetings	3
Section 6	Closing of Transfer of Books or Fixing of Record Date	3
Section 7	Quorum and Adjournment	4
Section 8	Voting	5
Section 9	Action Without meeting	5
Section 10	Waiver of Notice	6
ARTICLE III	DIRECTORS
Section 1	Number	6
Section 2	Vacancies	6
Section 3	Powers	6
Section 4	Removal of Directors	7
Section 5	Place of Meetings	7
Section 6	Annual Meetings	7

Section 7	Regular Meetings	8
Section 8	Special Meetings	8
Section 9	Quorum	8
Section 10	Action Without Meeting	8
Section 11	Committees of the Board	9
Section 12	Compensation	9
Section 13	Waiver of Notice	9
ARTICLE IV	OFFICERS
Section 1	Designation of Titles	9
Section 2	Election, Term of Office Qualification	10
Section 3	Subordinate Officers, Etc.	10
Section 4	Removal	10
Section 5	Vacancies	11
Section 6	Chairman of the Board	11
Section 7	The President	11
Section 8	Vice President	12
Section 9	The Treasurer	12
Section 10	The Secretary	13
ARTICLE V	RESIGNATIONS
ARTICLE VI	CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1	Contracts	14
Section 2	Loans	14
Section 3	Checks, Drafts, Etc.	14

Section 4	Deposits	14
ARTICLE VII	CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1	Certificates for Shares	15
Section 2	Transfer of Shares	15
ARTICLE VIII	FISCAL YEAR	16
ARTICLE IX	DIVIDENDS	16
ARTICLE X	INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS	16
ARTICLE XI	REPEAL, ALTERATION OR AMENDMENT	18

BYLAWS

OF

UDC HOMES CONSTRUCTION, INC.

ARTICLE I

OFFICES AND CORPORATE SEAL

SECTION 1. Principal Office. UDC Homes Construction, Inc. (hereinafter called “the corporation”) shall maintain a principal office in Arizona.

SECTION 2. Other Offices. The corporation may also maintain offices at such other place or places, either within or without the State of Arizona, as may be designated from time to time by the Board of Directors (hereinafter called the “board”), and the business of the corporation may be transacted at such other offices with the same effect as that conducted at the principal office.

SECTION 3. Corporate Seal. A corporate seal shall not be a requisite to the validity of any instrument executed by or on behalf of the corporation, but nevertheless if in any instance a corporate seal be used, the same shall be a circle having on the circumference thereof the name of the corporation and in the center the words “corporate seal,” the year incorporated, and the state where incorporated.

ARTICLE II

SHAREHOLDERS

SECTION 1. Shareholders’ Meetings. All meetings of shareholders shall be held at such place as may be fixed from time to time by the board, or in the absence of direction by the board, by the president or secretary of the corporation, either within or without the State of Arizona, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

SECTION 2. Annual Meetings. Annual meetings of shareholders shall be held within one hundred eighty (180) days of the end of the corporation’s fiscal year on such date as is designated by the president or secretary of the corporation or the shareholders of the corporation owning a majority of the entire capital stock of the corporation issued, outstanding and entitled to vote. At the annual meeting shareholders shall elect a board and transact such other business as may properly be brought before the meeting.

SECTION 3. Special Meetings of Shareholders. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by Arizona statute or by the Articles of Incorporation (hereinafter called “articles”), may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board, or at the request in writing of shareholders owning a majority of the entire capital stock of the corporation issued, outstanding, and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

SECTION 4. List of Shareholders. The officer who has charge of the stock transfer books for shares of the corporation shall prepare and make a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address and the number of shares registered in the name of each shareholder. Such list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder present.

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SECTION 5. Notice of Shareholders’ Meetings. Written notice of the annual meeting stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given, either personally or by mail, to each shareholder of record entitled to vote at such meeting not less than ten (10) nor more than fifty (50) days before the date of the meeting. If mailed, such notice shall be deemed to be delivered when mailed to the shareholder at his address as it appears on the stock transfer books of the corporation. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice unless determined otherwise by the unanimous vote of the holders of all the issued and outstanding shares of the corporation present at the meeting in person or represented by proxy.

SECTION 6. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the board may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of shareholders,

3

not less than ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, 4:00 o’clock in the afternoon on the day before the day on which notice of the meeting is mailed shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof.

SECTION 7. Quorum and Adjournment.

(a) The holders of a majority of the shares issued, outstanding, and entitled to vote at the meeting, represent in person or represented by proxy, shall constitute a quorum at all meetings of shareholders for the transaction of business except as otherwise provided by Arizona statute or by the articles.

(b) Business may be conducted once a quorum is present and may continue until adjournment of the meeting notwithstanding the withdrawal or temporary absence of sufficient shares to reduce the number present to less than a quorum. Unless the vote of a greater number, or voting by classes, is required by Arizona statute or the articles, the affirmative vote of the majority of the shares then represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders; provided, however, that if the shares then represented are less than required to constitute a quorum, the affirmative vote must be such as would constitute a majority if a quorum were present; and provided further, that the affirmative vote of a majority of the shares then present shall be sufficient in all cases to adjourn a meeting.

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(c) If a quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting to another time or place, without notice other than announcement at the meeting at which adjournment is taken, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

SECTION 8. Voting. At every meeting of the shareholders, each shareholder shall be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such shareholder, but no proxy shall be voted or acted upon after eleven (11) months from its date, unless the proxy provides for a longer period.

SECTION 9. Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote, or a consent in writing, setting forth the action so taken, shall be signed by the holders of all of the outstanding shares entitled to vote with respect to the subject matter of the action.

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SECTION 10. Waiver of Notice. Attendance of a shareholder at a meeting shall constitute waiver of notice of such meeting, except when such attendance is for the purpose of protesting that the meeting is not lawfully called or convened. Any shareholder may waive notice of any annual or special meeting of shareholders by executing a written waiver of notice either before, at or after the time of the meeting.

ARTICLE III

DIRECTORS

SECTION 1. Number. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than fifteen (15). The directors shall be elected at the annual meeting of the shareholders, except as provided in Section 2 of this article, and each director elected shall hold office until his or her successor is elected and qualified. Directors need not be shareholders.

SECTION 2. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by the affirmative vote of a majority of the remaining directors then in office, though not less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute.

SECTION 3. Powers. The business and affairs of the corporation shall be managed by the board, which may exercise all such powers of the corporation and do all such lawful acts as are not by Arizona statute, the Articles of Incorporation, or these Bylaws directed or required to be exercised or done by the shareholders.

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SECTION 4. Removal of Directors. Any director or the entire board may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of directors at a meeting of shareholders called expressly for that purpose.

SECTION 5. Place of Meetings. The board of the corporation may hold meetings, both regular and special, either within or without the State of Arizona, and such meetings may be held by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such meeting.

SECTION 6. Annual Meetings. Annual meetings of the board shall be held immediately following the annual meeting of shareholders and in the same place as the annual meeting of shareholders, and no notice to the newly elected directors of such meeting shall be necessary in order legally to hold the meeting, provided a quorum shall be present. In the event such meeting is not held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board, or as shall be specified in a written waiver of notice by all of the directors.

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SECTION 7. Regular Meetings. Regular meetings of the board may be held without notice at such time and at such place as shall from time to time be determined by the board.

SECTION 8. Special Meetings. Special meetings of the board may be called by the president or the secretary on one (1) day’s notice to each director, either personally, by mail, by telegram, or by telephone; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two (2) directors.

SECTION 9. Quorum. A quorum at any meeting of the board shall consist of a majority of the number of directors then serving, but not less than two (2) directors, provided that if and when a board comprised of one member is authorized, or in the event that only one director is then serving, then one director shall constitute a quorum as provided by Arizona statute or by the articles. If a quorum shall not be present at any meeting of the board, the directors then present may adjourn the meeting to another time or place, without notice other than announcement at the meeting, until a quorum shall be present.

SECTION 10. Action Without Meeting. Unless otherwise restricted by the articles or these bylaws, any action required or permitted to be taken at any meeting of the board or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

SECTION 11. Committees of the Board. The board by resolution, adopted by a majority of the full board, may designate from among its members an executive

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committee and one or more other committees each of which, to the extent provided in such resolution and permitted by law, shall have and may exercise all the authority of the board. The board, with or without cause, may dissolve any such committee or remove any member thereof at any time. The designation of any such committee and the delegation thereto of authority shall not operate to relieve the board, or any member thereof, of any responsibility imposed by law.

SECTION 12. Compensation. By resolution of the board, each director may be paid his expenses, if any, of attendance at each meeting of the board of directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the board or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

SECTION 13. Waiver of Notice. Attendance of a director at a meeting shall constitute waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Any director may waive notice of any annual, regular, or special meeting of directors by executing a written notice of waiver either before or after the time of the meeting.

ARTICLE IV

OFFICERS

SECTION 1. Designation of Titles. The officers of the corporation shall be chosen by the board and shall be a president, who shall be a member of the board, a vice president, a secretary, and a treasurer. The board may also choose a chairman of the

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board. Any number of offices, except the offices of president and secretary, may be held by the same person, unless the articles or these bylaws otherwise provide. The board may require any such officer, agent or employee to give security for the faithful performance of his duties.

SECTION 2. Election, Term of Office, Qualification. The executive officers of the corporation shall be elected annually by the board, each to hold office for one year or until his successor shall have been duly appointed or elected and shall qualify, or until his death, or until he shall resign, or shall have been removed in the manner hereinafter provided.

SECTION 3. Subordinate Officers, Etc. The board may appoint such subordinate officers, agents or employees as the board may deem necessary or advisable, including one or more additional vice presidents, one or more assistant treasurers and one or more assistant secretaries, each of whom shall hold office for such period, have authority and perform such duties as are provided in these bylaws or as the board may from time to time determine. The board may delegate to any executive officer or to any committee the power to appoint any such additional officers, agents or employees. Notwithstanding the foregoing, no assistant secretary or assistant treasurer shall have power or authority to collect, account for, or pay over any tax imposed by any federal, state, or city government.

SECTION 4. Removal. Any officer or agent may be removed by the board whenever in its judgment the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

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SECTION 5. Vacancies. A vacancy in any office, because of death, resignation, removal, or any other cause, shall be filled for the unexpired portion of the term in the manner prescribed in Sections 2 and 3 of this Article IV for election or appointment to such office.

SECTION 6. Chairman of the Board. The chairman of the board, if one shall have been appointed and be serving, shall preside at all meeting of the board and shall perform such other duties as from time to time may be assigned to him.

SECTION 7. The President. The president shall preside at all meetings of shareholders, and if a chairman of the board shall not have been appointed or, having been appointed, shall not be serving or be absent, the president shall preside at all meetings of the board. The president shall be the principal executive officer of the corporation and, subject to the control of the board, shall in general supervise and control all of the business and affairs of the corporation. He may sign, either alone or with the secretary or any other proper officer of the corporation thereunto authorized by the board, certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the board has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the board or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of the president and such other duties as may be prescribed by the board from time to time.

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SECTION 8. Vice President. Each vice president shall have such powers and perform such duties as the board or the president may from time to time prescribe and shall perform such other duties as may be prescribed by these bylaws. At the request of the president, or in case of his absence or inability to act, the vice president or, if there shall be more than one vice president then in office, then one of them who shall be designated for the purpose by the president or by the board shall perform the duties of the president, and when so acting shall have all powers of, and be subject to all the restrictions upon, the president.

SECTION 9. The Treasurer. The treasurer shall have charge and custody, and be responsible for, all the funds and securities of the corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name of and to the credit of the corporation in such banks and other depositaries as may be designated by the board; he shall disburse the funds of the corporation as may be ordered by the board, taking proper vouchers for such disbursements, and shall render to the president and to the directors at the regular meetings of the board or whenever they may require it, a statement of all his transactions as treasurer and an account of the financial condition of the corporation; and, in general, he shall perform all the duties incident to the office of treasurer and such other duties as may from time to time be assigned to him by the board. He may sign, with the president or a vice president, certificates of stock of the corporation.

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SECTION 10. The Secretary. The secretary shall act as secretary of, and keep the minutes of, all meetings of the board and of the shareholders; he shall cause to be given notice of all meetings of the shareholders and directors; he shall be custodian of the seal of the corporation and shall affix the seal, or cause it to be fixed, to all proper instruments when deemed advisable by him; he shall have charge of the stock book and also of the other books, records and papers of the corporation relating to its organization as a corporation, and shall see that the reports, statements and other documents required by law are properly kept or filed; and he shall in general perform all the duties incident to the office of secretary. He may sign, with the president, certificates of stock of the corporation. He shall also have such powers and perform such duties as are assigned to him by these bylaws, and he shall have such other powers and perform such other duties, not inconsistent with these bylaws, as the board shall from time to time prescribe.

ARTICLE V

RESIGNATIONS

Any director or other officer may resign his office at any time by giving written notice of his resignation to the president or the secretary of the corporation. Such resignation shall take effect at the time specified therein, at the time of the receipt thereof, and the acceptance thereof shall not be necessary to make it effective.

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ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1. Contracts. The board may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

SECTION 2. Loans. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the board, except that the president of the corporation is authorized to contract loans or issue negotiable paper on behalf of the corporation and in its name to the extent of $10,000. Such authority may be general or confined to specific instances.

SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board.

SECTION 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the board may select.

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ARTICLE VII

CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 1. Certificates for Shares. Certificates representing shares of the corporation shall be in such form as shall be determined by the board. Such certificates shall be signed by the president or a vice president and by the secretary or an assistant secretary and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the corporation itself or one of its employees. Each certificate for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the board may prescribe.

SECTION 2. Transfer of Shares. Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes.

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ARTICLE VIII

FISCAL YEAR

The fiscal year of the corporation shall be as determined by the board.

ARTICLE IX

DIVIDENDS

The board may, from time to time, declare and the corporation may pay dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its articles.

ARTICLE X

INDEMNIFICATION OF OFFICERS, DIRECTORS

EMPLOYEES AND AGENTS

Subject to the further provisions hereof, the Corporation shall indemnify any and all of its existing and former directors, officers, employees, and agents against all expenses incurred by them and each of them, including but not limited to, legal fees, judgments, penalties, and amounts paid in settlement or compromise, which may arise or be incurred, rendered, or levied in any legal action brought or threatened against any of them for or on account of any action or omission alleged to have been committed while acting within the scope of employment or service as director, officer, employee, or agent of the Corporation, whether or not any action is or has been filed against them and whether or not any settlement or compromise is approved by a court. Indemnification shall be made

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by the Corporation whether the legal action brought or threatened is by or in the right of the Corporation or by any other person. Whenever any existing or former director, officer, employee, or agent shall report to the President of the Corporation or the Chairman of the Board of Directors that he or she has incurred or may incur expenses, including but not limited to legal fees, judgments, penalties, and amounts paid in settlement or compromise in a legal action brought or threatened against him or her for or on account of any action or omission alleged to have been committed by him or her while acting within the scope of his or her employment or service as director, officer, employee, or agent of the Corporation, the Board of Directors shall, at its next regular or a special meeting held within a reasonable time thereafter, determine in good faith whether, in regard to the matter involved in the action or contemplated action, such person acted, failed to act, refused to act willfully, or acted with gross negligence or with fraudulent or criminal intent. If the Board of Directors determines in good faith that such person did not act, fail to act, or refuse to act willfully or act with gross negligence or with fraudulent or criminal intent in regard to the matter involved in the action or contemplated action, indemnification shall be mandatory and shall be automatically extended as specified herein, provided, however, that the Corporation shall have the right to refuse indemnification in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the Corporation, at its own expense and through counsel of its own choosing, to defend him or her in the action.

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ARTICLE XI

REPEAL, ALTERATION OR AMENDMENT

These bylaws may be repealed, altered, or amended, or substitute bylaws may be adopted at any time by a majority of the board at any regular or special meeting.

The undersigned, Mark R. Upton, Secretary of UDC Homes Construction, Inc., hereby certifies that the foregoing bylaws were duly adopted by Unanimous Consent of the Board of Directors of UDC Homes Construction, Inc. In Lieu of Organizational Meeting effective the 27^th day of February, 1992.

Mark R. Upton

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WRITTEN CONSENT OF

MAJORITY SHAREHOLDERS OF

UDC HOMES CONSTRUCTION, INC.

FEBRUARY 15, 2005

THE UNDERSIGNED, being the majority shareholders entitled to vote for UDC HOMES CONSTRUCTION, INC. an Arizona corporation (the “Corporation”) in accordance the bylaws of the undersigned and the laws governing said Corporation, do hereby consent to the adoption of the following resolution:

RESOLVED, that Peter O. Shea, Jr. and John C. Morrissey are hereby elected to serve as Directors of the Corporation until they resign or are replaced.

DECLARE, that this action is taken pursuant to the general corporation law of Arizona and Bylaws of the Corporation, and shall be inserted by the Secretary in the minute book of the Corporation,

Dated and effected as of Friday, February 15, 2005

Shea Homes, Inc. (Sole Shareholder)

James G. Shontere, Secretary

WRITTEN CONSENT

OF THE BOARD OF DIRECTORS OF

UDC HOMES CONSTRUCTION, INC.

February 1, 2002

The undersigned, being all the members of the Board of Directors of UDC Homes Construction, Inc., a Arizona Corporation, hereby consent in writing to the following resolution, in accordance with the Corporation Laws of the State of Arizona:

RESOLVED, that the following named individuals be, and they hereby are, elected to the offices appearing after their respective names, to serve for the remainder of the year or until their successors are elected and qualified:

Directors:	John F. Shea
	Edmund H. Shea, Jr.
	Peter O. Shea
	James G. Shontere, Secretary
Officers:	Bert Selva, President
	Ronald L. Lakey, Vice President
	Bruce J. Varker, Vice President Max B. Johnson, Vice President

NOTE, that the above list is the result of the resignation of Roy Humphrey’s due to retirement, with the election of Bert Selva as President.

IN WITNESS WHEREOF, the undersigned directors of UDC Homes Construction, Inc. have executed this Written Consent the 1^st day of February 2002.

John F. Shea

Edmund H. Shea, Jr.

Peter O. Shea

James G. Shontere

EX-3.69

Exhibit 3.69

CERTIFICATE OF FORMATION

OF

VISTANCIA CONSTRUCTION, LLC

The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is VISTANCIA CONSTRUCTION, LLC.

2. The address of the registered office and the name and the address of the registered agent of the limited liability company required to be maintained by Section 18-104 of the Delaware Limited Liability Company Act are National Registered Agents, Inc., 9 East Loockerman Street, Suite IB, Dover, Delaware 19901.

Executed on July 14, 2003.

Authorized Person

Delaware Limited Liability Certificate of Formation 1/96 -1

EX-3.70

Exhibit 3.70

LIMITED LIABILITY COMPANY AGREEMENT

OF

VISTANCIA CONSTRUCTION, LLC

This Limited Liability Company Agreement of VISTANCIA CONSTRUCTION, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of the 16^th day of July, 2003, by VISTANCIA, LLC (the sole Member of the Company).

RECITALS

The Member desired to form the Company to complete infrastructure and construct homes on real property contributed by Member.

Therefore, the Member formed a limited liability company under the Delaware Limited Liability Company Act (the “Act”) on the following terms and conditions:

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a Delaware limited liability company by the filing of a Certificate of Formation pursuant to the Act with the Delaware Secretary of State. A copy of the Certificate is attached to this Agreement as Exhibit A.

1.2 Name. The name of the Company is “VISTANCIA CONSTRUCTION, LLC” and all Company business shall be conducted under that name or such other names that comply with applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to complete infrastructure and construct homes on real property contributed by Member, and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Delaware Limited Liability Company Act, as amended from time to time.

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. VISTANCIA CONSTRUCTION, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. VISTANCIA, LLC, a Delaware limited liability company.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the LLC. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 18-607 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 18-607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

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3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

Section 4 MANAGEMENT

4.1 Management by Manager. The business and affairs of the Company shall be managed by the Shea Homes Southwest, Inc., an Arizona corporation as its statutory Manager. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

4.2 Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company. Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the Delaware General Corporation Law, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 18-502 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

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Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order;

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

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8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Delaware Secretary of State a certificate of cancellation in accordance with Section 18-203 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A     Certificate of Formation

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9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

VISTANCIA, LLC, a Delaware limited liability company
	By:	Shea Homes Southwest Inc., an Arizona corporation Its Member
		By:
		Name:	Jeff Muller
		Title:	Vice President
		By:
		Name:	Don Murphy
		Title:	Astt. Secretary

By:	Sunbelt Pleasant Point Investors, Inc., an Arizona limited liability company Its Member
	By:
	Name:	Curt Smith
	Title:	Authorized Rep
	By:
	Name:
	Title:

6

LIMITED LIABILITY COMPANY AGREEMENT

OF VISTANCIA CONSTRUCTION, LLC

EXHIBIT A

Certificate of Formation

EX-3.71

Exhibit 3.71

CERTIFICATE OF FORMATION

OF

VISTANCIA MARKETING, LLC

The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is VISTANCIA MARKETING, LLC.

2. The address of the registered office and the name and the address of the registered agent of the limited liability company required to be maintained by Section 18-104 of the Delaware Limited Liability Company Act are National Registered Agents, Inc., 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901.

Executed on July 14, 2003.
	Authorized Person

Delaware Limited Liability Certificate of Formation 1/96-1

EX-3.72

Exhibit 3.72

LIMITED LIABILITY COMPANY AGREEMENT

OF

VISTANCIA MARKETING, LLC

This Limited Liability Company Agreement of VISTANCIA MARKETING, LLC, a Delaware limited liability company (the “Company”), is entered into effective as of the 16^th day of July, 2003, by VISTANCIA, LLC (the sole Member of the Company).

RECITALS

The Member desired to form the Company to acquire, market and sell homes.

Therefore, the Member formed a limited liability company under the Delaware Limited Liability Company Act (the “Act”) on the following terms and conditions:

Section 1 FORMATION

1.1 Formation of Company. The Company has been organized as a Delaware limited liability company by the filing of a Certificate of Formation pursuant to the Act with the Delaware Secretary of State. A copy of the Certificate is attached to this Agreement as Exhibit A.

1.2 Name. The name of the Company is “VISTANCIA MARKETING, LLC” and all Company business shall be conducted under that name or such other names that comply with applicable law as the Member may select from time to time.

1.3 Purpose and Scope. Subject to the provisions of this Agreement and the Certificate, the purposes of the Company are to acquire, market and sell homes, and to do all other acts or things that may be necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes of the Company.

1.4 Term. The Company shall commence on the date the Certificate is filed and shall continue until dissolved pursuant to the terms of this Agreement or the Act.

1.5 Office; Agent. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be located at 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901, or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by law. The name and address of the registered agent of the Company shall be National Registered Agents, Inc., 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901. The Company may have such other offices as the Member may designate from time to time.

1.6 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

Act. The Delaware Limited Liability Company Act, as amended from time to time.

Agreement. This Limited Liability Company Agreement, as originally executed and as amended, modified, supplemented or restated from time to time in accordance with its terms.

Certificate. The Certificate of Formation of the Company, as originally filed and as amended or restated from time to time in accordance with this Agreement and the Act.

Company. VISTANCIA MARKETING, LLC, a Delaware limited liability company.

Distributable Cash. Cash from operations of the Company, interest on Company cash, notes receivable and other short term investments, net cash proceeds from a sale, refinancing, or condemnation of Company assets, including casualty insurance proceeds not used to rebuild or replace such assets, less cash expenditures and reasonable working capital reserves.

Fiscal Year. The taxable year of the Company, as determined under Section 706 of the Internal Revenue Code.

Member. VISTANCIA, LLC, a Delaware limited liability company.

Person. An individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign.

Section 2 CAPITALIZATION OF THE COMPANY

The Member shall have no obligation to contribute additional capital to the Company. The Member may elect to contribute cash or property to the LLC. If the Company does not have sufficient funds from capital contributions to pay its obligations, the Member may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section may constitute a loan from the Member to the Company and may bear interest at a rate determined by the Member.

Section 3 DISTRIBUTIONS AND ALLOCATIONS

3.1 Distributions. The Company may distribute Distributable Cash to the Member in such amounts and at such times as the Member may determine in its discretion; provided, however, no distribution shall be made by the Company if the distribution is prohibited by Section 18-607 of the Act. If the Member receives a distribution from the Company which is determined to have been prohibited by Section 18-607 of the Act, the Member shall, within thirty (30) days following notice, return such distribution to the Company.

3.2 Income, loss, etc. All items of income, gain, loss, deduction and credit of the Company shall be attributed to the Member.

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Section 4 MANAGEMENT

4.1 Management by Manager. The business and affairs of the Company shall be managed by the Shea Homes Southwest, Inc., an Arizona corporation as its statutory Manager. The Manager shall have full and complete authority, power, and discretion to manage and control all aspects of the business, affairs, and properties of the Company.

4.2 Officers. The Manager may, from time to time, appoint one or more individuals to be officers of the Company, Any officers so appointed shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title of an officer is one commonly used for an officer of a business corporation formed under the Delaware General Corporation Law, the use of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office. Any number of offices may be held by the same individual.

Section 5 INTERESTS OF MEMBERS

5.1 Limited Liability. Subject to the provisions of Section 18-502 of the Act, the Member shall have no personal liability for the expenses, liabilities or obligations of the Company. Subject to the provisions of Section 18-607 of the Act, the Member shall not be required to return any distribution made to it.

5.2 Dissolved Member. If the Member is dissolved or terminated, the powers of the Member may be exercised by its legal representative or successor. Upon the dissolution of the Member, the Company shall not dissolve but shall continue in existence.

Section 6 NO MEETINGS OF MEMBERS

The Company shall not be required to hold Member meetings.

Section 7 ACCOUNTING MATTERS

7.1 Maintenance of Records. The Company shall keep books and records of accounts. The books and records shall be maintained on a basis determined by the Manager.

7.2 Tax Matters. For federal income tax purposes, the Company shall be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701 -3(b)(1)(ii). Subject to the preceding sentence, the Manager shall cause to be prepared and filed all necessary tax returns for the Company.

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Section 8 DISSOLUTION AND LIQUIDATION

8.1 Events of Dissolution. Except as otherwise provided in this Agreement, the Company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(a) Upon the election of the Member to dissolve the Company.

(b) Upon the sale or other disposition of all or substantially all of the assets and properties of the Company and distribution to the Member of the proceeds of the sale or other disposition.

8.2 Effect of Dissolution. Upon any dissolution of the Company under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Company’s business shall be confined to those activities reasonably necessary to wind up the Company’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner.

8.3 Liquidation and Termination.

(a) If the Company is dissolved, then an accounting of the Company’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Company shall thereafter be promptly wound up and terminated. The Member will liquidate the assets of the Company as promptly as is consistent with obtaining the fair market value thereof, and the proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

(1) To the payment and discharge of all of the Company’s debts and liabilities to creditors (including the Member) in the order of priority as provided by law, other than liabilities for distributions to the Member; and

(2) The balance, if any, to the Member.

(b) After all of the assets of the Company have been distributed, the Company shall terminate.

(c) Notwithstanding anything to the contrary in this Agreement, upon liquidation of the Company, if the Member has a deficit or negative balance in the Member’s capital account (after giving effect to all contributions, distributions, allocations, and other capital account adjustments for all taxable years, including the year during which such liquidation occurs), the Member shall have no obligation to make any capital contribution to the Company, and the negative balance of the Member’s capital account shall not be considered a debt owed by the Member to the Company or to any other Person for any purpose whatsoever.

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8.4 Certificate of Cancellation. Upon the completion of the winding up of the affairs of the Company, the Member shall prepare, execute and deliver to the Delaware Secretary of State a certificate of cancellation in accordance with Section 18-203 of the Act.

Section 9 GENERAL PROVISIONS

9.1 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware.

9.2 Binding Effect. This Agreement will be binding upon and inure to the benefit of the Member, and its distributees, successors and assigns.

9.3 Headings. All headings are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

9.4 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, the provision will be fully severable; this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

9.5 No Third Party Beneficiary. This Agreement is made solely and specifically for the benefit of the Member, and its successors and assigns, and no other Person will have any rights, interest or claims or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

9.6 Amendments. Any amendment to this Agreement shall be in writing, dated and signed by the Member. If any conflict arises between the provisions of the amendment, or amendments, and the terms hereof, the most recent provisions shall govern and control.

9.7 Exhibits. The following Exhibits attached to this Agreement shall be deemed to be a part of this Agreement and are fully incorporated herein by this reference:

Exhibit A         Certificate of Formation

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9.8 Counterparts. This Agreement may be executed in multiple identical counterparts, each of which shall be deemed an original, and counterpart signature pages may be detached and assembled to form a single original document. This Agreement may be executed and delivered by the exchange of electronic facsimile copies or counterparts of the signature page, which shall be considered the equivalent of ink signature pages for all purposes.

The Member has executed this Agreement as of the date set forth above.

VISTANCIA, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc., an Arizona corporation Its Member
	By:
	Name:	Jeff Muller
	Title:	Vice President
	By:
	Name:	Don Murphy
	Title:	Asst. Secretary
By:	Sunbelt Pleasant Point Investors, Inc., an Arizona limited liability company Its Member
	By:
	Name:	Curt Smith
	Title:	Authorized Rep
	By:
	Name:
	Title:

6

LIMITED LIABILITY COMPANY AGREEMENT

OF VISTANCIA MARKETING, LLC

EXHIBIT A

Certificate of Formation

7

Delaware	PAGE 1
The First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF FORMATION OF “VISTANCIA MARKETING, LLC”, FILED IN THIS OFFICE ON THE SIXTEENTH DAY OF JULY, A.D. 2003, AT 10:17 O’CLOCK A.M.

		Harriet Smith Windsor, Secretary of State
3682398 8100		AUTHENTICATION: 2531699

CERTIFICATE OF FORMATION

OF

VISTANCIA MARKETING, LLC

The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the Delaware Limited Liability Company Act, hereby certifies that:

1. The name of the limited liability company is VISTANCIA MARKETING, LLC.

2. The address of the registered office and the name and the address of the registered agent of the limited liability company required to be maintained by Section 18-104 of the Delaware Limited Liability Company Act are National Registered Agents, Inc., 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901.

Executed on July 14, 2003.

Authorized Person

Delaware Limited Liability Certificate of Formation 1/96 - 1

EX-4.1

Exhibit 4.1

EXECUTION COPY

SHEA HOMES LIMITED PARTNERSHIP,

and

SHEA HOMES FUNDING CORP.,

as Issuers,

the GUARANTORS named herein,

as Guarantors,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

Indenture

Dated as of May 10, 2011

8.625% Senior Secured Notes Due 2019

CROSS-REFERENCE TABLE

TIA Sections	Indenture Sections
310(a)		7.10
(b)		7.03, 7.08(a)(iii), 7.08(e)
(c)		Inapplicable
311		7.03
312(a)		13.02
313(a)		7.06
(c)		5.10(b), 7.06
314(a)		4.20(c)
(b)		11.05, 13.01
(c)		13.04
(d)		11.05, 11.05(b), 13.01
(e)		13.04
(f)		Inapplicable
315(a)		7.02
(b)		7.02
(c)		7.02
(d)		7.02
(e)		Inapplicable
316(a)		5.04
(b)		5.06
(c)		13.02(d)
317(a)(1)		5.13
(a)(2)		5.12
318		13.01

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TABLE OF CONTENTS

		Page
ARTICLE I Definitions and Incorporation by Reference
SECTION 1.01.	Definitions		2
SECTION 1.02.	Rules of Construction		35
SECTION 1.03.	Other Definitions		36
ARTICLE II The Notes
SECTION 2.01.	Form and Dating		37
SECTION 2.02.	Execution and Authentication		37
SECTION 2.03.	Registrar and Paying Agent		38
SECTION 2.04.	Paying Agent To Hold Money in Trust		38
SECTION 2.05.	Securityholder Lists		38
SECTION 2.06.	Transfer and Exchange		39
SECTION 2.07.	Replacement Notes		39
SECTION 2.08.	Outstanding Notes		39
SECTION 2.09.	Temporary Notes		39
SECTION 2.10.	Cancelation		40
SECTION 2.11.	Defaulted Interest		40
SECTION 2.12.	CUSIP Numbers, ISINs, etc		40
SECTION 2.13.	Issuance of Additional Notes		40
ARTICLE III Optional Redemption; Offer to Purchase
SECTION 3.01.	Sinking Fund; Mandatory Redemption		41
SECTION 3.02.	Method and Effect of Redemption		41
SECTION 3.03.	Offer to Purchase		42
ARTICLE IV Covenants
SECTION 4.01.	Payment of Notes		44
SECTION 4.02.	Maintenance of Office or Agency		45
SECTION 4.03.	Existence		45
SECTION 4.04.	[Reserved]		46

ii

		Page
SECTION 4.05.	[Reserved]		46
SECTION 4.06.	Limitations on Indebtedness		46
SECTION 4.07.	Limitations on Restricted Payments		47
SECTION 4.08.	Limitations on Liens		50
SECTION 4.09.	Limitations on Restrictions Affecting Restricted Subsidiaries		50
SECTION 4.10.	Limitations on Asset Dispositions		52
SECTION 4.11.	Future Guarantors		54
SECTION 4.12.	Repurchase of Notes upon Change of Control		55
SECTION 4.13.	Limitations on Transactions with Affiliates		55
SECTION 4.14.	Limitations on Mergers, Consolidations and Sales of Assets		57
SECTION 4.15.	Limitation on Sale/Leaseback Transactions		59
SECTION 4.16.	Limitation on Line of Business		59
SECTION 4.17.	Limitation on Corporate Issuer		59
SECTION 4.18.	Limitations Relating to Partners Insurance Company		59
SECTION 4.19.	Reports to Holders of Notes		59
SECTION 4.20.	Reports to Trustee		60
SECTION 4.21.	[Reserved]		61
SECTION 4.22.	Collateral Requirement; Further Assurances; Costs		61
ARTICLE V Remedies
SECTION 5.01.	Events of Default		63
SECTION 5.02.	Other Remedies		66
SECTION 5.03.	Waiver of Defaults by Majority of Holders		66
SECTION 5.04.	Direction of Proceedings		67
SECTION 5.05.	Application of Moneys Collected by Trustee		67
SECTION 5.06.	Proceedings by Holders		68
SECTION 5.07.	Proceedings by Trustee		69
SECTION 5.08.	Remedies Cumulative and Continuing		69
SECTION 5.09.	Undertaking to Pay Costs		69
SECTION 5.10.	Notice of Defaults		69
SECTION 5.11.	Waiver of Stay, Extension or Usury Laws		70
SECTION 5.12.	Trustee May File Proof of Claim		70
SECTION 5.13.	Payment of Notes on Default; Suit Therefor		71
ARTICLE VI Guarantees; Release of Guarantor
SECTION 6.01.	Guarantees		72
SECTION 6.02.	Limitation on Liability		74
SECTION 6.03.	Successors and Assigns		74
SECTION 6.04.	No Waiver		74
SECTION 6.05.	Modification		74
SECTION 6.06.	Release of Guarantor		74

iii

		Page
SECTION 6.07.	Contribution		75
ARTICLE VII The Trustee
SECTION 7.01.	General		75
SECTION 7.02.	Certain Rights of the Trustee		75
SECTION 7.03.	Individual Rights of the Trustee		77
SECTION 7.04.	Trustee’s Disclaimer		77
SECTION 7.05.	[Reserved]		77
SECTION 7.05.	Reports by Trustee to Holders		77
SECTION 7.07.	Compensation and Indemnity		77
SECTION 7.08.	Replacement of Trustee		78
SECTION 7.09.	Successor Trustee by Merger		79
SECTION 7.10.	Eligibility		79
SECTION 7.11.	Money Held in Trust		79
ARTICLE VIII Defeasance and Discharge
SECTION 8.01.	Legal Defeasance and Discharge		80
SECTION 8.02.	Covenant Defeasance		80
SECTION 8.03.	Conditions to Legal or Covenant Defeasance		81
SECTION 8.04.	Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions		82
SECTION 8.05.	Repayment to Issuers		83
SECTION 8.06.	Reinstatement		83
SECTION 8.07.	Survival		83
SECTION 8.08.	Satisfaction and Discharge of Indenture		83
ARTICLE IX Amendments, Supplements and Waivers
SECTION 9.01.	Amendments Without Consent of Holders		84
SECTION 9.02.	Amendments with Consent of Holders		86
SECTION 9.03.	Effect of Consent		87
SECTION 9.04.	Trustee’s Rights and Obligations		87
SECTION 9.05.	Conformity with Trust Indenture Act		88
SECTION 9.06.	Payments for Consents		88

iv

		Page
ARTICLE X [Reserved] ARTICLE XI Collateral and Security
SECTION 11.01.	Security Documents		88
SECTION 11.02.	Collateral Agent		88
SECTION 11.03.	Authorization of Actions to be Taken		90
SECTION 11.04.	Release of Pari-Passu Liens		91
SECTION 11.05.	Filing, Recording and Opinions		92
ARTICLE XII [Reserved] ARTICLE XIII Miscellaneous
SECTION 13.01.	Trust Indenture Act of 1939		93
SECTION 13.02.	Holder Communications; Holder Actions		93
SECTION 13.03.	Notices		94
SECTION 13.04.	Certificate and Opinion as to Conditions Precedent		95
SECTION 13.05.	Statements Required in Certificate or Opinion		95
SECTION 13.06.	Payment Date Other Than a Business Day		96
SECTION 13.07.	Governing Law		96
SECTION 13.08.	No Adverse Interpretation of Other Agreements		96
SECTION 13.09.	Successors		96
SECTION 13.10.	Duplicate Originals		96
SECTION 13.11.	Severability		96
SECTION 13.12.	Table of Contents and Headings		96
SECTION 13.13.	No Liability of Directors, Officers, Employees, Partners, Incorporators and Stockholders		97
SECTION 13.14.	Provisions of Indenture for the Sole Benefit of Parties and Holders of Notes		97

v

APPENDICES AND EXHIBITS

Rule 144A/Regulation S Appendix
EXHIBIT 1	Form of Note
EXHIBIT A	Form of Supplemental Indenture
EXHIBIT B	Form of Mortgage

vi

INDENTURE, dated as of May 10, 2011, among SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership (the “Company”), SHEA HOMES FUNDING CORP., a Delaware corporation (the “Corporate Issuer” and, together with the Company, the “Issuers”), each of the Guarantors (as defined hereafter) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Trustee (the “Trustee”).

RECITALS

The Issuers have duly authorized the execution and delivery of the Indenture to provide for the issuance of up to $750,000,000 aggregate principal amount of the Issuers’ 8.625% Senior Secured Notes Due 2019 and, if and when issued, any Additional Notes (together with any Exchange Notes issued therefor as provided herein, the “Notes”). All things necessary to make the Indenture a legal, valid and binding agreement of the Issuers, in accordance with its terms, have been done, and the Issuers have done all things necessary to make the Notes (in the case of any Additional Notes, when duly authorized), when duly issued and executed by the Issuers and authenticated and delivered by the Trustee, the valid obligations of the Issuers as hereinafter provided.

In addition, the Guarantors party hereto have duly authorized the execution and delivery of the Indenture as guarantors of the Notes. All things necessary to make the Indenture a valid agreement of each Guarantor, in accordance with its terms, have been done, and each Guarantor has done all things necessary to make the Guarantees (in the case of the Guarantee of any Additional Notes, when duly authorized), when duly issued and executed by each Guarantor and when the Notes have been authenticated and delivered by the Trustee, the valid obligation of such Guarantor as hereinafter provided.

The Indenture is subject to, and will be governed by, the provisions of the Trust Indenture Act that are required to be a part of, and govern indentures qualified under, the Trust Indenture Act; provided, however, that in each case the provisions of TIA § 314(b) and § 314(d) shall only apply following qualification of the Indenture under the TIA.

THE INDENTURE WITNESSETH

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, the parties hereto covenant and agree, for the equal and proportionate benefit of all Holders, as follows:

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.01. Definitions.

“Acquired Indebtedness” means (a) with respect to any Person that becomes a Restricted Subsidiary (or is merged into the Company, the Corporate Issuer or any Restricted Subsidiary) after the Issue Date, Indebtedness of such Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary (or is merged into the Company, the Corporate Issuer or any Restricted Subsidiary) that was not Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary (or being merged into the Company, the Corporate Issuer or any Restricted Subsidiary) and (b) with respect to the Company, the Corporate Issuer or any Restricted Subsidiary, any Indebtedness expressly assumed by the Company, the Corporate Issuer or any Restricted Subsidiary in connection with the acquisition of any assets from another Person (other than the Company, the Corporate Issuer or any Restricted Subsidiary), which Indebtedness was not Incurred by such other Person in connection with or in contemplation of such acquisition. Indebtedness Incurred in connection with or in contemplation of any transaction described in clause (a) or (b) of the preceding sentence shall be deemed to have been Incurred by the Company, the Corporate Issuer or a Restricted Subsidiary, as the case may be, at the time such Person becomes a Restricted Subsidiary (or is merged into the Company, the Corporate Issuer or any Restricted Subsidiary) in the case of clause (a) or at the time of the acquisition of such assets in the case of clause (b), but shall not be deemed Acquired Indebtedness.

“Additional Interest” means additional interest owed to the Holders pursuant to a Registration Rights Agreement. All references in the Indenture, in any context, to any interest or other amount payable on or with respect to the Notes will be deemed to include Additional Interest, if any, applicable to such Notes.

“Additional Notes” means any notes of the Issuers issued under the Indenture in addition to the Original Notes, including any Exchange Notes or Private Exchange Notes issued in exchange for such Additional Notes, having the same terms in all respects as the Original Notes, except that interest will accrue on the Additional Notes from their date of issuance.

“Additional Pari-Passu Lien Obligations” has the meaning ascribed to it in the Intercreditor Agreement.

“Affiliate” means, when used with reference to a specified Person, any Person directly or indirectly controlling, or controlled by or under direct or indirect common control with, the Person specified.

“Affiliate Obligations” means obligations of Shea Properties, LLC, Shea Properties II, LLC or any of their respective Subsidiaries (or joint ventures in which they own an interest) or other Shea-family-owned entities (or joint ventures in which they own

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an interest, excluding, however, any of the foregoing that is a Guarantor), including development loans; provided, however, that capital calls required to be made by the Company or its Restricted Subsidiaries to or for the benefit of a joint venture pro rata on the basis of the Company’s or a Restricted Subsidiary’s ownership in such joint venture, which capital calls are not being made to enable such joint venture to pay amounts owed under any Indebtedness, shall not be Affiliate Obligations but will be treated as Restricted Payments.

“Agent” means any Registrar, Paying Agent or Authenticating Agent.

“Agent Member” means a member of, or a participant in, the Depositary.

“Asset Acquisition” means (a) an Investment by the Company, the Corporate Issuer or any Restricted Subsidiary in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary or shall be consolidated or merged with or into the Company, the Corporate Issuer or any Restricted Subsidiary or (b) the acquisition by the Company, the Corporate Issuer or any Restricted Subsidiary of the assets of any Person, which constitute all or substantially all of the assets or of an operating unit or line of business of such Person or which is otherwise outside the ordinary course of business.

“Asset Disposition” means (1) any sale, transfer, conveyance, lease or other disposition (including by way of merger, consolidation or sale and leaseback or sale of Equity Interests in any Subsidiary) (each, a “transaction”), whether in a single transaction or series of related transactions, of any Property or assets of either of the Issuers or any Restricted Subsidiary to any other Person; or (2) the issuance or sale of Equity Interests of the Corporate Issuer or any Restricted Subsidiary, whether in a single transaction or a series of related transactions. The term “Asset Disposition” shall not include:

(a) a transaction between either of the Issuers and any Restricted Subsidiary or a transaction between Issuers or Restricted Subsidiaries,

(b) a transaction in the ordinary course of business, including sales (directly or indirectly), Required Dedications, leases and sales and leasebacks of (A) homes, improved land and unimproved land and (B) real estate (including related amenities and improvements),

(c) a transaction involving the sale of Equity Interests of, or the disposition of assets in, an Unrestricted Subsidiary,

(d) any exchange or swap of assets (including land swaps) of either of the Issuers or any Restricted Subsidiary for assets (including Equity Interests of any Person that is or will be a Restricted Subsidiary following receipt thereof) that (x) are to be used by either of the Issuers or any Restricted Subsidiary in the ordinary course of its Real Estate Business and (y) have a Fair Market Value substantially equivalent to the Fair Market Value of the assets exchanged or swapped; provided, however, that to the extent that the assets exchanged or

3

swapped were Collateral, the assets received are pledged as Collateral under the Security Documents substantially contemporaneously with such exchange or swap to the extent required to do so pursuant to the Security Documents,

(e) any sale, transfer, conveyance, lease or other disposition of assets and properties that is governed by Section 4.14,

(f) the creation of a Permitted Lien and dispositions in connection with Permitted Liens,

(g) the making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.07, or

(h) any single transaction or series of related transactions that involves Property, assets or Equity Interests having a Fair Market Value of less than $1,000,000.

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligation”.

“Authenticating Agent” refers to a Person engaged to authenticate the Notes in the stead of the Trustee.

“Baker JV” means the joint venture conducted by Shea/Baker Ranch Associates LLC, a California limited liability company.

“Bankruptcy Law” means title 11 of the United States Code, as amended, or any similar Federal or state law for the relief of debtors.

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City or in the city where the Corporate Trust Office of the Trustee is located are authorized or required by law or regulation to close.

“Capitalized Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligations will be the capitalized amount thereof determined in accordance with GAAP.

“Cash Equivalents” means

(1) U.S. dollars;

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(2) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof having maturities of one year or less from the date of acquisition;

(3) demand deposits, certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500,000,000;

(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) of this definition entered into with any financial institution meeting the qualifications specified in clause (3) of this definition;

(5) commercial paper rated P-1, A-1 or the equivalent thereof by Moody’s or S&P, respectively, and in each case maturing within one year after the date of acquisition; and

(6) investments in money market funds substantially all of the assets of which consist of securities described in the foregoing clauses (1) through (5) of this definition.

“Certificated Note” means a Note in registered individual form without interest coupons.

“Change of Control” means

(1) any sale, lease or other transfer (in one transaction or a series of transactions) of all or substantially all of the consolidated assets of the Company and its Restricted Subsidiaries to any Person (other than a Restricted Subsidiary); provided, however, that a transaction where the holders of all classes of Common Equity of the Company immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of such Person immediately after such transaction shall not be a Change of Control;

(2) a “person” or “group” (within the meaning of Section 13(d) of the Exchange Act (other than the Permitted Holders)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of Common Equity of the Company representing more than 50% of the voting power of the Common Equity of the Company;

(3) the holders of Equity Interests of the Company approve any plan or proposal for the liquidation or dissolution of the Company; provided, however, that a liquidation or dissolution of the Company which is part of a transaction described in the proviso to clause (1) of this definition shall not constitute a Change of Control; or

5

(4) a change of control shall occur as defined in the instrument governing any publicly traded debt securities of the Company or the Corporate Issuer which requires the Company or the Corporate Issuer to repay or repurchase such debt securities.

“Collateral” means all the collateral described in the Security Documents.

“Collateral Agent” means Wells Fargo Bank, National Association, in its capacity as the collateral agent under the Security Documents, and any successor thereto in such capacity.

“Commission” means the Securities and Exchange Commission.

“Common Equity” of any Person means Equity Interests of such Person that is generally entitled to (a) vote in the election of directors of such Person or (b) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.

“Company” has the meaning ascribed to it in the preamble hereof and shall also refer to any successor obligor under the Indenture.

“Company Equity Plan” means any management equity or equity option or ownership plan or any other management or employee benefit plan of the Company or any Subsidiary of the Company.

“Consolidated Cash Flow Available for Fixed Charges” means, for any period, Consolidated Net Income for such period plus the sum of the following (but only to the extent deducted in calculating such Consolidated Net Income) for such period, but without duplication

(1) income taxes and Tax Distributions,

(2) Consolidated Interest Expense,

(3) depreciation and amortization expenses, and

(4) all other non-cash charges (unless such non-cash charge represents an accrual of or reserve for cash expenditures in any future period), minus

all non-cash items (other than the receipt of notes receivable) increasing such Consolidated Net Income for such period.

“Consolidated Fixed Charge Coverage Ratio” means, with respect to any determination date (each, a “Transaction Date”), the ratio of (x) Consolidated Cash Flow Available for Fixed Charges for the prior four full fiscal quarters (the “Four Quarter Period”) for which financial statements are available immediately preceding the Transaction Date, to (y) the aggregate Consolidated Interest Expense for the Four Quarter

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Period. For purposes of this definition, “Consolidated Cash Flow Available for Fixed Charges” and “Consolidated Interest Expense” shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

(1) the Incurrence or the repayment, repurchase, defeasance or other discharge (collectively, “repayment”) of any Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary (and the application of the proceeds thereof) giving rise to the need to make such calculation, and any Incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), at any time on or after the first day of the Four Quarter Period and on or prior to the Transaction Date, as if such Incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period, except that Indebtedness under revolving Credit Facilities shall be deemed to be the average daily balance of such Indebtedness during the Four Quarter Period (as reduced on such pro forma basis by the application of any proceeds of the Incurrence of Indebtedness giving rise to the need to make such calculation);

(2) any Asset Disposition or Asset Acquisition (including any Asset Acquisition giving rise to the need to make such calculation as a result of the Company, the Corporate Issuer or any Restricted Subsidiary (including any Person that becomes a Restricted Subsidiary as a result of any such Asset Acquisition) Incurring Acquired Indebtedness at any time on or after the first day of the Four Quarter Period and on or prior to the Transaction Date), as if such Asset Disposition or Asset Acquisition (including the Incurrence or repayment of any such Indebtedness) and the inclusion, notwithstanding clause (b) of the definition of “Consolidated Net Income”, of any Consolidated Cash Flow Available for Fixed Charges associated with such Asset Acquisition as if it occurred on the first day of the Four Quarter Period; provided, however, that the Consolidated Cash Flow Available for Fixed Charges associated with any Asset Acquisition shall not be included to the extent the net income so associated would be excluded pursuant to the definition of “Consolidated Net Income”, other than clause (b) thereof, as if it applied to the Person or assets involved before they were acquired; and

(3) the Consolidated Cash Flow Available for Fixed Charges and the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with GAAP, shall be excluded.

Furthermore, in calculating “Consolidated Cash Flow Available for Fixed Charges” for purposes of determining the denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage Ratio”,

(a) interest on Indebtedness in respect of which a pro forma calculation is required that is determined on a fluctuating basis as of the Transaction Date (including Indebtedness actually Incurred on the Transaction Date) and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date, and

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(b) notwithstanding the immediately preceding clause (a), interest on such Indebtedness determined on a fluctuating basis, to the extent such interest is covered for at least one year by agreements relating to Interest Protection Agreements, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

“Consolidated Interest Expense” means, for any period, the total interest expense of the Company, its consolidated Restricted Subsidiaries and the Corporate Issuer (other than non-cash interest expense attributable to convertible indebtedness under Accounting Practices Bulletin 14 or any successor provision), plus, to the extent not included in such total interest expense, and to the extent Incurred by the Company, its Restricted Subsidiaries or the Corporate Issuer, without duplication:

(1) interest expense attributable to Capitalized Lease Obligations, Attributable Debt and the interest component of any deferred payment obligations;

(2) amortization of debt discount (including the amortization of original issue discount resulting from the issuance of Indebtedness at less than par) and debt issuance cost; provided, however, that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense;

(3) capitalized interest;

(4) non-cash interest expense; provided, however, that any non-cash interest expense or income attributable to the movement in the mark to mark valuation of Interest Protection Agreements or other derivative instruments pursuant to GAAP shall be excluded from the calculation of Consolidated Interest Expense);

(5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

(6) net payments (or minus net receipts) pursuant to Interest Protection Agreements;

(7) the product of (a) all dividends accrued in respect of all Disqualified Equity Interests of the Company and all Preferred Equity Interests of the Company or any Restricted Subsidiary, in each case, held by Persons other than the Company or a Restricted Subsidiary (other than dividends payable solely in Qualified Equity Interests of the Company), times (b) a fraction, the numerator of which is one and the denominator of which is one minus the effective combined tax rate of the issuer of such Disqualified Equity Interests or Preferred Equity Interests (expressed as a decimal) for such period (as estimated by the chief financial officer of the Company in good faith);

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(8) interest Incurred in connection with Investments in discontinued operations; and

(9) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is guaranteed by (or secured by a Lien on the assets of) the Company or any Restricted Subsidiary; provided, however, that this clause (9) shall not include any interest accruing on Indebtedness (A) subject to guarantees constituting Specified Obligations of the Company or any Restricted Subsidiary or (B) of the type described in subsection (y) of clause (14) of the definition of “Permitted Indebtedness”.

“Consolidated Net Income” for any period means the aggregate net income (or loss) of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided, however, that there will be excluded from such net income (loss) (to the extent otherwise included therein), without duplication:

(a) the net income (or loss) of (x) any Unrestricted Subsidiary or (y) any Person (other than a Restricted Subsidiary) in which any Person other than the Company, the Corporate Issuer or any Restricted Subsidiary has an ownership interest, except, in each case, to the extent that any such income has actually been received by the Company, the Corporate Issuer or any Restricted Subsidiary in the form of cash dividends or similar cash distributions during such period,

(b) except to the extent includable in Consolidated Net Income pursuant to clause (a) of this definition, the net income (or loss) of any Person that accrued prior to the date that (i) such Person becomes a Restricted Subsidiary or is merged with or into or consolidated with the Company, the Corporate Issuer or any of its Restricted Subsidiaries (except, in the case of an Unrestricted Subsidiary that is redesignated a Restricted Subsidiary during such period, to the extent of its retained earnings from the beginning of such period to the date of such redesignation) or (ii) the assets of such Person are acquired by the Company, the Corporate Issuer or any Restricted Subsidiary,

(c) the net income of any Restricted Subsidiary that is not a Guarantor to the extent that (but only so long as) the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary during such period; provided, however, that the net income of any such Restricted Subsidiary during such period shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution,

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(d) the gains or losses, together with any related provision for taxes, realized during such period by the Company, the Corporate Issuer or any Restricted Subsidiary resulting from (i) the acquisition of securities, or extinguishment of Indebtedness, of the Company, the Corporate Issuer or any Restricted Subsidiary or (ii) any Asset Disposition by the Company, the Corporate Issuer or any Restricted Subsidiary,

(e) any extraordinary gain or loss together with any related provision for taxes, realized by the Company, the Corporate Issuer or any Restricted Subsidiary, and

(f) any Tax Distributions paid during such period by the Company, the Corporate Issuer or any Restricted Subsidiary.

“control” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Corporate Issuer” has the meaning ascribed to it in the preamble hereof and shall also refer to any successor obligor under the Indenture.

“Corporate Trust Office” means the office of the Trustee at which the corporate trust business of the Trustee is principally administered, which at the date of the Indenture is located at 707 Wilshire Blvd. 17th Floor, Los Angeles, CA 90017, Attention: Corporate Trust Services; provided, however, that, for purposes of Sections 2.03 and 4.02, such office shall be located at 608 2nd Ave., South Minneapolis, MN 55479, Attention: Bondholders Communications, or such other address as the Trustee may designate from time to time by notice to the Holders and the Issuers, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Issuers).

“Credit Facilities” means, collectively, one or more credit facilities and lines of credit among or between the Company or one or more Restricted Subsidiaries and one or more lenders pursuant to which the Company or one or more Restricted Subsidiaries may Incur Indebtedness for working capital and general corporate purposes (including acquisitions), as any such facility or line of credit may be amended, restated, supplemented or otherwise modified from time to time, and includes any agreement extending the maturity of, increasing the amount of, or restructuring, all or any portion of the Indebtedness under such facility or line of credit or any successor facilities or lines of credit and includes any facility or line of credit with one or more lenders refinancing or replacing all or any portion of the Indebtedness under such facility or line of credit or any successor facility or line of credit.

“Currency Agreement” of any Person means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in currency values.

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“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

“Default” means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default.

“Depositary” means the depositary of each Global Note, which will initially be DTC.

“Designation Amount” has the meaning ascribed to it in the definition of “Unrestricted Subsidiary”.

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to 91 days following the final maturity date of the Notes or (b) is convertible into or exchangeable or exercisable for (whether at the option of the Issuers or the holder thereof) (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case, at any time prior to 91 days following the final maturity date of the Notes; provided, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Company to repurchase or redeem such Equity Interest upon the occurrence of a change in control or asset disposition occurring prior to 91 days following the final maturity date of the Notes shall not constitute Disqualified Equity Interests if the change in control or asset disposition provision applicable to such Equity Interests are no more favorable to such holders than the provisions of Section 4.10 or Section 4.12 (as applicable) and such Equity Interests specifically provide that the Company will not repurchase or redeem any such Equity Interests pursuant to such provisions prior to the Company’s repurchase of the Notes as are required pursuant to the provisions of Section 4.10 or Section 4.12 (as applicable).

“DTC” means The Depository Trust Company, a New York corporation.

“Equity Interests” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of or in such Person’s capital stock or other equity interests, and options, rights or warrants to purchase such capital stock or other equity interests, whether now outstanding or issued after the Issue Date, including all Disqualified Equity Interests and Preferred Equity Interests.

“Equity Offering” means any public or private sale, after the Issue Date, of Qualified Equity Interests of the Company, other than (i) public offerings registered on Form S-4 or S-8 or any successor form thereto or (ii) any issuance pursuant to employee benefit plans or otherwise in compensation to officers, directors or employees.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

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“Exchange Notes” means the notes of the Issuers issued under the Indenture in exchange for, and in an aggregate principal amount equal to, the Initial Notes or any Initial Additional Notes in compliance with the terms of a Registration Rights Agreement and containing terms substantially identical to the Initial Notes or any Initial Additional Notes (except that such Exchange Notes will be registered under the Securities Act and will not be subject to transfer restrictions or bear the Restricted Legend).

“Exchange Offer” means an offer by the Issuers to the Holders of the Initial Notes or any Initial Additional Notes to exchange such Notes for Exchange Notes, as provided for in the applicable Registration Rights Agreement.

“Exchange Offer Registration Statement” means the Exchange Offer Registration Statement as defined in a Registration Rights Agreement.

“Excluded Contribution” means cash or Cash Equivalents received by the Company as capital contributions to its equity or from the issuance or sale of Qualified Equity Interests of the Company, in each case, after the Issue Date and to the extent designated at the time as an Excluded Contribution pursuant to an Officers’ Certificate of the Company.

“Excluded Property” has the meaning ascribed to it in the Security Agreement.

“Fair Market Value” means, with respect to any Property or other asset, the price (after taking into account any liabilities relating to such assets) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction, as such price is determined in good faith by the Governing Body of the Company or a duly authorized committee thereof, as evidenced by a resolution of such Governing Body or committee; provided, however, that for purposes of Section 4.07(a)(iii)(B), if the Fair Market Value of the Property or assets in question is so determined to be in excess of $1,000,000, such determination must be confirmed by an Independent Qualified Party.

“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 in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date.

“Governing Body” means, as to any Person, the board of directors of such Person or, if such Person is not a corporation or otherwise governed by a board of directors, the governing body of such Person (including in the case of a partnership, the general partner of such partnership or group otherwise exercising the authority over such Person which would generally be vested in a board of directors of a corporation); provided, however, to the extent a Person is a partnership and its general partner is itself a partnership, the Governing Body shall be the governing group of individuals with ultimate authority to control such general partner.

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“Guarantee” means the guarantee of the Notes by each Guarantor under the Indenture.

“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person: (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part; provided, however, that the term “guarantee” does not include (x) endorsements for collection or deposit in the ordinary course of business or (y) indemnification obligations of the Company, the Corporate Issuer or any Restricted Subsidiary entered into in the ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning.

“Guarantors” means (a) initially, the Persons that execute the Indenture as guarantors and (b) in addition, each of the Company’s Subsidiaries that subsequently becomes a Guarantor of the Notes pursuant to Section 4.11, including in each case, their successors and assigns, in each case until released from their respective Guarantee pursuant to Section 6.06.

“Holder”, “Holders”, “Holder of Notes” or “Holders of the Notes” means the Person or each Person in whose name a Note is registered in the books of the Registrar for the Notes.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;

(2) all Capitalized Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person;

(3) all obligations of such Person issued or assumed as the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding (A) any accounts payable or other liability to trade creditors arising in the ordinary course of business and (B) any obligation to pay a contingent purchase price as long as such obligation remains contingent);

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(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the 10th business day following payment on the letter of credit);

(5) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Equity Interests of such Person or, with respect to any Preferred Equity Interests of any Subsidiary of such Person, the amount of such Preferred Equity Interests to be determined in accordance with the Indenture (but excluding, in each case, any accrued dividends);

(6) all guarantees by such Person of obligations of the type referred to in clauses (1) through (5) or dividends of other Persons (excluding any preferred returns payable pursuant to any joint venture documentation);

(7) all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any Property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such Property or assets and the amount of the obligation so secured; and

(8) to the extent not otherwise included in this definition, the obligations of such Person under Currency Agreements or Interest Protection Agreements.

Notwithstanding the foregoing, (i) in connection with the purchase by the Company, the Corporate Issuer or any Restricted Subsidiary of any business, the term “Indebtedness” will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter, (ii) guarantees constituting Specified Obligations shall not constitute Indebtedness and (iii) repayment guarantees constituting Investments made pursuant to the JV Payment Basket shall constitute Indebtedness.

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.

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The amount of any Preferred Equity Interests that has a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Preferred Equity Interests as if such Preferred Equity Interests were redeemed, repaid or repurchased on any date on which the amount of such Preferred Equity Interests are to be determined pursuant to the Indenture; provided, however, that if such Preferred Equity Interests could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be calculated as of the first date thereafter on which such Preferred Equity Interests could be required to be so redeemed, repaid or repurchased. If any Preferred Equity Interests does not have a fixed redemption, repayment or repurchase price, the amount of such Preferred Equity Interests will be their maximum liquidation value.

“Independent Qualified Party” means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Real Estate Businesses of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged; provided, however, that such firm or consultant is not an Affiliate of the Company.

“Independent Valuation” of real property means (x) with respect to the sale of real property by the Company, the Corporate Issuer or any Restricted Subsidiary, any amount proposed to be paid for such real property pursuant to a bona fide offer to purchase made by an unaffiliated Person and which the Company, the Corporate Issuer or the Restricted Subsidiary, as applicable, would be willing to accept or (y) any appraised value of such real property as determined by an Independent Qualified Party.

“Indenture” means this indenture, as amended or supplemented from time to time.

“Initial Additional Notes” means Additional Notes of the Issuers issued under the Indenture in an offering not registered under the Securities Act and any Notes issued in replacement therefor, but not including any Exchange Notes issued in exchange therefor.

“Initial Notes” means the Notes of the Issuers issued under the Indenture on the Issue Date and any Notes issued in replacement thereof, but not including any Exchange Notes or Private Exchange Notes issued in exchange therefor.

“Initial Purchaser” means Credit Suisse Securities (USA) LLC.

“Intercreditor Agreement” means the Intercreditor Agreement dated as of the Issue Date, among the Trustee, the Collateral Agent and the Administrative Agent under the LC Facility Agreement, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“Interest Payment Date” means each May 15 and November 15 of each year, commencing November 15, 2011.

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“Interest Protection Agreement” of any Person means any interest rate swap agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in interest rates with respect to Indebtedness permitted to be Incurred under the Indenture and not for speculative purposes.

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other Property to others or any payment for Property or services for the account or use of others), or any purchase or acquisition of Equity Interests, Indebtedness or other similar instruments issued by such Person (including, for the avoidance of doubt, the purchase of equity interests in joint ventures pursuant to customary buy/sell provisions contained in the agreements governing such joint ventures). If the Company, the Corporate Issuer or any Restricted Subsidiary issues, sells or otherwise disposes of any Equity Interests of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company, the Corporate Issuer or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. The acquisition by the Company, the Corporate Issuer or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company, the Corporate Issuer or such Restricted Subsidiary, as applicable, in such third Person at such time. Except as otherwise provided for herein, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value.

For purposes of the definition of “Unrestricted Subsidiary”, the definition of “Restricted Payment” and Section 4.07:

(1) “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any Property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Company’s Governing Body.

“Issue Date” means May 10, 2011.

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“Issuers” has the meaning ascribed to it in the preamble hereof and shall also refer to any successor obligors under the Indenture.

“JFSCI” means J.F. Shea Co., Inc., a Nevada corporation.

“JV Payment Basket” has the meaning ascribed to it in Section 4.07(b)(xiii).

“LC Facility Agreement” means the Letter of Credit Facility Agreement dated as of May 10, 2011, among the Company, the Corporate Issuer, the Guarantors party thereto, Credit Suisse AG, as administrative agent and as issuing bank, and the Participants party thereto.

“LC Facility Obligations” means the obligations of the Company pursuant to the terms of the LC Facility Agreement.

“Lien” means, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this definition, a Person shall be deemed to own, subject to a Lien, any Property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such Property.

“Marketable Securities” means (a) equity securities that are listed on the New York Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market and (b) debt securities that are rated by a nationally recognized rating agency, listed on the New York Stock Exchange or the American Stock Exchange or covered by at least two reputable market makers.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to its debt rating business.

“Mortgage” means a deed of trust, mortgage, deed to secure debt or similar agreement in substantially the form annexed hereto as Exhibit B from an Issuer or a Guarantor to the Collateral Agent with respect to real property (modified as is reasonably necessary to conform to state-specific requirements).

“Net Cash Proceeds” means with respect to an Asset Disposition, payments received in cash (including any such payments received by way of deferred payment of principal pursuant to a note, other obligation or installment receivable or otherwise (including any cash received upon sale, conversion or other disposition of such note, other obligation or receivable), but only as and when received), excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the Property disposed of in such Asset Disposition or received in any other non-cash form unless and until such non-cash consideration is converted into cash therefrom, in each case, net of all legal, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state and local taxes required to be accrued as a liability under GAAP as a consequence of such

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Asset Disposition, and in each case net of a reasonable reserve for the after-tax cost of any indemnification or other payments (fixed and contingent) attributable to the seller’s indemnities or other obligations to the purchaser undertaken by the Company, the Corporate Issuer or any of the Restricted Subsidiaries in connection with such Asset Disposition, and net of all payments made on any Indebtedness which is secured by or relates to such Property (other than Indebtedness secured by Liens on the Collateral) in accordance with the terms of any Lien or agreement upon or with respect to such Property or which such Indebtedness must by its terms or by applicable law be repaid out of the proceeds from such Asset Disposition, and net of all contractually required distributions and payments made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of such Asset Disposition.

“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of such Person for which (a) the sole legal recourse for collection of principal and interest on such Indebtedness (other than in respect of customary “bad-boy” guarantees) is against the specific Property identified in the instruments evidencing or securing such Indebtedness and such Property was acquired with the proceeds of such Indebtedness or such Indebtedness was Incurred within 90 days after the acquisition of such Property and (b) no other assets of such Person may be realized upon in collection of principal or interest on such Indebtedness; provided, however, that such Indebtedness cannot serve as a basis for a cross default to any other Indebtedness. Indebtedness which is otherwise Non-Recourse Indebtedness will not lose its character as Non-Recourse Indebtedness because there is recourse for (i) environmental warranties and indemnities or (ii) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance and condemnation proceeds and other sums actually received by the obligor from secured assets to be paid to the lender, waste and mechanics’ liens.

“Non-U.S. Person” means a Person that is not a “U.S. person”, as such term is defined in Regulation S.

“Notes” has the meaning ascribed to it in the Recitals hereof.

“Notes Obligations” means Obligations in respect of the Notes, the Guarantees or the Indenture.

“Obligations” means with respect to any Indebtedness, all obligations (whether in existence on the Issue Date or arising afterwards, absolute or contingent, direct or indirect) for or in respect of principal (when due, upon acceleration, upon redemption, upon mandatory repayment or repurchase pursuant to a mandatory offer to purchase, or otherwise), premium, interest, penalties, fees, indemnification, reimbursement and other amounts payable and liabilities with respect to such Indebtedness, including all interest accrued or accruing after the commencement of any bankruptcy, insolvency or reorganization or similar case or proceeding at the contract rate (including, without limitation, any contract rate applicable upon default) specified in the relevant documentation, whether or not the claim for such interest is allowed as a claim in such case or proceeding.

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“Offering Circular” means the Confidential Offering Circular dated May 3, 2011, pursuant to which the Notes were offered and sold.

“Officer” means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary.

“Officers’ Certificate”, when used with respect to the Company or the Issuers, means a certificate signed by two Officers thereof.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

“Original Notes” means the Initial Notes and any Exchange Notes and Private Exchange Notes issued in exchange therefor.

“Pari-Passu Lien Obligations” means all Indebtedness secured by Pari-Passu Liens on the Collateral, as permitted by clauses (8), (9) and (10) of the definition of “Permitted Liens”, and all Obligations in respect thereof, including the Notes Obligations, the LC Facility Obligations and each class of Additional Pari-Passu Lien Obligations.

“Partners Insurance Company” means Partners Insurance Company, Inc., a Hawaii corporation, and its successors and assigns.

“Permitted Holders” means, collectively, John F. Shea, Peter O. Shea, Peter O. Shea, Jr., Mary Shea, John Morrissey and their respective family trusts, spouses, sons and daughters and lineal descendants, siblings and other familial relatives of any of them, including any corporation, limited liability companies or other entities more than 50% of the issued and outstanding equity interests of which are held, directly or indirectly, by any of the foregoing persons.

“Permitted Indebtedness” means

(1) Indebtedness of the Company or any Guarantor under letters of credit not in excess of $75,000,000 aggregate principal amount outstanding at any one time; provided, however, that such $75,000,000 shall be reduced to the extent such letters of credit are drawn upon and the use of proceeds thereof constitute Investments (other than Permitted Investments described in clauses (3), (8), (9) and (10) of the definition thereof);

(2) Indebtedness with respect to the Original Notes and Guarantees thereof;

(3) Indebtedness (other than Indebtedness described in clauses (1) and (2) above) outstanding on the Issue Date after giving effect to the anticipated use of proceeds from the sale of the Initial Notes;

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(4) Indebtedness owed to and held by the Company, the Corporate Issuer or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Equity Interests which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company, the Corporate Issuer or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Company or the Corporate Issuer is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;

(5) Indebtedness of the Company or any Restricted Subsidiary under any Interest Protection Agreements in a notional amount no greater than the outstanding principal amount (at the time the related Interest Protection Agreement is entered into) of the Indebtedness being hedged;

(6) Purchase Money Indebtedness and Capitalized Lease Obligations Incurred by the Company or any Restricted Subsidiary in connection with the acquisition of equipment and fixtures or other Property in an aggregate principal amount outstanding at any one time (including all Refinancing Indebtedness Incurred to Refinance any Indebtedness Incurred pursuant to this clause (6)) not to exceed $10,000,000 (which amount shall not include any obligations that would not be required to be classified or accounted for as Capital Lease Obligations in accordance with GAAP as of March 31, 2011, without giving effect to any changes therein after the Issue Date);

(7) to the extent a portion of the Original Notes are redeemed or repurchased and retired, Indebtedness of the Company or any Guarantor in an aggregate amount (including all Refinancing Indebtedness Incurred to Refinance any Indebtedness Incurred pursuant to this clause (7)) not to exceed the lesser of (x) 75% of the aggregate principal amount of the Notes so redeemed or repurchased and retired and (y) $100,000,000;

(8) Indebtedness of the Company or any Guarantor which, together with all other Indebtedness Incurred under this clause (8), including all Indebtedness Incurred to Refinance any Indebtedness Incurred under this clause (8), does not exceed $25,000,000 aggregate principal amount outstanding at any one time;

(9) all obligations under any arrangement (including (x) adjustments to land purchase price and (y) profit participations) by which future payments are due to the sellers of real property acquired by either of the Issuers or any Restricted Subsidiary after a specified period of time following such acquisition or at the time of the subsequent sale of the subject real property, which future payments (i) are based on the subsequent sale price of the subject real property, the allocated costs of developing the subject real property or an amount specified at the time of such acquisition and (ii) may include fixed minimum amounts in respect of such arrangements and true-up payments;

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(10) Refinancing Indebtedness Incurred by the Company or any Guarantor in respect of (i) any Coverage Indebtedness or (ii) any Permitted Indebtedness Incurred pursuant to clause (2) or (3) above or this clause (10);

(11) bank overdrafts arising in the ordinary course of business;

(12) obligations under an agreement with any government authority, adjoining (or common masterplan) landowner or seller of real property, in each case entered into in the ordinary course of business in connection with the acquisition of real property, to entitle, develop or construct infrastructure thereupon;

(13) Indebtedness deemed to exist pursuant to the terms of a joint venture agreement as a result of the failure of the Company or any Restricted Subsidiary to make a required capital contribution therein; provided, however, that the only recourse on such Indebtedness is limited to the Company’s or such Restricted Subsidiary’s equity interests in the related joint venture;

(14) obligations relating to, and guarantees and pledges of assets Incurred in the ordinary course of business in respect of (x) surety bonds and (y) payments due in respect of community facility district, metro-district, mello-roos, subdivision improvement and similar bonding requirements;

(15) repayment guarantees that constitute Investments made pursuant to the JV Payment Basket; provided, however, that, after giving effect to such guarantees, the Company could invest at least $1.00 in a Restricted Investment pursuant to Section 4.07(b)(xiii);

(16) Indebtedness that is Non-Recourse Indebtedness with respect to the Company and the Restricted Subsidiaries;

(17) any guarantee by the Company or any Guarantor of any Coverage Indebtedness or any Permitted Indebtedness (other than Permitted Indebtedness incurred pursuant to clause (13) or (16) above); provided, however, that in the event such Indebtedness that is being guaranteed is subordinated to the Notes or a Guarantee, as the case may be, then the related guarantee shall be subordinated in right of payment to the Notes or such Guarantee, as the case may be; and

(18) any Indebtedness Incurred by the Corporate Issuer as a co-issuer or co-guarantor of such Indebtedness with the Company.

“Permitted Investment” means

(1) Cash Equivalents;

(2) guarantees (but not payments thereon) with respect to Specified Obligations;

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(3) any Investment in (a) the Company or any Guarantor or (b) any Person that becomes a Guarantor as a result of such Investment or that is consolidated or merged with or into, or transfers all or substantially all of the assets of it or an operating unit or line of business to, the Company or a Guarantor;

(4) any receivables, loans or other consideration taken by either of the Issuers or any Restricted Subsidiary in connection with any asset sale otherwise permitted by the Indenture; provided that non-cash consideration received in an Asset Disposition or an exchange or swap of assets shall be pledged as Collateral under the Security Documents to the extent the assets subject to such Asset Disposition or exchange or swap of assets constituted Collateral;

(5) Investments received in connection with any bankruptcy or reorganization proceeding, or as a result of foreclosure, perfection or enforcement of any Lien or any judgment or settlement of any Person in exchange for or satisfaction of Indebtedness or other obligations or other Property received from such Person, or for other liabilities or obligations of such Person created, in accordance with the terms of the Indenture;

(6) Investments in Interest Protection Agreements permitted by the Indenture;

(7) any loan or advance to an executive officer, director or employee of the Company or any Restricted Subsidiary made in the ordinary course of business or in accordance with past practice; provided, however, that any such loan or advance exceeding $1,000,000 shall have been approved by the Governing Body of the Company or a committee thereof consisting of disinterested members;

(8) obligations (but not payments thereon) with respect to homeowners association obligations, community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds and similar bonding requirements arising in the ordinary course of business of a homebuilder;

(9) guarantee or indemnification obligations (other than for the payment of borrowed money) entered into in the ordinary course of business and incurred for the benefit of any adjoining landowner, seller of real property or municipal government authority (or enterprises thereof) in connection with the acquisition, entitlement and development of real property;

(10) guaranty and indemnification obligations arising in connection with surety bonds issued in the ordinary course of business;

(11) prepaid expenses, negotiable instruments held for collection and insurance, lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business;

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(12) current Investments acquired in the ordinary course of business for cash management purposes; and

(13) guarantees and related extensions of credit constituting Permitted Indebtedness (other than Indebtedness incurred pursuant to clause (15) of the definition of “Permitted Indebtedness”, but including, in case of clause (1) of the definition of “Permitted Indebtedness”, any payments made in respect of letters of credit issued pursuant to such clause) or Coverage Indebtedness.

“Permitted Liens” means

(1) Liens for taxes, assessments or governmental or quasi-government charges or claims that (a) are not yet delinquent, (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, if required, or (c) encumber solely Property abandoned or in the process of being abandoned,

(2) Liens of landlords and carriers’, warehousemen’s, mechanics’, suppliers’, materialmen’s, repairmen’s or other Liens arising in the ordinary course of business and with respect to amounts that, to the extent applicable, either (a) are not yet delinquent or (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, if required,

(3) Liens (other than any Lien imposed by the Employer Retirement Income Security Act of 1974, as amended) Incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security,

(4) Liens Incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, development obligations, progress payments, government contacts, utility services, developer’s or other obligations to make on-site or off-site improvements and other obligations of like nature (exclusive of obligations for the payment of borrowed money), in each case Incurred in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(5) attachment or judgment Liens not giving rise to a Default,

(6) recorded or unrecorded easements, rights-of-way, dedications, covenants, conditions, restrictions, reservations, assessment district or similar Liens in connection with municipal or special district financing, agreements with adjoining landowners or state or local government authorities and other similar charges, burdens and encumbrances which do not, individually or in the aggregate, materially impair the use or development of the assets to which they relate in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

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(7) zoning restrictions, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do not materially impair the use of such real property in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(8) Liens securing Indebtedness Incurred pursuant to clauses (1), (5) and (7) of the definition of “Permitted Indebtedness”; provided, however, that any such Liens rank pari-passu with the Notes and such Indebtedness is subject to the Intercreditor Agreement,

(9) Liens securing Indebtedness Incurred pursuant to clause (9) of the definition of “Permitted Indebtedness”; provided, however, that such Liens apply only to the Property acquired in connection with the Incurrence of such Indebtedness and related properties acquired from the same seller,

(10) Liens securing (i) the Original Notes, the Guarantees thereof and other Obligations (other than Additional Notes) under the Indenture and the Security Documents and in respect thereof and (ii) any obligations owing to the Trustee or the Collateral Agent under the Indenture, the Intercreditor Agreement or the Security Documents,

(11) Liens securing Non-Recourse Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary,

(12) Liens securing Indebtedness Incurred pursuant to clause (6) of the definition of “Permitted Indebtedness”; provided, however, that such Liens apply only to the Property acquired in connection with the Incurrence of such Indebtedness,

(13) Liens on Property or assets of the Company, the Corporate Issuer or any Restricted Subsidiary securing Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary owing to the Company, the Corporate Issuer or one or more Restricted Subsidiaries,

(14) leases or subleases granted to others not materially interfering with the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(15) any right of first refusal, right of first offer, option, contract or other agreement to sell an asset; provided, however, that such sale is not otherwise prohibited under the Indenture,

(16) any right of a lender or lenders to which the Company, the Corporate Issuer or a Restricted Subsidiary may be indebted to offset against, or appropriate and apply to the payment of such, Indebtedness any and all balances, credits, deposits, accounts or money of the Company, the Corporate Issuer or a Restricted Subsidiary with or held by such lender or lenders or its Affiliates,

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(17) any pledge or deposit of cash or Property in conjunction with obtaining surety, performance, completion or payment bonds and letters of credit or other similar instruments or providing earnest money obligations, escrows or similar purpose undertakings or indemnifications in the ordinary course of business of the Company, the Corporate Issuer and the Restricted Subsidiaries,

(18) Liens for homeowner and property owner association developments and assessments,

(19) Liens on deposits made in the ordinary course of business as security for the obligations of the Company, the Corporate Issuer and the Restricted Subsidiaries with respect to indemnification in respect of title insurance providers,

(20) Liens on Property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company or becomes a Subsidiary of the Company; provided, however that such Liens were in existence prior to the contemplation of such merger or consolidation or acquisition and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Subsidiary or acquired by the Company or its Subsidiaries,

(21) Liens on Property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company, provided, however, that such Liens were in existence prior to the contemplation of such acquisition,

(22) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods,

(23) Liens Incurred in the ordinary course of business to secure (i) profit and price participation arrangements and (ii) fees, taxes and carry costs on, in respect of or owing to governmental issuers (including enterprises thereof) of community facility district, mello-roos, metro-district or similar bonding obligations,

(24) Liens to secure any Refinancing (or successive Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clause (9), (10), (12), (20) or (21); provided, however, that:

(A) such new Lien shall be limited to all or part of the same Property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such Property or proceeds or distributions thereof); and

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(B) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clause (9), (10), (12), (20) or (21) at the time the original Lien became a Permitted Lien and (y) an amount necessary to pay any fees and expenses, including premiums, related to such Refinancing,

(25) Licenses of intellectual property granted in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Company or any Restricted Subsidiary,

(26) Liens of lessor, sublessor or licensor arising under any lease, sublease or license entered into by the Company or any Restricted Subsidiary in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Company or any Restricted Subsidiary, and covering only the Property or assets so leased, subleased or licensed,

(27) any (i) interest or title of a lessor or sublessor under any lease of a Property or asset not prohibited by the Indenture, (ii) Lien or restriction that the interest or title of such lessor or sublessor may be subject to or (iii) subordination of the interest of the lessee or sublessee under such lease to any Lien or restriction referred to in the preceding clause (ii), so long as the holder of such Lien or restriction agrees to recognize the rights of such lessee or sublessee under such lease,

(28) pledges, deposits and other Liens existing under, or required to be made in connection with, (i) earnest money obligations, escrows or similar purpose undertakings or indemnifications in connection with any purchase and sale agreement, (ii) development agreements or other contracts entered into with governmental authorities (or an entity sponsored by a governmental authority), in connection with the entitlement of real Property or (iii) agreements for the funding of infrastructure, including in respect of the issuance of community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds, and similar bonding requirements arising in the ordinary course of business of a homebuilder,

(29) Liens, encumbrances or other restrictions contained in any joint venture agreement entered into by the Company or any Restricted Subsidiary with respect to the equity interests issued by the relevant joint venture or the assets of such joint venture,

(30) assignments of insurance or condemnation proceeds provided to landlords (or their mortgagees) pursuant to the terms of any lease of Property leased by the Company or any Restricted Subsidiary, in each case with respect to the Property so leased, and customary Liens and rights reserved in any lease for rent or for compliance with the terms of such lease,

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(31) Liens on cash pledged to secure deductibles, retentions and other obligations to insurance providers in the ordinary course of business, and

(32) Liens securing Indebtedness described under clause (8) of the definition of “Permitted Indebtedness”; provided, however, that to the extent such Indebtedness constitutes Indebtedness of the type described in clause (1) of the definition of “Indebtedness” (other than a note evidencing the deferred purchase price of Property), any such Liens rank pari-passu with the Notes and such Indebtedness is subject to the Intercreditor Agreement.

“Permitted Priority Liens” means Permitted Liens permitted by clauses (6), (9), (11), (12), (15), (18), (23), (24) (to the extent the Refinancing pertains to Indebtedness secured by Liens referred to in clause (12)), (28) and (32) (unless required pursuant to such clause (32) to rank pari-passu with the Notes) of the definition of “Permitted Liens”.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Post-Petition Interest” means any interest or entitlement to fees or expenses or other charges that accrues after the commencement of any bankruptcy proceeding, whether or not allowed or allowable in any such bankruptcy proceeding.

“Preferred Equity Interests” of any Person means all Equity Interests of such Person which has a preference in liquidation or with respect to the payment of dividends.

“Property” of any Person means all types of real, personal, tangible, intangible or mixed property owned by such Person, whether or not included in the most recent consolidated balance sheet of such Person and its Subsidiaries under GAAP, including Equity Interests and Indebtedness of other Persons.

“Purchase Money Indebtedness” means Indebtedness of the Company or any Restricted Subsidiary Incurred for the purpose of financing all or any part of the purchase price, or the cost of construction or improvement, of any Property to be used in the ordinary course of business by the Company and the Restricted Subsidiaries; provided, however, that (a) the aggregate principal amount of such Indebtedness shall not exceed such purchase price or cost and (b) such Indebtedness shall be Incurred no later than 180 days after the acquisition of such Property or completion of such construction or improvement.

“Qualified Equity Interests” of a Person means Equity Interests of such Person other than:

(1) any Disqualified Equity Interests;

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(2) any Equity Interests sold to a Subsidiary of such Person or a Company Equity Plan;

(3) any Equity Interests financed, directly or indirectly, using funds borrowed from such Person, a Subsidiary of such Person or any Company Equity Plan or contributed, extended, advanced or guaranteed by such Person, a Subsidiary of such person or any Company Equity Plan;

(4) any Equity Interests issued upon conversion of, or issued in exchange for, debt securities owned by any Subsidiary of such Person or Company Equity Plan;

(5) any Equity Interests issued in connection with any cash contribution made in accordance with Section 4.07(b)(vi); and

(6) except for purposes of the definition of “Excluded Contribution”, any Equity Interest to the extent the cash or Cash Equivalents received in connection therewith are designated as Excluded Contributions.

Unless otherwise specified, Qualified Equity Interests refer to Qualified Equity Interests of the Company.

“Real Estate Business” means homebuilding, housing construction, real estate (including masterplan) development or construction and the sale of homes and related real estate activities, including the provision of mortgage financing or title insurance or any other business substantially related or reasonably incidental thereto.

“Real Property Collateral Management Agreement” means the Real Property Collateral Management Agreement, dated as of the Issue Date, among the Issuers, the Guarantors and the Collateral Agent.

“Record Date” for the interest payable on any Interest Payment Date means the May 1 or November 1 (whether or not a Business Day) immediately preceding such Interest Payment Date.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with the Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:

(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced;

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(2) such Refinancing Indebtedness has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being Refinanced;

(3) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; and

(4) if the Indebtedness being Refinanced is subordinated in right of payment to the Notes, such Refinancing Indebtedness is subordinated in right of payment to the Notes to at least the same extent as the Indebtedness being Refinanced;

provided further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or the Corporate Issuer or (B) Indebtedness of the Company, the Corporate Issuer or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.

“Registration Rights Agreement” means (i) with respect to the Initial Notes, the Registration Rights Agreement dated the Issue Date among the Issuers, the Guarantors party thereto and the Initial Purchaser with respect to the Initial Notes, and (ii) with respect to any Initial Additional Notes, any registration rights agreements among the Issuers, the Guarantors party thereto and any initial purchasers or dealer managers party thereto relating to rights given by the Issuers to the purchasers of Initial Additional Notes to register such Initial Additional Notes or exchange them for Exchange Notes registered under the Securities Act.

“Required Dedication” means a dedication or conveyance of any Property at the direction of a governmental authority or a public utility, or pursuant to or in connection with a development agreement, or to a homeowners or condominium owners association, to (i) such governmental authority (or any designee of such governmental authority), (ii) a utility provider, (iii) a special foundation which holds land for preservation of the environment or (iv) a homeowners or condominium owners association, in any case for parks, schools, recreation centers, common community facilities, public streets, utility easements and installations, slopes or other rights-of-way or public use, in each case in the ordinary course of business (as determined by the Company in good faith and in the exercise of its reasonable commercial judgment).

“Responsible Officer”, when used with respect to the Trustee, means any officer of the Trustee with direct responsibility for the administration of the trust created by the Indenture.

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“Restricted Investment” has the meaning ascribed to it in the definition of “Restricted Payment”.

“Restricted Payment” means any of the following:

(1) the declaration or payment of any dividend or any other distribution on Equity Interests of the Company, the Corporate Issuer or any Restricted Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Company, the Corporate Issuer or any Restricted Subsidiary (other than (a) dividends or distributions payable solely in Qualified Equity Interests and (b) in the case of the Corporate Issuer or Restricted Subsidiaries, dividends or distributions payable ratably to the Company, the Corporate Issuer or a Restricted Subsidiary and each other Person entitled thereto);

(2) the purchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company, the Corporate Issuer or any Restricted Subsidiary (other than a payment made to the Company, the Corporate Issuer or any Restricted Subsidiary);

(3) any Investment (other than any Permitted Investment), including any Investment in any joint venture, any Investment in an Unrestricted Subsidiary (including by the designation of a Subsidiary of the Company as an Unrestricted Subsidiary) or any Investment in a Restricted Subsidiary that is not a Guarantor (each Investment described in this clause (3), a “Restricted Investment”);

(4) the purchase, repurchase, redemption, acquisition or retirement for value, prior to one year before the date for any scheduled maturity, sinking fund or amortization or other principal installment payment, of any Subordinated Indebtedness (other than (a) Indebtedness permitted under clause (4) of the definition of “Permitted Indebtedness” or (b) the purchase, repurchase, redemption, defeasance, or other acquisition or retirement of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, amortization or principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement); and

(5) any payment by either Issuer or any Restricted Subsidiary with respect to a Specified Obligation.

“Restricted Period” means the relevant 40-day “distribution compliance period” as such term is defined in Regulation S, which, for each relevant Note, commences on the date such Note is issued.

“Restricted Subsidiary” means any Subsidiary of the Company which is not an Unrestricted Subsidiary, including the Corporate Issuer.

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“Sale/Leaseback Transaction” means an arrangement relating to Property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such Property to a Person and the Company or a Restricted Subsidiary leases it from such Person.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc., a New York corporation, or any successor to its debt rating business.

“Securities Act” means the Securities Act of 1933, as amended.

“Security Agreement” mean the Security Agreement dated as of the Issue Date, among the Issuers, the Grantors party thereto and the Collateral Agent in respect of the Indenture, as amended and restated or otherwise modified from time to time.

“Security Documents” means the security documents, including the Mortgages and the Security Agreement, granting or perfecting a security interest in any Property or assets of any Person to secure the Indebtedness and related Obligations under the Notes, the Guarantees, the LC Facility Agreement and any other Pari-Passu Lien Obligations, as each may be amended, restated, supplemented or otherwise modified from time to time.

“Significant Subsidiary” means any Subsidiary of the Company which would constitute a “significant subsidiary” as defined in Rule 1-02(w)(1) or (2) of Regulation S-X under the Securities Act and the Exchange Act as in effect on the Issue Date and, for purpose of determining whether an Event of Default has occurred, any group of Restricted Subsidiaries that combined would be such a Significant Subsidiary.

“Specified Obligations” means (1) interest-coverage, re-margin and completion guarantees with respect to (a) any joint venture in which either Issuer or any Restricted Subsidiary has a direct or an indirect equity interest or (b) the Baker JV, (2) customary “bad-boy” guarantees, (3) guarantees of Affiliate Obligations existing on the Issue Date (and any extension, modification or replacement of such Affiliate Obligation provided that such extension, modification or replacement does not increase the obligations of the Company or any Restricted Subsidiary with respect to such Affiliate Obligations) and (4) tax payments (including interest and penalties) or Tax Distributions, as applicable, attributable to any U.S. Federal income tax proceeding (whether or not still contested or subject to appeal) regarding the completed contract method (as defined in U.S. Treasury Regulation Section 1.460-4(d)) of accounting for periods prior to 2011 (other than any increase in taxes payable for periods after 2010 as a result of such proceeding).

“Stated Maturity” means, with respect to any Indebtedness, the date specified in such Indebtedness as the fixed date on which the final payment of principal of such Indebtedness is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such Indebtedness at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

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“Subordinated Indebtedness” means Indebtedness subordinated in right of payment to the Notes, or the Guarantees, as the case may be, pursuant to a written agreement and includes any Indebtedness ranking equally in right of payment to the Notes or the applicable Guarantee, as the case may be, but unsecured or secured by the Collateral on a basis entirely junior to that of the Notes and the Guarantees.

“Subsidiary” of any Person means any corporation or other entity of which a majority of the Equity Interests having ordinary voting power to elect a majority of the Governing Body or other persons performing similar functions is at the time directly or indirectly owned or controlled by such Person.

“Tax Distribution Agreement” means the Tax Distribution Agreement dated as of the Issue Date among the Company, the direct and indirect holders of ownership interests in the Company, and each of the Persons party to the Sixth Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership, dated as of April 1, 2005 (as amended, restated, supplemented or otherwise modified from time to time).

“Tax Distributions” means, so long as the Company is treated as a pass-through or disregarded entity for United States Federal income tax purposes, the distributions in respect of income taxes permitted under Section 2 of the Tax Distribution Agreement as in effect on the Issue Date.

“Tie In Jurisdiction” means a jurisdiction in which a “tie-in” endorsement may be obtained for a title insurance policy covering Property located in such jurisdiction which endorsement effectively ties coverage to other title insurance policies covering properties located in other jurisdictions; the parties acknowledge that as of the date hereof, each of California, Colorado, Nevada, Arizona and Washington State is a Tie In Jurisdiction and Florida is not a Tie In Jurisdiction.

“Title Company” means Fidelity National Title Insurance Company and such successor and additional title companies as may be approved in writing by the Collateral Agent.

“Title Policy” means, with respect to any real property, either (i) an ALTA 2006 Form mortgagee’s Policy of Title Insurance or other form acceptable to the Collateral Agent, or (ii) a sub-policy which is issued together with a master ALTA 2006 Form mortgagee’s Policy of Title Insurance in any state in a Tie In Jurisdiction in which multiple Real Properties are located, which master policy shall include a tie-in endorsement aggregating the coverage of all of the sub-policies issued in such state, each in favor of the Collateral Agent for the benefit of the Pari-Passu Lien Secured Parties (as defined in the Intercreditor Agreement) with respect to such real property, including endorsements with respect to such items of coverage as the Collateral Agent may reasonably request and which endorsements are

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available, including with respect to any Title Policy issued in a Tie In Jurisdiction, a tie in endorsement increasing the coverage amount of such policy to the aggregate amount of coverage of all Title Policies issued in all Tie In Jurisdictions for which Title Policies have been issued, issued by Title Company and with, if and to the extent required by the Collateral Agent, reinsurance (with direct access agreements) with title insurance companies acceptable to the Collateral Agent, showing the fee simple title to the land and improvements described in the applicable Mortgage as vested in an Issuer or a Guarantor, and insuring that the Lien granted by such Mortgage is a valid Lien against such real property in favor of Collateral Agent for the benefit of the Pari-Passu Lien Secured Parties, subject only to (x) matters that are not of public record and (y) Permitted Liens. No Title Policy is or will be required to include extended coverage with respect to mechanics’ liens.

“Trustee” means the party named as such in the preamble of the Indenture until such time, if any, a successor replaces such party in accordance with the applicable provisions of the Indenture and thereafter means the successor serving hereunder.

“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as amended.

“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

“Unrestricted Subsidiary” means

(1) Partners Insurance Company and its Subsidiaries and

(2) any other Subsidiary of the Company (other than the Corporate Issuer) so designated after the Issue Date by a resolution adopted by the Governing Body of the Company or a duly authorized committee thereof as provided below; provided, however, that (a) the holders of Indebtedness of such Subsidiary of the Company do not have direct or indirect recourse against the Company, the Corporate Issuer or any Restricted Subsidiary, and neither the Company, the Corporate Issuer nor any Restricted Subsidiary otherwise has liability for, or any payment obligations in respect of, such Indebtedness (including any undertaking, agreement or instrument evidencing such Indebtedness), except, in each case, to the extent that (i) the amount thereof constitutes a Restricted Payment permitted by the Indenture, (ii) in the case of Non-Recourse Indebtedness, such recourse or liability is for the matters discussed in the last sentence of the definition of “Non-Recourse Indebtedness”, or (iii) such Indebtedness is a guarantee by such Subsidiary of Indebtedness of the Company, the Corporate Issuer or a Restricted Subsidiary and (b) no holder of any Indebtedness of such Subsidiary shall have a right to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity as a result of a default on any Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary.

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Subject to the foregoing, the Governing Body of the Company or a duly authorized committee thereof may designate any Subsidiary to be an Unrestricted Subsidiary; provided, however, that (1) the net amount (the “Designation Amount”) then outstanding of all previous Investments by the Company and the Restricted Subsidiaries in such Subsidiary and its Subsidiaries will be deemed to be a Restricted Payment at the time of such designation and will reduce the amount available for Restricted Payments under Section 4.07, to the extent provided therein, (2) the Company must be permitted under Section 4.07 to make the Restricted Payment deemed to have been made pursuant to clause (1), and (3) after giving effect to such designation, no Default shall have occurred or be continuing. In accordance with the foregoing, and not in limitation thereof, Investments made by any Person in any Subsidiary of such Person prior to such Person’s merger with the Company or any Restricted Subsidiary (but not in contemplation or anticipation of such merger) shall not be counted as an Investment by the Company or such Restricted Subsidiary if such Subsidiary of such Person is designated as an Unrestricted Subsidiary.

The Governing Body of the Company or a duly authorized committee thereof may also redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that (1) the Indebtedness of such Unrestricted Subsidiary as of the date of such redesignation could then be Incurred under Section 4.06 and (2) immediately after giving effect to such redesignation and the Incurrence of any such additional Indebtedness, the Company and the Restricted Subsidiaries could Incur $1.00 of additional Coverage Indebtedness under Section 4.06.

Any such designation or redesignation by the Governing Body of the Company or a committee thereof will be evidenced to the Trustee by the filing with the Trustee of a certified copy of the resolution of the Governing Body of the Company or a committee thereof giving effect to such designation or redesignation and an Officers’ Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth the underlying calculations of such Officers’ Certificate. The designation of any Person as an Unrestricted Subsidiary shall be deemed to include a designation of all Subsidiaries of such Person as Unrestricted Subsidiaries.

“U.S. Government Obligations” means non-callable, non-payable bonds, notes, bills or other similar obligations issued or guaranteed by the United States government or any agency thereof the full and timely payment of which are backed by the full faith and credit of the United States.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness or portion thereof at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including, without limitation, payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (b) the sum of all such payments described in clause (a)(i) of this definition.

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“$” means U.S. dollars.

SECTION 1.02. Rules of Construction. Unless the context otherwise requires or except as otherwise expressly provided,

(a) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(b) “herein”, “hereof” and other words of similar import refer to the Indenture as a whole and not to any particular Section, Article other subdivision;

(c) all references to Sections or Articles or Exhibits refer to Sections or Articles or Exhibits of or to the Indenture unless otherwise indicated;

(d) references to agreements or instruments, or to statutes or regulations, are to such agreements or instruments, or statutes or regulations, as amended from time to time (or to successor statutes and regulations);

(e) in the event that a transaction meets the criteria of more than one category of permitted transactions or listed exceptions, the Company may classify such transaction as it, in its sole discretion, determines;

(f) references to the Issuers mean either the Issuers or the applicable Issuer as the context requires and references to an Issuer mean either such Issuer or the Issuers as the context requires;

(g) “including” means including without limitation;

(h) “or” is not exclusive;

(i) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured indebtedness;

(j) secured Indebtedness shall not be deemed to be subordinate or junior to any other secured Indebtedness merely because it has a junior priority with respect to the same collateral; and

(k) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the Company dated such date prepared in accordance with GAAP.

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SECTION 1.03. Other Definitions.

Term	Defined in Section
act	13.02(b)(i)
Affiliated Persons	4.13(a)
Affiliated Transaction	4.13(a)
Agent Members	Appendix
Appendix	2.01
Applicable Premium	Appendix
Applicable Procedures	Appendix
Asset Sale Offer	4.10(d)
cash transaction	7.03(a)
Clearstream, Luxembourg	Appendix
Comparable Treasury Issue	Appendix
Comparable Treasury Price	Appendix
Covenant Defeasance	8.02
Coverage Indebtedness	4.06(a)
Change of Control Offer	4.12(a)
Definitive Note	Appendix
Depository	Appendix
Euroclear	Appendix
Event of Default	5.01
expiration date	3.03(b)(iv)
Excess Proceeds	4.10(d)
Global Notes	Appendix
Incur	4.06(a)
Legal Defeasance	8.01
Notes Custodian	Appendix
offer	3.03(a)
Offer to Purchase	3.03(a)
Pari-Passu Indebtedness	4.10(d)
Pari-Passu Liens	11.01
Paying Agent	2.03
Primary Treasury Dealer	Appendix
Private Exchange	Appendix
Private Exchange Notes	Appendix
Purchase Agreement	Appendix
purchase amount	3.03(b)(ii)
purchase date	3.03(b)(iv)
Quotation Agent	Appendix
QIB	Appendix
Reference Treasury Dealer	Appendix
Reference Treasury Dealer Quotations	Appendix
Registered Exchange Offer	Appendix
Registrar	2.03
Regulation S	Appendix
Regulation S Global Note	Appendix
Regulation S Permanent Global Note	Appendix

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Term	Defined in Section
Regulation S Temporary Global Note	Appendix
Repurchase Date	4.12(a)
Restricted Notes Legend	Appendix
Restricted Period	Appendix
Rule 144A	Appendix
Rule 144A Global Note	Appendix
Rule 144A Notes	Appendix
self-liquidating paper	7.03(b)
Shelf Registration Statement	Appendix
Successor	4.14(a)(i)
Transfer Restricted Notes	Appendix

ARTICLE II

The Notes

SECTION 2.01. Form and Dating. Provisions relating to the Original Securities and the Additional Notes are set forth in the Rule 144A/Regulation S Appendix (the “Appendix”) which is hereby incorporated in, and expressly made part of, the Indenture. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in, and expressly made a part of, the Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Issuers are subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Issuers). Each Note shall be dated the date of its authentication. The terms of the Notes set forth in the Appendix are part of the terms of the Indenture.

SECTION 2.02. Execution and Authentication. (a) An Officer for each of the Company and the Corporate Issuer shall sign the Notes for the Company and the Corporate Issuer, respectively, by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless. A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under the Indenture.

(b) On the Issue Date, the Trustee shall authenticate and deliver $750,000,000 of 8.625% Senior Secured Notes Due 2019 and, at any time and from time to time thereafter, the Trustee shall authenticate and deliver Notes for original issue in an aggregate principal amount specified by the Issuers, in each case upon a written order of the Issuers signed by an Officer. Such order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and, in the case of an issuance of Additional Notes pursuant to Section 2.13 after the Issue Date, shall certify that such issuance is in compliance with Sections 4.06 and 4.08. The aggregate principal amount of Notes outstanding at any time is unlimited.

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(c) The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate the Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in the Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

SECTION 2.03. Registrar and Paying Agent. (a) The Issuers shall maintain an office or agency (which may be the office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency (which may be the office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuers may have one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent.

(b) The Issuers shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to the Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of the Indenture that relate to such agent. The Issuers shall notify the Trustee of the name and address of any such agent. If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Issuers or any wholly-owned Restricted Subsidiary incorporated or organized within the United States of America may act as Paying Agent, Registrar, co-registrar or transfer agent.

(c) The Issuers initially appoint the Trustee as Registrar and Paying Agent in connection with the Notes.

SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due date of the principal and interest on any Note, the Issuers shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Issuers shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Notes and shall notify the Trustee of any default by the Issuers in making any such payment. If the Company or a Subsidiary thereof acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.

SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee, in writing at least five Business Days before each interest payment date

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and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

SECTION 2.06. Transfer and Exchange. The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer. When a Note is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of the Indenture and Section 8-401(a) of the Uniform Commercial Code are met. When Notes are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed or 15 days before an interest payment date.

SECTION 2.07. Replacement Notes. If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Issuers, such Holder shall furnish an indemnity bond that is sufficient in the judgment of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Note is replaced. The Issuers and the Trustee may charge the Holder for their expenses in replacing a Note. Every replacement Note is an additional Obligation of the Issuers.

SECTION 2.08. Outstanding Notes. (a) Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancelation and those described in this Section as not outstanding. A Note does not cease to be outstanding because either of the Issuers or an Affiliate of either of the Issuers holds the Note.

(b) If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Issuers receive proof satisfactory to them that the replaced Note is held by a protected purchaser (as defined in Section 8-303 of the Uniform Commercial Code).

(c) If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

SECTION 2.09. Temporary Notes. Until definitive Notes are ready for delivery, the Issuers may prepare and the Trustee shall authenticate temporary Notes.

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Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuers consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate definitive Notes and deliver them in exchange for temporary Notes.

SECTION 2.10. Cancelation. The Issuers at any time may deliver Notes to the Trustee for cancelation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel (subject to the record retention requirements of the Exchange Act) all Notes surrendered for registration of transfer, exchange, payment or cancelation and deliver evidence of such cancelation to the Issuers. The Issuers may not issue new Notes to replace Notes they have redeemed, paid or delivered to the Trustee for cancelation.

SECTION 2.11. Defaulted Interest. If the Issuers default in a payment of interest on the Notes, the Issuers shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Issuers may pay the defaulted interest to the persons who are Holders on a subsequent special record date. The Issuers shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

SECTION 2.12. CUSIP Numbers, ISINs, etc. The Issuers may use “CUSIP” numbers, ISINs and “Common Code” numbers (in each case if then generally in use) and, if so, the Trustee shall use “CUSIP” numbers, ISINs and “Common Code” numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Issuers shall advise the Trustee in writing of any change in any “CUSIP” numbers, ISINs or “Common Code” numbers applicable to the Notes.

SECTION 2.13. Issuance of Additional Notes. (a) After the Issue Date, the Issuers shall be entitled, subject to their compliance with Sections 4.06 and 4.08, to issue Additional Notes under the Indenture, which Notes shall have identical terms as the Initial Notes issued on the Issue Date, other than with respect to the date of issuance and issue price. All the Notes issued under the Indenture shall be treated as a single class for all purposes of the Indenture including waivers, amendments, redemptions and offers to purchase.

(b) With respect to any Additional Notes, the Issuers shall set forth in resolution of the Board of Managers and Board of Directors, as applicable, and an Officers’ Certificate, a copy of each which shall be delivered to the Trustee, the following information:

(1) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to the Indenture and the provision of Section 4.06 that the Issuers are relying on to issue such Additional Notes; and

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(2) the issue price, the issue date and the CUSIP number of such Additional Notes, if any; provided, however, that no Additional Notes may be issued at a price that would cause such Additional Notes to have “original issue discount” within the meaning of Section 1273 of the Code.

ARTICLE III

Optional Redemption; Offer to Purchase

SECTION 3.01. Sinking Fund; Mandatory Redemption. There is no sinking fund for, or mandatory redemption of, the Notes.

SECTION 3.02. Method and Effect of Redemption. (a) If the Issuers elect to redeem Notes pursuant to paragraph 4 thereof, the Issuers must notify the Trustee of the redemption date and the principal amount of Notes to be redeemed by delivering an Officers’ Certificate at least 45 days before the redemption date (unless a shorter period is satisfactory to the Trustee). If fewer than all of the Notes are being redeemed, the Officers’ Certificate must also specify a record date not less than 15 days after the date of the notice of redemption is given to the Trustee, and the Trustee will select the Notes to be redeemed on a pro rata basis, by lot or by such other method the Trustee in its sole discretion deems fair and appropriate (subject to the procedures of DTC), in denominations of $2,000 principal amount or any integral multiple of $1,000 in excess thereof. The Trustee will notify the Issuers promptly of the Notes or portions of Notes to be called for redemption. Notice of redemption must be sent by the Issuers or, at the Issuers’ request, by the Trustee in the name and at the expense of the Issuers to Holders whose Notes are to be redeemed at least 30 days but not more than 60 days before the redemption date. Notices of redemption may not be conditional.

(b) The notice of redemption will identify the Notes to be redeemed and will include or state the following:

(i) the redemption date;

(ii) the redemption price, including the portion thereof representing any accrued interest, if any;

(iii) the place or places where Notes are to be surrendered for redemption (Notes called for redemption must be so surrendered in order to collect the redemption price);

(iv) that on the redemption date, the redemption price will become due and payable on Notes called for redemption, and interest on Notes called for redemption will cease to accrue on and after the redemption date;

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(v) that if any Note is redeemed in part, the portion of the principal amount thereof to be redeemed, and that on and after the redemption date, upon surrender of such Note, new Notes equal in principal amount to the unredeemed portion will be issued; and

(vi) if any Note contains a CUSIP or ISIN number, no representation is being made as to the correctness of the CUSIP or ISIN number either as printed on the Notes or as contained in the notice of redemption and that the Holder should rely only on the other identification numbers printed on the Notes.

(c) Once notice of redemption is sent to the Holders, Notes called for redemption become due and payable at the redemption price on the redemption date, and upon surrender of the Notes called for redemption, the Issuers shall redeem such Notes at the redemption price. Commencing on the redemption date, Notes redeemed will cease to accrue interest. Upon surrender of any Note redeemed in part, the Holder will receive a new Note equal in principal amount to the unredeemed portion of the surrendered Note.

SECTION 3.03. Offer to Purchase. (a) An “Offer to Purchase” means an offer by the Issuers to purchase Notes as required by the Indenture. An Offer to Purchase must be made by written offer (the “offer”) sent to the Holders. The Issuers will notify the Trustee at least 15 days (or such shorter period as is acceptable to the Trustee) prior to sending the offer to Holders of their obligation to make an Offer to Purchase, and the offer will be sent by the Issuers or, at the Issuers’ request, by the Trustee in the name and at the expense of the Issuers.

(b) The offer must include or state the following as to the terms of the Offer to Purchase:

(i) the provision of the Indenture pursuant to which the Offer to Purchase is being made;

(ii) the aggregate principal amount of the outstanding Notes offered to be purchased by the Issuers pursuant to the Offer to Purchase (including, if less than 100%, the paragraph of the Notes pursuant to which such offer is made) (the “purchase amount”);

(iii) the purchase price, including the portion thereof representing accrued interest, if any;

(iv) an expiration date (the “expiration date”) not less than 30 days or more than 60 days after the date of the offer, and a settlement date for purchase (the “purchase date”) not more than five Business Days after the expiration date;

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(v) information concerning the business of the Company which the Issuers in good faith believe will enable the Holders to make an informed decision with respect to the Offer to Purchase, at a minimum to include:

(A) the most recent annual and quarterly financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the Company, other than to the extent such information is contained in the Company’s filings with the SEC and incorporated in the offer by reference,

(B) a description of material developments in the Company’s business subsequent to the date of the latest of the financial statements (including a description of the events requiring the Issuers to make the Offer to Purchase), and

(C) if applicable, appropriate pro forma financial information concerning the Offer to Purchase and the events requiring the Issuers to make the Offer to Purchase;

(vi) a Holder may tender all or any portion of its Notes, subject to the requirement that any portion of a Note tendered must be in denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof;

(vii) the place or places where Notes are to be surrendered for tender pursuant to the Offer to Purchase;

(viii) each Holder electing to tender a Note pursuant to the offer will be required to surrender such Note at the place or places specified in the offer prior to the close of business on the expiration date (such Note being, if the Issuers or the Trustee so requires, duly endorsed or accompanied by a duly executed written instrument of transfer);

(ix) interest on any Note not tendered, or tendered but not purchased by the Issuers pursuant to the Offer to Purchase, will continue to accrue;

(x) on the purchase date the purchase price will become due and payable on each Note accepted for purchase, and interest on Notes purchased will cease to accrue on and after the purchase date;

(xi) Holders are entitled to withdraw Notes tendered by giving notice, which must be received by the Issuers or the Trustee not later than the close of business on the expiration date, setting forth the name of the Holder, the principal amount of the tendered Notes, the certificate number of the tendered Notes and a statement that the Holder is withdrawing all or a portion of the tender;

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(xii) (A) if Notes in an aggregate principal amount less than or equal to the purchase amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Issuers will purchase all such Notes, and (B) if the Offer to Purchase is for less than all of the outstanding Notes and Notes in an aggregate principal amount in excess of the purchase amount are tendered and not withdrawn pursuant to the offer, the Issuers will purchase Notes having an aggregate principal amount equal to the purchase amount on a pro rata basis, with adjustments so that only Notes in denominations of $2,000 principal amount and any integral multiples of $1,000 in excess thereof;

(xiii) if any Note is purchased in part, new Notes equal in principal amount to the unpurchased portion of the Note will be issued; and

(xiv) if any Note contains a CUSIP or ISIN number, no representation is being made as to the correctness of the CUSIP or ISIN number either as printed on the Notes or as contained in the offer and that the Holder should rely only on the other identification numbers printed on the Notes.

(c) Prior to the purchase date, the Issuers will accept tendered Notes for purchase as required by the Offer to Purchase and deliver to the Trustee all Notes so accepted together with an Officers’ Certificate specifying which Notes have been accepted for purchase. On the purchase date, the purchase price will become due and payable on each Note accepted for purchase, and interest on Notes purchased will cease to accrue on and after the purchase date. The Trustee will promptly return to Holders any Notes not accepted for purchase and send to Holders new Notes equal in principal amount to any unpurchased portion of any Notes accepted for purchase in part.

(d) The Issuers will comply with Rule 14e-1 under the Exchange Act and all other applicable laws in making any Offer to Purchase, and the above procedures will be deemed modified as necessary to permit such compliance.

ARTICLE IV

Covenants

SECTION 4.01. Payment of Notes. (a) The Issuers agree to pay the principal of, premium, if any, and interest, if any, on the Notes on the dates and in the manner provided in the Notes and the Indenture. The Issuers shall pay Additional Interest, if any, in the amounts set forth in the applicable Registration Rights Agreement. Not later than 9:00 a.m. (New York City time) on the due date of any principal of, premium, if any, or interest, if any, on, any Notes, or any redemption or purchase price of the Notes, the Issuers will deposit with the Trustee (or Paying Agent) money in immediately available funds sufficient to pay such amounts; provided, however, that if the Issuers or any Affiliate of the Issuers is acting as Paying Agent, it will, on or before

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each due date, segregate and hold in a separate trust fund for the benefit of the Holders a sum of money sufficient to pay such amounts until paid to such Holders or otherwise disposed of as provided in the Indenture. In each case, the Issuers will promptly notify the Trustee of their compliance with this paragraph.

(b) An installment of principal, premium, if any, or interest, if any, will be considered paid on the date due if the Trustee (or Paying Agent, other than the Issuers or any Affiliate of the Issuers) holds on that date money designated for and sufficient to pay the installment. If the Issuers or any Affiliate of the Issuers acts as Paying Agent, an installment of principal, premium, if any, or interest, if any, will be considered paid on the due date only if paid to the Holders.

(c) The Issuers agree to pay interest on overdue principal, and, to the extent lawful, overdue installments of interest, if any, at the rate per annum specified in the Notes.

(d) Payments in respect of the Notes represented by the Global Notes are to be made by wire transfer of immediately available funds to the accounts specified by the Holders of the Global Notes. With respect to Certificated Notes, the Issuers will make all payments by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each Holder’s registered address.

SECTION 4.02. Maintenance of Office or Agency. The Issuers will maintain an office or agency where Notes may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Issuers in respect of the Notes and the Indenture may be served. The Issuers hereby initially designate the Corporate Trust Office of the Trustee as such office of the Issuers. The Issuers will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers fail to maintain any such required office or agency or fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served to the Trustee.

The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be surrendered or presented for any of such purposes and may from time to time rescind such designations. The Issuers will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

SECTION 4.03. Existence. The Issuers will each do or cause to be done all things necessary to preserve and keep in full force and effect their existence and the existence of each of the Restricted Subsidiaries in accordance with their respective organizational documents, and the material rights, licenses and franchises of the Issuers and each Restricted Subsidiary; provided, however, that the Issuers are not required to preserve any such right, license or franchise, or the existence of any Restricted Subsidiary, if the maintenance or preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole; and provided further, however, that this Section not prohibit any transaction otherwise permitted by Section 4.10 or Section 4.14.

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SECTION 4.04. [Reserved].

SECTION 4.05. [Reserved].

SECTION 4.06. Limitations on Indebtedness. (a) The Issuers will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume, become liable for or guarantee the payment of (collectively, “Incur”) any Indebtedness (including Acquired Indebtedness) unless, immediately after giving effect thereto and the application of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 (any such Indebtedness Incurred pursuant to this paragraph being herein referred to as “Coverage Indebtedness”).

(b) Notwithstanding Section 4.06(a), the Company and the Restricted Subsidiaries may Incur Permitted Indebtedness.

(c) For purposes of determining compliance with this covenant:

(i) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of more than one of the types of Permitted Indebtedness, the Issuers, in their sole discretion, will classify such item of Indebtedness (or any portion thereof) at the time of Incurrence and will only be required to include the amount and type of such Indebtedness in one of the categories of Permitted Indebtedness or as Coverage Indebtedness;

(ii) the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness permitted above; and

(iii) any Permitted Indebtedness originally classified as Incurred pursuant to one of the clauses in the definition of “Permitted Indebtedness” (other than pursuant to clause (1)) may later be reclassified by the Company such that it will be deemed as having been Incurred as Coverage Indebtedness or as Permitted Indebtedness pursuant to another clause in the definition of “Permitted Indebtedness”, as applicable, to the extent that such reclassified Indebtedness could be Incurred pursuant thereto at the time of such reclassification.

(d) The Issuers will not, and will not cause or permit any Guarantor to, directly or indirectly, Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of such Issuer or Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Guarantee of such Guarantor, as the case may be, to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the applicable Issuer or such Guarantor, as the case may be.

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SECTION 4.07. Limitations on Restricted Payments. (a) The Company will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, make any Restricted Payment unless:

(i) no Default shall have occurred and be continuing at the time of or immediately after giving effect to such Restricted Payment;

(ii) immediately after giving effect to such Restricted Payment, the Company could Incur at least $1.00 of Coverage Indebtedness pursuant to Section 4.06(a); and

(iii) immediately after giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments (including the Fair Market Value of any non-cash Restricted Payment) declared or made on or after the Issue Date (other than those Restricted Payments described in Section 4.07(b)(iii) through Section 4.07(b)(xiii)) does not exceed the sum of:

(A) 50% of the Consolidated Net Income of the Company on a cumulative basis during the period (taken as one accounting period) from and including the first day of the Company’s fiscal quarter during which the Issue Date occurs and ending on the last day of the Company’s fiscal quarter immediately preceding the date of such Restricted Payment (or in the event such Consolidated Net Income shall be a deficit, minus 100% of such deficit), plus

(B) 100% of the aggregate net cash proceeds of and the Fair Market Value of any Property or other asset received by the Company from (1) any capital contribution to the Company after the Issue Date or any issue or sale after the Issue Date of any Qualified Equity Interests and (2) the issue or sale after the Issue Date of any Indebtedness or other securities of the Company convertible into or exercisable for Qualified Equity Interests that have been so converted or exercised, plus

(C) in the case of a distribution on or disposition or repayment of any Restricted Investment, an amount (to the extent not included in the calculation of Consolidated Net Income referred to in (A)) equal to the lesser of (x) the return of capital with respect to such Investment (including by dividend, distribution or sale of Equity Interests) and (y) the amount of such Investment that was treated as a Restricted Payment, in either case, less the cost of the disposition or repayment of such Investment (to the extent not included in the calculation of Consolidated Net Income referred to in (A)), plus

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(D) with respect to any Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary after the Issue Date in accordance with the definition of “Unrestricted Subsidiary” (so long as the designation of such Subsidiary as an Unrestricted Subsidiary was treated as a Restricted Payment made after the Issue Date, and only to the extent not included in the calculation of Consolidated Net Income referred to in (A)), an amount equal to the lesser of (x) the proportionate interest of the Company or any Restricted Subsidiary in an amount equal to the excess of (I) the total assets of such Unrestricted Subsidiary, valued on an aggregate basis at the lesser of book value and Fair Market Value thereof, over (II) the total liabilities of such Unrestricted Subsidiary, determined in accordance with GAAP, and (y) the Designation Amount at the time of such Unrestricted Subsidiary’s designation as an Unrestricted Subsidiary.

(b) Section 4.07(a) will not prohibit:

(i) the payment of any dividend or redemption of any Equity Interests or Subordinated Indebtedness within 60 days after the date of declaration thereof or call for redemption if, at such date of declaration or call for redemption, such payment or redemption was permitted by the provisions of the preceding paragraph as of the date of declaration (and the payment itself will be deemed to have been paid on such date of declaration);

(ii) any Restricted Payment made in exchange for, or out of the net proceeds of the substantially concurrent sale of, Qualified Equity Interests;

(iii) the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value by the Company of any Subordinated Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary in exchange for, or out of proceeds of, Refinancing Indebtedness Incurred as permitted by and in compliance with Section 4.06;

(iv) Restricted Investments after the Issue Date not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $10,000,000;

(v) Restricted Investments after the Issue Date in joint ventures not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $100,000,000; provided, however, that, at the time any such Investment

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is made, the net book value of the Company’s inventory (including “work-in-progress” inventory, land held for development and land held for sale) and cash securing the Notes and any other Pari-Passu Lien Obligations is at least 275% of the aggregate principal amount of the Notes then outstanding plus the aggregate amount of such other Pari-Passu Lien Obligations;

(vi) Restricted Payments made after the Issue Date in respect of Specified Obligations not to exceed $70,000,000; provided, however, that such Restricted Payments may exceed $70,000,000 to the extent that the Company receives a cash equity contribution from JFSCI in the amount of such excess within 10 Business Days following such Restricted Payment;

(vii) Tax Distributions (other than payments with respect to Specified Obligations);

(viii) the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Company, the Corporate Issuer or any Restricted Subsidiary with the proceeds of the offering of the Notes as described in the Offering Circular;

(ix) the declaration and payment of dividends to holders of any class or series of Disqualified Equity Interests of the Company or any of its Restricted Subsidiaries issued in accordance with and to the extent permitted by Section 4.06; provided, however, that, at the time of payment of such dividend, no Default shall have occurred and be continuing (or result therefrom);

(x) repurchases of Equity Interests deemed to occur upon exercise of equity options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

(xi) Restricted Payments that are made with Excluded Contributions;

(xii) the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to provisions similar to those described in Section 4.10 and Section 4.12; provided, however, that all Notes tendered by Holders in connection with an Asset Sale Offer or a Change of Control Offer, as applicable, have been purchased, redeemed, defeased or acquired for value; or

(xiii) Restricted Investments after the Issue Date in joint ventures (other than amounts expended in respect of Specified Obligations) in an amount not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $70,000,000 (any Investment made pursuant to this clause (xiii) being an Investment made pursuant to the “JV Payment Basket”).

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(c) For purposes of determining the aggregate and permitted amounts of Restricted Payments made, the amount of any guarantee of any Investment in any Person that was initially treated as a Restricted Payment and which was subsequently terminated or expired, net of any amounts paid by either of the Issuers or any Restricted Subsidiary in respect of such guarantee, shall be deducted.

SECTION 4.08. Limitations on Liens. The Company will not, and will not cause or permit any Restricted Subsidiary to, create, Incur or suffer to exist any Liens, other than Permitted Liens, on any of their respective Properties.

SECTION 4.09. Limitations on Restrictions Affecting Restricted Subsidiaries. (a) The Company will not, and will not cause or permit any Restricted Subsidiary to, create, assume or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(i) pay dividends or make any other distributions on its Equity Interests or any other interest or participation in, or measured by, its profits, owned by the Company, the Corporate Issuer or any other Restricted Subsidiary, or pay interest on or principal of any Indebtedness owed to the Company or any other Restricted Subsidiary,

(ii) make loans or advances to the Company, the Corporate Issuer or any other Restricted Subsidiary, or

(iii) transfer any of its Property or assets to the Company, the Corporate Issuer or any other Restricted Subsidiary.

(b) The encumbrances and restrictions in Section 4.09(a) shall not apply to:

(i) encumbrances or restrictions existing under or by reason of applicable law, including judicial or regulatory actions,

(ii) contractual encumbrances or restrictions in effect at or entered into on the Issue Date,

(iii) any restrictions or encumbrances arising under (A) Acquired Indebtedness or (B) appearing in any agreements acquired or assumed in connection with the acquisition of Property; provided, however, that such encumbrance or restriction applies only to either the assets that were subject to the restriction or encumbrance at the time of the acquisition or the obligor on such Indebtedness and its Subsidiaries prior to such acquisition,

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(iv) any Permitted Lien, or any other agreement restricting the sale or other disposition of Property, if such Permitted Lien or agreement does not expressly restrict the ability of a Subsidiary of the Company to pay dividends or make or repay loans or advances prior to default thereunder,

(v) reasonable and customary borrowing base covenants set forth in agreements evidencing Indebtedness otherwise permitted by the Indenture,

(vi) customary non-assignment provisions in leases, licenses, encumbrances, contracts or similar assets entered into or acquired in the ordinary course of business,

(vii) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all of the Equity Interests or assets of such Restricted Subsidiary pending the closing of such sale or disposition,

(viii) encumbrances or restrictions existing under or by reason of (A) the Indenture, the Notes or the Guarantees, (B) the LC Facility Agreement or (C) the definitive agreements governing any other Pari-Passu Indebtedness permitted to be Incurred subsequent to the Issue Date in accordance with Section 4.06; provided, however, that in the case of clause (C), (x) either (i) the encumbrance or restriction applies only in the event of and during the continuance of a payment default or a default with respect to a financial covenant contained in such definitive agreements or (ii) the Company determines at the time any such Pari-Passu Indebtedness is Incurred (and at the time of any modification of the terms of any such encumbrance or restriction) that any such encumbrance or restriction will not materially affect the Company’s or any Restricted Subsidiary’s ability to make principal or interest payments on the Notes and any other Indebtedness that is an obligation of the Company or any Restricted Subsidiary, as applicable, and (y) the encumbrance or restriction is not materially more disadvantageous to the holders of the Notes than is customary in comparable financings or agreements (as determined by the Company in good faith),

(ix) purchase money obligations that impose restrictions on the Property so acquired of the nature described in Section 4.09(a)(iii),

(x) Liens permitted under the Indenture securing Indebtedness that limit the right of the debtor to dispose of the assets subject to such Lien,

(xi) provisions with respect to the disposition or distribution of assets or Property in joint venture agreements, assets sale agreements, stock sale agreements and other similar agreements,

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(xii) customary provisions of any franchise, distribution or similar agreements,

(xiii) restrictions on cash or other deposits or net worth imposed by contracts entered into in the ordinary course of business,

(xiv) any encumbrances or restrictions existing under (A) development agreements or other contracts entered into with municipal entities, agencies or sponsors in connection with the entitlement or development of real property or (B) agreements for funding of infrastructure, including in respect of the issuance of community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds, and similar bonding requirements arising in the ordinary course of business of a homebuilder;

(xv) any encumbrances or restrictions contained in any joint venture agreement entered into by the Company or any of its Restricted Subsidiaries, to the extent binding upon the assets of the relevant joint venture, together with any encumbrances or restrictions contained in any agreement entered into by any such joint venture; and

(xvi) any encumbrance or restrictions of the type referred to in clauses (i), (ii) or (iii) of Section 4.09(a) imposed by any amendments, modifications, restatements, renewals, supplements, replacements or Refinancings of the contracts, instruments or obligations referred to in clauses (ii), (iii), (viii) and (ix) of Section 4.09(b); provided, however, that such amendments, modifications, restatements, renewals, supplements, replacements or Refinancings are, in the good faith judgment of the Company’s Governing Body, no more restrictive in any material respect with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, supplement, replacement or Refinancing.

SECTION 4.10. Limitations on Asset Dispositions. (a) The Company will not, and will not cause or permit any Restricted Subsidiary to, make any Asset Disposition unless: (x) the Company (or such Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Disposition at least equal to the Fair Market Value thereof (or at least 90% of the Fair Market Value thereof in the case of a Sale/Leaseback Transaction of a model house), and (y) not less than 70% of the consideration received by the Company (or such Restricted Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and Marketable Securities.

(b) The amount of (i) any Indebtedness (other than any Subordinated Indebtedness) of either the Company or any Restricted Subsidiary that is actually assumed by the transferee in such Asset Disposition (provided that the Company or Restricted Subsidiary, as the case may be, making the Asset Disposition is released from

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its obligations with respect to such Indebtedness), (ii) any notes or other obligations received by the Company or any Restricted Subsidiary which are immediately converted into cash and (iii) the Fair Market Value of any Property or other asset (including Equity Interests of any Person that will be a Restricted Subsidiary following receipt thereof) received that are used or useful in a Real Estate Business (provided that to the extent that the assets disposed of in such Asset Disposition were Collateral, such Property or assets are pledged as Collateral under the Security Documents substantially contemporaneously with such sale, to the extent required to do so pursuant to such Security Documents), shall be deemed to be consideration required by Section 4.10(a)(y) for purposes of determining the percentage of such consideration received by the Company or Restricted Subsidiary, as the case may be.

(c) The Net Cash Proceeds of an Asset Disposition shall, within one year of such Asset Disposition, at the Company’s election, (a) be used by either of the Company or a Restricted Subsidiary to invest in assets (including Equity Interests of any Person that is or will be a Restricted Subsidiary following investment therein) used or useful in the Real Estate Business of the Company and the Restricted Subsidiaries (provided that to the extent that the assets disposed of in such Asset Disposition were Collateral, such assets are pledged as Collateral under the Security Documents to the extent required to do so pursuant to such Security Documents), (b) be used to permanently prepay or permanently repay any (1) Indebtedness which had been secured by the assets sold in the relevant Asset Disposition or (2) Indebtedness of a Restricted Subsidiary that is not a Guarantor, to the extent the assets sold were not Collateral, or (c) be applied to make an offer to purchase Notes and, if the Company or a Restricted Subsidiary elects or is required to do so, to repay, purchase or redeem any other Pari-Passu Lien Obligations (or cash collateralize letters of credit that constitute Pari-Passu Lien Obligations Incurred in connection with Indebtedness Incurred pursuant to clause (1) of the definition of “Permitted Indebtedness” or a Credit Facility) and, if the Company or a Restricted Subsidiary elects or is required to do so and the assets disposed of were not Collateral, repay, purchase or redeem any unsubordinated Indebtedness (on a pro rata basis if the amount available for such repayment, purchase, redemption or cash collateralization is less than the aggregate amount of (i) the principal amount of the Notes tendered in such offer to purchase, (ii) the lesser of the principal amount, or accreted value, of such other Pari-Passu Lien Obligations tendered or to be repaid, redeemed, repurchased or cash collateralized and (iii) the lesser of the principal amount, or accreted value, of such unsubordinated Indebtedness tendered or to be repaid, repurchased or redeemed, plus, in each case, accrued interest to the date of repayment, purchase or redemption) at 100% of the principal amount or accreted value thereof, as the case may be, plus accrued and unpaid interest, if any, to the date of repurchase, repayment or redemption. Pending any such application under this paragraph, Net Cash Proceeds may be used to temporarily reduce Indebtedness or otherwise be invested in any manner not prohibited by the Indenture.

(d) Any Net Cash Proceeds from the Asset Disposition that are not invested or applied as provided and within the time period set forth in paragraph (c) above (which will include the Fair Market Value of any Cash Equivalents and Marketable Securities received in connection with such Asset Disposition which have not

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been converted into cash) will be deemed to constitute “Excess Proceeds”. When the aggregate amount of Excess Proceeds exceeds $10,000,000, the Issuers shall make an offer to all Holders of the Notes and, if required by the terms of any Indebtedness that is pari-passu with the Notes (“Pari-Passu Indebtedness”), to the holders of such Pari-Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount (or accreted value, as applicable) of the Notes and such Pari-Passu Indebtedness that is an integral multiple of $1,000 that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount (or accreted value, as applicable) thereof, plus accrued and unpaid interest to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. The Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within 10 Business Days after the date that Excess Proceeds exceed $10,000,000 by delivering the notice required pursuant to the terms of the Indenture, with a copy to the Trustee.

(e) To the extent that the aggregate amount of Notes and such Pari-Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuers may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in the Indenture. If the aggregate principal amount of Notes and the Pari-Passu Indebtedness surrendered by holders thereof exceeds the amount of Excess Proceeds, the Notes and such Pari-Passu Indebtedness will be purchased on a pro rata basis based on the principal amount (or accreted value, as applicable) of the Notes and such Pari-Passu Indebtedness tendered. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reduced by the amount of such Asset Sales Offer.

(f) The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in the Indenture by virtue thereof.

SECTION 4.11. Future Guarantors. The Company shall cause each wholly-owned Restricted Subsidiary (other than any wholly-owned Subsidiary that is prohibited from becoming a Guarantor as a result of any requirement of law, rule or regulation binding on such Subsidiary) that Incurs any Indebtedness to, contemporaneously, (i) execute and deliver to the Trustee a supplemental indenture in the form of Exhibit A pursuant to which such Restricted Subsidiary will guarantee payment of the Notes on the same terms and conditions as those set forth in the Indenture and applicable to the other Guarantors and (ii) execute and deliver an amendment, supplement or other instrument in respect of the Security Documents necessary to cause such Restricted Subsidiary to become a grantor thereunder and take all action required thereunder to perfect the Liens created thereunder, as well as to execute and deliver to the Trustee joinders to the Intercreditor Agreement, in each case at the time such Person becomes a Restricted Subsidiary or Guarantees any such Indebtedness, as applicable.

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SECTION 4.12. Repurchase of Notes upon Change of Control. (a) In the event that there shall occur a Change of Control, each Holder of the Notes shall have the right, at such Holder’s option, to require the Issuers to purchase all or any part of such Holder’s Notes (a “Change of Control Offer”) on a date (the “Repurchase Date”) that is no later than 90 days after notice of the Change of Control, at 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Repurchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

(b) On or before the thirtieth day after any Change of Control, the Issuers are obligated to mail or cause to be mailed to all Holders of record of the Notes with a copy to the Trustee, a notice stating (i) that a Change of Control has occurred and each Holder has a right to require the Issuers to purchase such Holder’s Notes at 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Repurchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), (ii) the Repurchase Date, (iii) the date by which the repurchase right must be exercised, and (iv) the procedure which the Holder must follow to exercise such right. To exercise such right, the Holder of such Note must deliver, at least 10 days prior to the Repurchase Date, written notice to the Issuers (or an agent designated by the Issuers for such purpose) of the Holder’s exercise of such right, together with the Note with respect to which the right is being exercised, duly endorsed for transfer; provided, however, that if mandated by applicable law, a Holder may be permitted to deliver such written notice nearer to the Repurchase Date than may be specified by the Issuers.

(c) The Issuers will comply with applicable law, including Section 14(e) of the Exchange Act, and Rule 14e-1 thereunder, if applicable, if the Issuers are required to give a notice of a right of repurchase as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.12, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 4.12 by virtue thereof.

SECTION 4.13. Limitations on Transactions with Affiliates. (a) The Company will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any Property or assets to or for the benefit of, or purchase or lease any Property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, (i) any Affiliate of the Company, (ii) any Affiliate of any of the Company’s Subsidiaries, (iii) any holder of 10% or more of the Common Equity of the Company or (iv) any Affiliates of such holders (collectively, “Affiliated Persons”), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could reasonably be obtained by the Company or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s­length basis with Persons who are not Affiliated Persons.

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(b) In addition, the Company will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction:

(i) in the case of transfers of real property involving more than $10,000,000, unless the consideration paid in respect thereof exceeds the greatest of not less than three Independent Valuations, and

(ii) in all other cases:

(A) having a value of more than $2,000,000 unless the terms of such Affiliate Transaction are set forth in writing and a majority of the Company’s Governing Body has determined in good faith that the criterion set forth in the immediately preceding paragraph has been satisfied, and

(B) having a value of more than $5,000,000 unless the terms of such Affiliate Transaction are set forth in writing and the Company has received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm’s-length transaction with a Person who is not an Affiliated Person.

(c) Notwithstanding the foregoing, an Affiliate Transaction will not include:

(i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Governing Body of the Company,

(ii) Equity Interests issuances to directors, officers and employees of the Company or its Subsidiaries pursuant to plans approved by the holders of Equity Interests of the Company,

(iii) any Permitted Investment (other than Permitted Investments described in clause (3)(b) of the definition of “Permitted Investments”) or Restricted Payment permitted under Section 4.07,

(iv) any transaction between or among the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliated Person (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the Indenture)),

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(v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to the Company or a Restricted Subsidiary,

(vi) any Affiliate Transactions consummated in accordance with written agreements existing on the Issue Date with Affiliates, or entities in which an Affiliate owns an interest, including amendments thereto that are no more favorable to the Affiliate in any material respect than the terms existing on the Issue Date,

(vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or such Restricted Subsidiary, as the case may be, the Corporate Issuer or any Restricted Subsidiary, and

(viii) any transaction with an Affiliate that is a joint venture in which the Company or any Restricted Subsidiary has a direct or indirect equity interest so long as the other joint venture partners not constituting Affiliates of the Company or such Restricted Subsidiary, as the case may be, approve the subject transaction.

SECTION 4.14. Limitations on Mergers, Consolidations and Sales of Assets. (a) Neither of the Issuers nor any of the Guarantors will consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets (including, without limitation, by way of liquidation or dissolution), or assign any of its obligations under the Notes, the Guarantees or the Indenture (as an entirety or substantially as an entirety in one transaction or in a series of related transactions), to any Person (in each case other than in a transaction in which the Company, the Corporate Issuer or a Guarantor is the survivor of a consolidation or merger, or the transferee in a sale, lease, conveyance or other disposition, liquidation or dissolution) unless:

(i) the Person formed by or surviving such consolidation or merger (if other than the Company, the Corporate Issuer or the Restricted Subsidiary, as the case may be), or to which such sale, lease, conveyance or other disposition or assignment will be made (collectively, the “Successor”), is a corporation or other legal entity organized and existing under the laws of the United States or any state thereof or the District of Columbia, and the Successor assumes by supplemental indenture in a form reasonably satisfactory to the Trustee all of the obligations of the Company, the Corporate Issuer or the Restricted Subsidiary, as the case may be, under the Notes or a Guarantee, as the case may be, and the Indenture, the Intercreditor Agreement and the Security Documents,

(ii) immediately after giving effect to such transaction, no Default has occurred and is continuing and

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(iii) immediately after giving effect to such transaction, the Company (or its Successor) could Incur at least $1.00 of Coverage Indebtedness pursuant to Section 4.06(a).

(b) Section 4.14(a) shall not apply to:

(i) a transaction involving the sale or disposition of Equity Interests of a Guarantor, or the consolidation or merger of a Guarantor, or the sale, lease, conveyance or other disposition of all or substantially all of the assets of a Guarantor, that in any such case results in such Guarantor being released from its Guarantee pursuant to Section 6.03,

(ii) a transaction the purpose of which is to change the state of incorporation of the Company, the Corporate Issuer or any Restricted Subsidiary,

(iii) a liquidation or dissolution of any Restricted Subsidiary, other than the Corporate Issuer or

(iv) a sale, lease, conveyance or other disposition of all or substantially all of the assets of any Restricted Subsidiary in connection with the sale or wind-down of retail or other land sales by such Restricted Subsidiary.

(c) Upon any consolidation or merger of either of the Issuers or any Guarantor, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of either of the Issuers or any Guarantor, in each case in accordance with this Section 4.14, in which the any such Issuer or Guarantor is not the continuing obligor under the Notes, the surviving entity formed by such consolidation or into which such Issuer or Guarantor is merged or the Person to which the sale, lease, conveyance, lease or disposition is made will succeed to, and be substituted for, and may exercise every right and power of, such Issuer or Guarantor under this Indenture, the Notes, the Security Documents and Intercreditor Agreement with the same effect as if such surviving entity had been named therein as such Issuer or Guarantor, as applicable. Upon any such consolidation, merger, sale, lease, conveyance or disposition, the Issuers shall deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel (i) with respect to both the Officers’ Certificate and the Opinion of Counsel, stating that such transaction and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with the applicable provisions of the Indenture, (ii) with respect to the Officers’ Certificate only, that all conditions precedent in the Indenture relating to such transaction have been satisfied and (iii) with respect to the Opinion of Counsel only, if a supplemental indenture is required in connection with such transaction, that the Indenture, as amended by such supplemental indenture, constitutes the legal, valid and binding obligation of the Issuers, enforceable against the Issuers in accordance with its terms

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SECTION 4.15. Limitation on Sale/Leaseback Transactions. The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any Property unless:

(i) the Company or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to Section 4.06 and (B) create a Lien on such Property securing such Attributable Debt without equally and ratably securing the Notes pursuant to Section 4.08;

(ii) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the Fair Market Value of such Property (or at least 90% of such Fair Market Value in the case of a Sale/Leaseback Transaction of a model house); and

(iii) the Company applies the proceeds of such transaction in compliance with Section 4.10.

SECTION 4.16. Limitation on Line of Business. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Real Estate Business.

SECTION 4.17. Limitation on Corporate Issuer. The Corporate Issuer may not hold any material assets (other than Indebtedness owing to the Corporate Issuer by the Company or any Restricted Subsidiary and non-material Cash Equivalents), become liable for any obligations or engage in any business activities (other than treasury, cash management and activities incidental thereto); provided, however, that the Corporate Issuer may be a co-obligor or co-guarantor with respect to the Notes or any other Indebtedness or other obligations if the Company is an obligor or guarantor of such Indebtedness or obligations. The Corporate Issuer shall be a wholly-owned Subsidiary of the Company at all times. At any time after the Company or any successor to the Company is a corporation, the Corporate Issuer may merge with or consolidate into the Company or any Subsidiary of the Company.

SECTION 4.18. Limitations Relating to Partners Insurance Company. The Company shall not permit Partners Insurance Company (i) to engage in any business other than its existing business on the Issue Date or (ii) to Incur any Indebtedness.

SECTION 4.19. Reports to Holders of Notes. (a) The Company shall (1) furnish to the Trustee, (2) upon request, furnish to Holders and prospective holders of the Notes and (3) prior to the earlier of (a) consummation of the Exchange Offer and (b) 360 days after the Issue Date, make publicly available on its website, a copy of all of the following information and reports within the time periods specified in the Commission’s rules and regulations applicable to the filing of the related reports:

(i) the description of the business of the Company and all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Company’s certified independent accountants; and

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(ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports.

(b) After the earlier of (1) consummation of the Exchange Offer and (2) 360 days after the Issue Date, whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the Commission, subject to the next sentence, and provide the Trustee and Holders with, such annual and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such reports to be so filed and provided at the times specified for the filings of such reports under such Sections and containing all the information, audit reports and exhibits required for such reports. The Company will not take any action for the purpose of causing the Commission not to accept any such filings. If, notwithstanding the foregoing, the Commission will not accept any of the Company’s filings for any reason, the Company will post all such reports on its website within the time periods that would apply if the Company were required to file those reports with the Commission.

(c) For so long as any of the Notes remain outstanding and constitute “restricted securities” under Rule 144, the Company will furnish to the Holders of Notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

(d) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of them will not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Corporate Issuer’s and/or the Company’s compliance with any of its covenants in the Indenture (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

SECTION 4.20. Reports to Trustee. (a) The Issuers are required to deliver to the Trustee an annual statement regarding compliance with the Indenture in accordance with TIA Section 314(a)(4).

(b) The Company shall deliver to the Trustee, on or prior to each Interest Payment Date, an Officers’ Certificate setting forth the amount of Additional Interest, if any, the Issuers are required to pay on that Interest Payment Date. If no Additional Interest is required to be paid on a given Interest Payment Date, no such Officers’ Certificate is required to be delivered to the Trustee for that Interest Payment Date.

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(c) All “obligors”, as that term is defined under the Trust Indenture Act, on the Notes, including the Issuers and the Guarantors, will comply with Section 314(a) of the Trust Indenture Act. The Company will notify the Trustee when any Notes are listed on any national securities exchange and of any delisting.

SECTION 4.21. [Reserved].

SECTION 4.22. Collateral Requirement; Further Assurances; Costs. (a) On the Issue Date, the Issuers and each Guarantor shall grant Liens on all their Property (other than Excluded Property) and take all appropriate steps to cause such Liens to be perfected Liens (subject to Permitted Liens), including through recordation of Mortgages, entry into control agreements, filing of UCC-1 financing statements or otherwise, pursuant to, and to the extent required by, the Security Documents to be entered into on the Issue Date and the Indenture. In addition, the Company shall provide a Title Policy to the Collateral Agent with respect to each Mortgage granted pursuant to this Section 4.22 and the real property described in such Mortgage. For the avoidance of doubt, the requirements of this Section 4.22(a) are subject to Section 4.22(d) below.

(b) If either of the Issuers or any of the Guarantors at any time grants, assumes, perfects or becomes subject to any Lien upon any of its Property (other than Excluded Property) then owned or thereafter acquired as security for any other Pari-Passu Lien Obligation, such Issuer will, or will cause such Guarantor to, as promptly as practical (subject to Section 4.22(d) below):

(i) grant a Lien on such Property to the Collateral Agent for the benefit of the Holders and, to the extent such grant would require the execution and delivery of a Security Document, such Issuer or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the agreement or instrument executed and delivered to secure such other Pari-Passu Lien Obligations;

(ii) cause the Lien granted in such Security Document to be duly perfected in any manner permitted by law to the same extent as the Liens granted for the benefit of such other Pari-Passu Lien Obligations are perfected; and

(iii) instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this Section 4.22(b), including as necessary under the Security Documents.

(c) If either of the Issuers or any Guarantor at any time after the Issue Date acquires any new Property (other than Excluded Property) that is not automatically subject to a Lien under the Security Documents, or a Restricted Subsidiary becomes a Guarantor, such Issuer will, or will cause such Guarantor, subject to the requirements of the Security Documents, to as soon as practical after such Property’s acquisition or it no longer being Excluded Property (subject to the provisions of Section 4.22(d)):

(i) grant a Lien on such Property (or, in the case of a new Guarantor, all of its assets except Excluded Property) to the Collateral Agent for the benefit of the Holders (and, to the extent such grant would require the execution and delivery of a Security Document, such Issuer or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the Security Documents executed and delivered on the Issue Date);

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(ii) cause the Lien granted in such Security Document to be duly perfected in any manner permitted by law to the same extent as the Liens granted on the Issue Date are perfected (including, in the case of real property, through the recordation of Mortgages; and

(iii) instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this paragraph including as necessary under the Security Documents.

The Company shall deliver an Opinion of Counsel to the Trustee in respect of any Lien grant referred to by the foregoing provisions of this paragraph by a new Guarantor or with respect to real property, addressing customary matters (and containing customary exceptions) consistent with the Opinion of Counsel delivered on the Issue Date, or within 90 days after the Issue Date in accordance with Section 4.22(d) below, in respect of such matters; provided, however, that an Opinion of Counsel shall not be required with respect to any Mortgage on real property located in a jurisdiction for which an Opinion of Counsel has been previously delivered to the Trustee pursuant to the Indenture. In addition, the Company shall provide a Title Policy to the Collateral Agent with respect to each Mortgage granted pursuant to this Section 4.22(c) and the real property described in such Mortgage.

(d) Notwithstanding anything to the contrary set forth in this Section 4.22 or elsewhere in the Indenture or any Security Document:

(i) any Mortgages (and any related Security Documents) required to be granted pursuant to the Indenture or the Security Documents with respect to real property owned by the Issuers or a Guarantor on the Issue Date shall be granted, together with Opinions of Counsel delivered to the Trustee in respect of the enforceability and validity of such Mortgages and Title Policies to the Collateral Agent with respect to each Mortgage granted pursuant to this Section 4.22 and the real property described in such Mortgage, as soon as commercially reasonable following the Issue Date, but in no event later than 90 days following the Issue Date; and

(ii) in the event that Rule 3-16 of Regulation S-X under the Securities Act requires or would require (or is replaced with another rule

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or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the Commission of separate financial statements of a Guarantor that are not otherwise required to be filed, then the securities of such Person need not be pledged pursuant to this Section 4.22 and shall automatically be deemed released and to not be and to not have been part of the Collateral, but only to the extent necessary to not be subject to such requirement. In such event, the Security Documents may be amended or modified, without the consent of any Holder of Notes, to the extent necessary to evidence the release of Liens securing the Notes and the Guarantees on the securities that are so deemed to no longer constitute part of the Collateral.

(e) The Issuers will bear and pay all legal expenses, filing fees, insurance premiums and other costs associated with the performance of the obligations of the Issuers and the Guarantors set forth in this Section 4.22 and will also pay or reimburse the Trustee and Collateral Agent for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee and Collateral Agent in connection therewith, including the reasonable compensation and expenses of the Trustee and Collateral Agent’s agents and counsel.

(f) Neither of the Issuers nor any of the Guarantors will be permitted to take any action, or knowingly or negligently omit to take any action, which action or omission would reasonably be expected to materially impair the security interest with respect to the Collateral for the benefit of the Trustee and the Holders of the Notes.

ARTICLE V

Remedies

SECTION 5.01. Events of Default. “Event of Default” means any one or more of the following events:

(i) the failure by the Issuers and the Guarantors to pay interest on, or with respect to, any Note when the same becomes due and payable and the continuance of any such failure for a period of 30 days;

(ii) the failure by the Issuers and the Guarantors to pay the principal of or premium on any Note when the same becomes due and payable at maturity, upon acceleration or otherwise, including pursuant to any required repurchase or optional redemption;

(iii) the failure by the Issuers or any Restricted Subsidiary to comply with any of its agreements or covenants in, or provisions of, the Notes, the Guarantees or the Indenture and such failure continues for the period and after the notice specified below (except in the case of a default under Sections 4.12 and 4.14, which will constitute Events of Default with notice but without passage of time);

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(iv) the failure by either of the Issuers or any Restricted Subsidiary to make any principal or interest payment in an amount of $10,000,000 or more, individually or in the aggregate, in respect of Indebtedness (other than Non-Recourse Indebtedness) of either of the Issuers or any Restricted Subsidiary within 30 days of such principal or interest becoming due and payable (after giving effect to any applicable grace period set forth in the documents governing such Indebtedness);

(v) a final judgment or judgments that exceed $10,000,000 or more (net of insurance available to the applicable Issuer or Restricted Subsidiary and expected (in the good faith judgment of the Company) to be available to satisfy such judgment), individually or in the aggregate, for the payment of money having been entered by a court or courts of competent jurisdiction against either of the Issuers or any of the Restricted Subsidiaries and such judgment or judgments is not satisfied, bonded, stayed, annulled or rescinded within 60 days of being entered;

(vi) either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(A) commences a voluntary case,

(B) consents to the entry of an order for relief against it in an involuntary case,

(C) consents to the appointment of a Custodian of it or for all or substantially all of its Property, or

(D) makes a general assignment for the benefit of its creditors;

(vii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A) is for relief against either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary as debtor in an involuntary case,

(B) appoints a Custodian of either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary or a Custodian for all or substantially all of the Property of either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary, or

(C) orders the liquidation of either of the Issuers or any Restricted Subsidiary that is a Significant Subsidiary, and the order or decree remains unstayed and in effect for 60 days;

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(viii) any Guarantee of a Guarantor which is a Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Guarantee and the Indenture) or is declared in any judicial proceeding to be null and void and unenforceable or found to be invalid or any Guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantor from its Guarantee in accordance with the terms of the Indenture and the Guarantee); or

(ix) the Liens created by the Security Documents shall at any time not constitute valid and perfected Liens on any material portion of the Collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required by the Indenture, the Intercreditor Agreement or the Security Documents) other than in accordance with the terms of the relevant Security Document, the Indenture and the Intercreditor Agreement and other than the satisfaction in full of all Obligations under the Indenture or the release or amendment of any such Lien in accordance with the terms of the Indenture, the Intercreditor Agreement or the Security Documents, or, except for expiration in accordance with its terms or amendment, modification, waiver, termination or release in accordance with the terms of the Indenture, the Intercreditor Agreement and the relevant Security Document, any of the Security Documents shall for whatever reason be terminated or cease to be in full force and effect, if in either case, such default continues for 30 days after notice, or the enforceability thereof shall be contested by the Issuers or any Guarantor.

The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

A Default as described in subclause (iii) of this Section 5.01 will not be deemed an Event of Default until the Trustee notifies the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes notify the Issuers and the Trustee, of the Default and (except in the case of a default with respect to Section 4.12 and Section 4.14) the Issuers do not cure the Default within 60 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a “Notice of Default”. If such a Default is cured within such time period, it ceases to be a Default.

If an Event of Default (other than an Event of Default with respect to either of the Issuers resulting from subclause (vi) or (vii) of this Section 5.01), shall have occurred and be continuing under the Indenture, the Trustee by notice to the Issuers, or the Holders of at least 25% in principal amount of the Notes then outstanding by notice to the Issuers and the Trustee, may declare the principal of and accrued but unpaid interest

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on all the Notes to be due and payable immediately. Upon such declaration of acceleration, such principal and interest will be due and payable immediately. If an Event of Default with respect to either of the Issuers specified in subclause (vi) or (vii) of this Section 5.01 occurs, the principal of and accrued but unpaid interest on all the Notes will ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee and the Issuers or any Holder. The Holders of a majority in principal amount of the Notes by notice to the Trustee may rescind an acceleration and its consequences if (i) the rescission would not conflict with any judgment or decree, (ii) before any judgment or decree for payment of the moneys due shall have been obtained or entered, the Issuers pay or deposit with the Trustee a sum sufficient to pay all matured installments of interest, if any, upon all of the Notes and the principal (and premium, if any) of all the Notes which shall have become due otherwise than by acceleration or shall have been required to be repurchased or redeemed (with interest on overdue installments of interest, if any, to the extent that payment of such interest is enforceable under applicable law and on such principal at the rate borne by the Notes to the date of such payment or deposit) and the reasonable compensation, disbursements, expenses and advances of the Trustee and all other amounts due the Trustee under Section 7.07 and (iii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

If the Trustee shall have proceeded to enforce any right under the Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any reason or shall have been determined to be adverse to the Trustee, then and in every such case the Issuers, the Trustee and the Holders of Notes shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Issuers, the Trustee and the Holders of Notes shall continue as though no such proceeding had been taken.

Except with respect to an Event of Default pursuant to clause (i) or (ii) of this Section 5.01, the Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to the Trustee by the Issuers, a Paying Agent or any Holder.

SECTION 5.02. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of principal of, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes, the Indenture or the Security Documents. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.

SECTION 5.03. Waiver of Defaults by Majority of Holders. By written notice to the Trustee and the Issuers, the Holders of a majority in aggregate principal amount of the Notes then outstanding may on behalf of the Holders of all of the Notes waive any past Default hereunder and its consequences, except (a) a Default in the

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payment of the principal of or interest on a Note, (b) a Default arising from the failure to redeem or purchase any Note when required pursuant to the Indenture or (c) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Noteholder affected. Upon any such waiver, the Issuers, the Trustee and the Holders of Notes shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 5.03, said Default or Event of Default shall for all purposes of the Notes and the Indenture be deemed to have been cured and to be not continuing.

SECTION 5.04. Direction of Proceedings. The Holders of a majority in aggregate principal amount of the outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Notes; provided, however, that (subject to the provisions of Section 7.01) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine upon advice of counsel that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, its executive committee, or a trust committee of directors or Responsible Officers or both shall determine that the action or proceeding so directed would involve the Trustee in personal liability.

SECTION 5.05. Application of Moneys Collected by Trustee. Any moneys collected by the Trustee pursuant to this Article (including any proceeds from Collateral received pursuant to the terms of the Security Documents) with respect to outstanding Notes shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the Notes and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:

FIRST: To the payment of costs and expenses of collection and reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other expenses and liabilities Incurred, and all advances made, by the Trustee pursuant to Section 7.07 except as a result of its negligence or bad faith;

SECOND: If the principal of the Notes shall not have become due and be unpaid, to the payment of interest, if any, on the Notes, in the order of the maturity of the installments of such interest, if any, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest, if any, at the rate borne by the Notes, such payment to be made ratably to the Persons entitled thereto;

THIRD: If the principal of the Notes shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Notes for principal, interest, if any, with interest on the overdue principal and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest, if any, at the rate borne by the Notes, and in case such moneys shall be insufficient to pay in full the whole amounts so due

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and unpaid upon the Notes, then to the payment of such principal and interest, if any (without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest), ratably to the aggregate of such principal and accrued and unpaid interest, if any; and

FOURTH: To the payment of any surplus then remaining to the Issuers, their successors or assigns, or to whomsoever may be lawfully entitled to receive the same.

No claim for interest which in any manner at or after maturity shall have been transferred or pledged separate or apart from the Notes to which it relates, or which in any manner shall have been kept alive after maturity by an extension (otherwise than pursuant to an extension made pursuant to a plan proposed by the Issuers to the Holders of all Notes), purchase, funding or otherwise by or on behalf or with the consent or approval of the Issuers shall be entitled, in case of a default hereunder, to any benefit of the Indenture, except after prior payment in full of the principal of all Notes and of all claims for interest not so transferred, pledged, kept alive, extended, purchased or funded.

SECTION 5.06. Proceedings by Holders. No holder of any Notes shall have any right by virtue of or by availing of any provision of the Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to the Indenture for the appointment of a receiver or trustee or similar official, or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding shall have made written request to the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered such reasonable indemnity as the Trustee may require against the costs, expenses and liabilities to be Incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have neglected or refused to institute any such action, suit or proceeding, it being understood and intended, and being expressly covenanted by the Holder of every Note with every other Holder and the Trustee, that no one or more Holders of Notes shall have any right in any manner whatever by virtue of or by availing of any provision of the Indenture or of the Notes to affect, disturb or prejudice the rights of any other Holder of Notes, or to obtain or seek to obtain priority over or preference as to any other such Holder, or to enforce any right under the Indenture or the Notes, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Notes.

Notwithstanding any other provisions in the Indenture, however, the right of any Holder of any Note to receive payment of the principal of, premium, if any, and interest, if any, on such Note, on or after the maturity thereof, or to institute suit for the enforcement of any such payment on or after such respective dates shall not be impaired or affected without the consent of such Holder.

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SECTION 5.07. Proceedings by Trustee. In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by the Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceedings in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in the Indenture or in aid of the exercise of any power granted in the Indenture, or to enforce any other legal or equitable right vested in the Trustee by the Indenture or by law.

SECTION 5.08. Remedies Cumulative and Continuing. All powers and remedies given by this Article V to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in the Indenture, and no delay or omission of the Trustee or of any Holder to exercise any right or power accruing upon any default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 5.06, every power and remedy given by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.

SECTION 5.09. Undertaking to Pay Costs. All parties to the Indenture agree, and each Holder of any Note by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, or in any suit for the enforcement of any right or remedy under the Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the cost of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.09 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the then outstanding Notes, or to any suit instituted by any Holders for the enforcement of the payment of the principal of, premium, if any, or interest, if any, on any Note against the Issuers on or after the due date of such Note.

SECTION 5.10. Notice of Defaults. (a) The Issuers are required to deliver to the Trustee prompt written notice of the occurrence of any Default together with a statement specifying such Default and what action the Issuers are taking or propose to take with respect thereto.

(b) The Trustee shall, within 90 days after the occurrence of a default known to the Trustee, with respect to the Notes, mail to all Holders of Notes, as the names and the addresses of such Holders appear upon the Register, notice of all defaults, unless such defaults shall have been cured before the giving of such notice (the term “default” for the purpose of this Section 5.10(b) being hereby defined to be the events

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specified in clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix) of Section 5.01, not including periods of grace, if any, provided for therein and irrespective of the giving of the written notice specified in said clause (iii) but in the case of any default of the character specified in said clause (iii) no such notice to Holders shall be given until at least 60 days after the giving of written notice thereof to the Company pursuant to said clause (iii)); provided, however, that, except in the case of default in the payment of the principal of, premium, if any, or interest, if any, on any of the Notes, or in the payment or satisfaction of any redemption or purchase obligation, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, a trust committee of directors or a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the best interests of the Holders. Notice to Holders under this Section shall be given in the manner and to the extent provided in Trust Indenture Act Section 313(c).

SECTION 5.11. Waiver of Stay, Extension or Usury Laws. The Issuers and each Guarantor covenants, to the extent permitted by applicable law, that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Issuers or the Guarantor from paying all or any portion of the principal of, premium, if any, or interest, if any, on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of the Indenture. The Issuers and each Guarantor hereby expressly waives, to the extent that it may lawfully do so, all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 5.12. Trustee May File Proof of Claim. The Trustee may file proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee hereunder) and the Holders allowed in any judicial proceedings relating to the Issuers or any Guarantor or their respective creditors or Property, and is entitled and empowered to collect, receive and distribute any money, securities or other Property payable or deliverable upon conversion or exchange of the Notes or upon any such claims. Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, if the Trustee consents to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee hereunder. Nothing in the Indenture will be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

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SECTION 5.13. Payment of Notes on Default; Suit Therefor. The Issuers covenant that (a) if default shall be made in the payment of any installment of interest, if any, upon the Notes as and when the same shall become due and payable, and such default shall have continued for a period of 30 days, or (b) if default shall be made in the payment of the principal of, and premium, if any, on the Notes as and when the same shall have become due and payable, whether at maturity of the Notes or upon redemption or by declaration or otherwise, then, upon demand of the Trustee, the Issuers will pay to the Trustee, for the benefit of the Holders, the whole amount that then shall have become due and payable on all such Notes for principal, and premium, if any, or interest, if any, or both, as the case may be, with interest upon the overdue principal and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest, if any, at the rate borne by the Notes; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agent, attorneys and counsel, and any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith.

If the Issuers shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Issuers or any other obligor on the Notes and collect in the manner provided by law out of the Property of the Issuers or any other obligor on the Notes, wherever situated, the moneys adjudged or decreed to be payable.

If there shall be pending proceedings for the bankruptcy or for the reorganization of the Issuers or any other obligor on the Notes under any bankruptcy, insolvency or other similar law now or hereafter in effect, or if a receiver or trustee or similar official shall have been appointed for the Property of the Issuers or such other obligor, or in the case of any other similar judicial proceedings relative to the Issuers or other obligor on the Notes, or to the creditors or Property of the Issuers or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.13, shall be entitled and empowered by intervention in such proceedings or otherwise to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest, if any, owing and unpaid in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders allowed in such judicial proceedings relative to the Issuers or any other obligor on the Notes, its or their creditors, or its or their Property, and to collect and receive any moneys or other Property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses, and any receiver, assignee or trustee or similar official in bankruptcy or reorganization is hereby authorized by each of the Holders to make such payments to the Trustee, and, if the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it

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for compensation and expenses or otherwise pursuant to Section 7.07, including counsel fees and expenses Incurred by it up to the date of such distribution. To the extent that such payment of reasonable compensation, expenses and counsel fees and expenses out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, moneys, securities and other Property which the Holders of Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.

All rights of action and of asserting claims under the Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the Holders of Notes in respect of which such judgment has been recovered.

ARTICLE VI

Guarantees; Release of Guarantor

SECTION 6.01. Guarantees. (a) Each Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns (1) the full and punctual payment of principal of and interest on the Notes when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Issuers under the Indenture and the Notes and (2) the full and punctual performance within applicable grace periods of all other obligations of the Issuers under the Indenture and the Notes (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Article VI notwithstanding any extension or renewal of any Guaranteed Obligation.

(b) Each Guarantor waives presentation to, demand of, payment from and protest to the Issuers of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by (1) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person (including any Guarantor) under the Indenture, the Securities or any other agreement or otherwise; (2) any extension or renewal of any thereof; (3) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Notes or any other agreement; (4) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (5) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (6) except as set forth in Section 6.06, any change in the ownership of such Guarantor.

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(c) Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations.

(d) Except as expressly set forth in Sections 6.02, 6.06, 8.01 and 8.02, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under the Indenture, the Notes or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

(e) Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of either Issuer or otherwise.

(f) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuers to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other non-monetary Guaranteed Obligation as a result of which an Event of Default has occurred and is continuing, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (A) the unpaid amount of such Guaranteed Obligations, (B) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (C) all other monetary Guaranteed Obligations of the Company to the Holders and the Trustee.

(g) Each Guarantor agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the Guaranteed Obligations hereby may be accelerated as provided in Article V for the purposes of such Guarantor’s Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article V, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section.

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(h) Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights under this Section.

SECTION 6.02. Limitation on Liability. Any term or provision of the Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering the Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

SECTION 6.03. Successors and Assigns. This Article VI shall be binding upon each Guarantor and its successors and assigns and shall enure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in the Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of the Indenture.

SECTION 6.04. No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article VI shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article VI at law, in equity, by statute or otherwise.

SECTION 6.05. Modification. No modification, amendment or waiver of any provision of this Article VI, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.

SECTION 6.06. Release of Guarantor. A Guarantor will be released from its obligations under this Article VI (other than any obligation that may have arisen under Section 6.07).

(1) upon the sale (including any sale pursuant to any exercise of remedies by a holder of Indebtedness of the Company or of such Guarantor) or other disposition (including by way of consolidation or merger) of a Guarantor,

(2) upon the sale or disposition of all or substantially all the assets of such Guarantor,

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(3) upon the designation of such Guarantor as an Unrestricted Subsidiary in accordance with the terms of the Indenture,

(4) upon a Legal Defeasance or Covenant Defeasance pursuant to Article VIII, or

(5) upon the full satisfaction of the Company’s obligations under the Indenture;

provided, however, that in the case of clauses (1) and (2) above, (i) such sale or other disposition is made to a Person other than the Company or a Subsidiary of the Company, (ii) such sale or disposition is otherwise permitted by the Indenture and (iii) the Company provides an Officers’ Certificate to the Trustee to the effect that the Company will comply with its obligations under Section 4.10.

At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release.

SECTION 6.07. Contribution. Each Guarantor that makes a payment under its Guarantee shall be entitled, upon payment in full of all Guaranteed Obligations under the Indenture, to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

ARTICLE VII

The Trustee

SECTION 7.01. General. (a) The duties and responsibilities of the Trustee are as provided by the Trust Indenture Act and as set forth herein. Whether or not expressly so provided, every provision of the Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee is subject to this Article.

(b) Except during the continuance of an Event of Default, the Trustee need perform only those duties that are specifically set forth in the Indenture and no others, and no implied covenants or obligations will be read into the Indenture against the Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall exercise those rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

SECTION 7.02. Certain Rights of the Trustee. Subject to Trust Indenture Act Sections 315(a) through (d):

(a) The Trustee may rely, and will be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other

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evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make further inquiry or investigation into such facts or matters as it sees fit.

(b) Before the Trustee acts or refrains from acting, it shall be entitled to receive an Officers’ Certificate and an Opinion of Counsel conforming to Section 13.05 and the Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such a certificate or opinion. Unless otherwise specifically provided in the Indenture, any demand, request, direction or notice from the Issuers or the Company, as applicable, shall be sufficient if signed by an Officer of the Issuers or the Company, as applicable.

(c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.

(d) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities that might be Incurred by it in compliance with such request or direction.

(e) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with Section 5.04 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under the Indenture.

(f) The Trustee may consult with counsel, and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(g) No provision of the Indenture will require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder, or in the exercise of its rights or powers, unless it receives indemnity satisfactory to it against any loss, liability or expense.

(h) The Trustee may request that the Issuers deliver an Officers’ Certificate setting forth the name of the individuals and/or titles of Officers authorized at such time to take specific actions pursuant to the Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such Officers’ Certificate previously delivered and not superseded.

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(i) In no event shall the Trustee be liable, directly or indirectly, for any special, indirect or consequential damages, even if the Trustee has been advised of the possibility of such damages.

(j) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

SECTION 7.03. Individual Rights of the Trustee. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not the Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311. For purposes of Trust Indenture Act Section 311(b)(4) and (6):

(a) “cash transaction” means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and

(b) “self-liquidating paper” means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or Incurred for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.

SECTION 7.04. Trustee’s Disclaimer. The Trustee (a) makes no representation as to the validity or adequacy of the Indenture or the Notes, (b) is not accountable for the Company’s use or application of the proceeds from the Notes and (c) is not responsible for any statement in the Notes other than its certificate of authentication.

SECTION 7.05. [Reserved].

SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each May 15, beginning with May 15, 2012, the Trustee will mail to each Holder, as provided in Trust Indenture Act Section 313(c), a brief report dated as of such May 15, if required by Trust Indenture Act Section 313(a).

SECTION 7.07. Compensation and Indemnity. (a) The Company will pay the Trustee compensation as agreed upon in writing for its services. The compensation of the Trustee is not limited by any law on compensation of a trustee of an

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express trust. The Company will reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances Incurred or made by the Trustee, including the reasonable compensation and expenses of the Trustee’s agents and counsel.

(b) In addition to any other indemnity provided to the Trustee hereunder, the Company will indemnify the Trustee for, and hold it harmless against, any loss or liability or expense Incurred by it without negligence or bad faith on its part arising out of or in connection with the acceptance or administration of the Indenture and its duties under the Indenture and the Notes, including the costs and expenses of defending itself against any claim or liability and of complying with any process served upon it or any of its officers in connection with the exercise or performance of any of its powers or duties under the Indenture and the Notes.

(c) To secure the Company’s payment obligations in this Section or as otherwise provided in the Indenture, the Trustee will have a lien prior to the Notes on all money or Property held or collected by the Trustee, in its capacity as Trustee, except money or Property held in trust to pay principal of, premium, if any, and interest, if any, on particular Notes.

(d) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 5.01(vi) or Section 5.01(vii) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended, to the extent permitted by law, to constitute expenses of administration under any Bankruptcy Law.

SECTION 7.08. Replacement of Trustee. (a) (i) The Trustee may resign at any time by written notice to the Issuers.

(ii) The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by written notice to the Trustee.

(iii) If the Trustee is no longer eligible under Section 7.10 or in the circumstances described in Trust Indenture Act Section 310(b), any Holder that satisfies the requirements of Trust Indenture Act Section 310(b) may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(iv) The Issuers may remove the Trustee if: (A) the Trustee is no longer eligible under Section 7.10; (B) the Trustee is adjudged bankrupt or an insolvent; (C) a receiver or other public officer takes charge of the Trustee or its Property; or (D) the Trustee becomes incapable of acting.

A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

(b) If the Trustee has been removed by the Holders, Holders of a majority in principal amount of the Notes may appoint a successor Trustee with the consent of the

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Issuers. Otherwise, if the Trustee resigns or is removed, or if a vacancy exists in the office of Trustee for any reason, the Issuers will promptly appoint a successor Trustee. If the successor Trustee does not deliver its written acceptance within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the Holders of a majority in principal amount of the outstanding Notes may petition, at the expense of the Issuers, any court of competent jurisdiction for the appointment of a successor Trustee.

(c) Upon delivery by the successor Trustee of a written acceptance of its appointment to the retiring Trustee and to the Issuers, (i) the retiring Trustee will transfer all Property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07, (ii) the resignation or removal of the retiring Trustee will become effective, and (iii) the successor Trustee will have all the rights, powers and duties of the Trustee under the Indenture. Upon request of any successor Trustee, the Issuers will execute any and all instruments for fully and vesting in and confirming to the successor Trustee all such rights, powers and trusts. The Issuers will give notice of any resignation and any removal of the Trustee and each appointment of a successor Trustee to all Holders, and include in the notice the name of the successor Trustee and the address of its Corporate Trust Office.

(d) Notwithstanding replacement of the Trustee pursuant to this Section, Issuers’ obligations under Section 7.07 will continue for the benefit of the retiring Trustee.

(e) The Trustee agrees to give the notices provided for in, and otherwise comply with, Trust Indenture Act Section 310(b).

SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act will be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee in the Indenture.

SECTION 7.10. Eligibility. The Indenture must always have a Trustee that satisfies the requirements of Trust Indenture Act Section 310(a) and has a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition.

SECTION 7.11. Money Held in Trust. The Trustee will not be liable for interest on any money received by it except as it may agree with the Issuers. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law and except for money held in trust under Article VIII.

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ARTICLE VIII

Defeasance and Discharge

SECTION 8.01. Legal Defeasance and Discharge. The Issuers and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.03, be deemed to have been discharged from their respective obligations with respect to the Notes, the Guarantees and under the Security Documents and the Intercreditor Agreement and cause the release of all Liens on the Collateral granted under the Security Documents, on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the Issuers shall be deemed to have paid and discharged the entire Indebtedness represented by the Notes, which shall thereafter be deemed to be outstanding only for the purposes of Section 8.04 and the other Sections of the Indenture referred to in clauses (a) through (f) of this Section 8.01, and the Issuers and the Guarantors shall be deemed to have satisfied all of their respective obligations under the Notes, the Guarantees, the Indenture and the Security Documents (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments delivered to it by the Issuers acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Notes to receive payments in respect of the principal, premium, if any, and interest and on the Notes when such payments are due from the trust referred to below; (b) the Issuers’ obligations with respect to the Notes concerning mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust with respect to the Notes; (c) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuers’ and the Guarantors’ obligations in connection therewith; (d) this Article VIII and the Issuers’ and Guarantors’ obligations pursuant to this Article VIII; (e) the rights of registration of transfer and exchange of the Notes; and (f) the rights of Holders that are beneficiaries with respect to Property so deposited with the Trustee payable to all or any of them.

SECTION 8.02. Covenant Defeasance. The Issuers shall, subject to the satisfaction of the conditions set forth in Section 8.03, be released from their obligations under the covenants contained in Sections 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13, clause (iii) of Section 4.14(a) and Sections 4.15, 4.16, 4.17, 4.18, 4.19 and 4.22 and each Guarantor shall, subject to the satisfaction of such conditions, be released from such Guarantor’s obligation under its Guarantee, on and after the date that the conditions set forth in Section 8.03 are satisfied and, thereupon, the Liens on the Collateral granted under the Security Documents will be released (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed outstanding for all other purposes hereunder. For this purpose, Covenant Defeasance means that, with respect to the Notes and the Guarantees, the Issuers and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other

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provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 5.01, but, except as specified above, the remainder of the Indenture and the Notes shall be unaffected thereby. Subject to the satisfaction of the conditions set forth in Section 8.03, Sections 5.01(iii) (with respect to the covenants described in this Section 8.02 and so defeased), 5.01(iv), 5.01(v), 5.01(vi) (with respect to Significant Subsidiaries only), 5.01(vii) (with respect to Significant Subsidiaries only), 5.01(viii) and 5.01(ix) shall not constitute Events of Default or Defaults hereunder.

SECTION 8.03. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of Sections 8.01 and 8.02 to the Notes:

In order to exercise either Legal Defeasance or Covenant Defeasance:

(a) the Issuers must irrevocably deposit, or cause to be deposited, with the Trustee, in trust, for the benefit of the Holders of Notes, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay, without reinvestment, the principal of, and premium, if any, on the Notes on the stated maturity thereof or on the applicable redemption date, as the case may be, together with the interest payable therein to and including such stated maturity or redemption date, and the Issuers must specify whether the Notes are being defeased to maturity or to a particular redemption date;

(b) in the case of Legal Defeasance, the Issuers must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling, or there has been a change in the applicable United States federal income tax law after the date of the Indenture, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such Legal Defeasance, and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(c) in the case of Covenant Defeasance, the Issuers must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of Notes will not recognize income, gain or loss for United States Federal income tax purposes as a result of such Covenant Defeasance, and such Holders will be subject to United States Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

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(d) no Default shall have occurred and be continuing on the date of such deposit (other than a Default resulting from the borrowing of funds to be applied to such deposit);

(e) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which the Issuers or any of the Restricted Subsidiaries is a party or by which the Issuers or any of the Restricted Subsidiaries is bound;

(f) the Issuers must deliver to the Trustee an Officers’ Certificate stating that (x) the deposit was not made by the Issuers with the intent of preferring the Holders of Notes over other creditors of the Issuers, or with the intent of defeating, hindering, delaying or defrauding creditors of the Issuers or others and (y) that the Company is solvent after giving effect to such deposit; and

(g) the Issuers must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel in the United States reasonably acceptable to the Trustee, each stating that the conditions precedent provided for or relating to Legal Defeasance or Covenant Defeasance, as applicable, in the case of the Officers’ Certificate, in clauses (a) through (f) and, in the case of the Opinion of Counsel, in clauses (b) and (c) of this Section 8.03, have been complied with.

SECTION 8.04. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.05, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively, and solely for purposes of this Section 8.04, the “Trustee”) pursuant to Section 8.03 or Section 8.08 in respect of the Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of the Notes and the Indenture, to the payment, either directly or indirectly or through any paying agent (including the Issuers acting as paying agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Obligations deposited pursuant to Section 8.03 or Section 8.08 or the principal, premium, if any, and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Notes.

Subject to the preceding paragraph and Section 7.07, anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay, solely to the extent available in such trust, to the Issuers from time to time upon the request of the Issuers any money or non-callable U.S. Government Obligations held by it as provided in Section 8.03 or Section 8.08 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to

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the Trustee (which may be the opinion delivered under Section 8.03(a)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

SECTION 8.05. Repayment to Issuers. Any money deposited with the Trustee or any paying agent, or then held by the Issuers, in trust for the payment of the principal, premium, if any, and interest on the Notes and remaining unclaimed for two years after such principal, premium, if any, and interest has become due and payable shall be paid to the Issuers on their request or (if then held by the Issuers) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured creditor, look only to the Issuers for payment thereof, and all liability of the Trustee or such paying agent with respect to such trust money, and all liability of the Issuers as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such paying agent, before being required to make any such repayment, may at the expense of the Issuers cause to be published once, in The New York Times and The Wall Street Journal (national editions), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuers.

SECTION 8.06. Reinstatement. If the Trustee or paying agent is unable to apply any money or non-callable U.S. Government Obligations in accordance with Section 8.01, Section 8.02 or Section 8.08 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers’ and the Guarantors’ obligations under the Indenture, the Guarantees and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01, Section 8.02 or Section 8.08 until such time as the Trustee or paying agent is permitted to apply all such money in accordance with Section 8.01, Section 8.02 or Section 8.08, as the case may be; provided, however, that, if the Issuers make any payment of principal of, premium, if any, or interest on any Note following the reinstatement of their obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or paying agent.

SECTION 8.07. Survival. The Trustee’s rights under Article VII and this Article VIII shall survive the termination of the Indenture.

SECTION 8.08. Satisfaction and Discharge of Indenture. If at any time (a) (i) the Issuers shall have paid or caused to be paid the principal of, premium, if any, and interest on all the outstanding Notes (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.04) as and when the same shall have become due and payable, or (ii) the Issuers shall have delivered to the Trustee for cancelation all Notes theretofore authenticated (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.04), or (b) (i) the Notes mature within one year, or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption, (ii) the Issuers irrevocably deposits in trust with the Trustee, as

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trust funds solely for the benefit of the Holders, money or U.S. Government Obligations or a combination thereof sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certificate delivered to the Trustee, without consideration of any reinvestment, to pay principal of and premium and interest on the Notes to maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder, (iii) no Default has occurred and is continuing on the date of the deposit, (iv) the deposit will not result in a breach or violation of, or constitute a default under, the Indenture or any other agreement or instrument to which the Issuers are a party or by which they are bound, and (v) the Issuers delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent provided for herein relating to the satisfaction and discharge of the Indenture have been complied with; and if, in any such case, the Issuers shall also pay or cause to be paid all other sums payable hereunder by the Issuers (including all amounts, payable to the Trustee pursuant to Section 7.07), then, (x) after satisfying the conditions in clause (a), only the Company’s obligations under Sections 7.07 and 8.04 will survive or (y) after satisfying the conditions in clause (b), only the Issuers’ or the Company’s, as applicable, obligations in Article II and Sections 4.01, 4.02, 4.03, 7.07, 7.08, 8.04, 8.05 and 8.06 will survive, and, in either case, the Trustee, on demand of the Issuers accompanied by an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the satisfaction and discharge contemplated by this provision have been complied with, and at the cost and expense of the Issuers, shall execute proper instruments acknowledging such satisfaction and discharging of the Indenture and the Security Documents and cause the release of all Liens on the Collateral granted under the Security Documents. The Issuers agree to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred, and to compensate the Trustee for any services thereafter reasonably and properly rendered, by the Trustee in connection with the Indenture, the Notes or the Security Documents.

ARTICLE IX

Amendments, Supplements and Waivers

SECTION 9.01. Amendments Without Consent of Holders. The Issuers, the Guarantors, the Trustee and the Collateral Agent (as applicable) may amend, supplement or waive the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents without notice to or the consent of any Holder:

(a) to evidence a Successor to the Company, the Corporate Issuer or a Guarantor as permitted pursuant to Section 4.14, and the assumption by the Successor of the covenants, agreements and obligations of the Company, the Corporate Issuer or such Guarantor, as the case may be, herein and in the Notes or the Guarantees;

(b) to add to the covenants of the Issuers such further covenants, restrictions, conditions or provisions for the protection of the Holders of Notes, or to surrender any right or power herein conferred upon the Issuers, and to make the occurrence, or the occurrence and continuance, of a default in any such additional

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covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in the Indenture as herein set forth; provided, however, that in respect of any such additional covenants, restrictions, conditions or provisions such amendment, supplemented indenture or waiver may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Notes to waive such an Event of Default;

(c) to cure any ambiguity, defect or inconsistency in the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents;

(d) to comply with any requirements of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act;

(e) to evidence and provide for the acceptance of appointment hereunder by a successor or replacement Trustee or under the Security Documents of a successor or replacement Collateral Agent;

(f) to provide for uncertificated Notes in addition to, or in place of, Certificated Notes;

(g) to provide for any Guarantee of the Notes, to add security to or for the benefit of the Notes and, in the case of the Security Documents, to or for the benefit of the other secured parties named therein, or to confirm and evidence the release, termination or discharge of any Guarantee of the Notes or Lien securing the Notes or any Guarantee when such release, termination or discharge is permitted by the Indenture, the Intercreditor Agreement and the Security Documents;

(h) to make any other change that does not adversely affect the legal rights of any Holder;

(i) to conform any provision of the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents to the “Description of the Notes” contained in the Offering Circular to the extent that the “Description of the Notes” was intended to be a verbatim recitation of a provision in the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Security Documents;

(j) to provide for the issuance of Additional Notes as permitted under the Indenture; or

(k) to make any amendment to the provisions of the Indenture relating to the transfer and legending of Notes; provided, however, that (a) compliance with the Indenture as so amended would not result in Notes being transferred in

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violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of Holders to transfer Notes.

In addition, the Collateral Agent and the Trustee (as applicable) may amend the Intercreditor Agreement and the Security Documents to add additional secured parties to the extent Liens securing Indebtedness and other Obligations held by such parties are permitted under the Indenture.

After an amendment under this Section becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

SECTION 9.02. Amendments with Consent of Holders. (a) Except as otherwise provided in Section 9.02(b), the Issuers, the Guarantors, the Trustee and the Collateral Agent (when acting with respect to the Notes) may amend or supplement the Indenture, the Notes, the Guarantees, the Intercreditor Agreement and the Security Documents with the consent of the Holders of a majority in principal amount of the outstanding Notes (which may include written consents obtained in connection with a tender offer or exchange offer for Notes), and the Holders of a majority in principal amount of the outstanding Notes by written notice to the Trustee may waive future compliance by the Issuers and the Guarantors with any provision of the Indenture, the Notes, the Guarantees or the Security Documents (which may include waivers obtained in connection with a tender offer or exchange offer for Notes).

(b) Notwithstanding the provisions of paragraph (a) of this Section 9.02, without the consent of each Holder affected, an amendment or waiver may not:

(i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver,

(ii) reduce the rate of, or extend the time for payment of, any interest, including default interest, on any Note,

(iii) reduce principal of, or change the fixed maturity of, any Note or alter the provisions (including related definitions) with respect to redemptions described under Article III or with respect to mandatory offers to repurchase Notes described under Section 4.10 and Section 4.12,

(iv) make any Note payable in money other than that stated in the Note,

(v) adversely modify the ranking or priority of the Notes or any Guarantee, except for releases of Guarantees or Collateral permitted by the Indenture and the Intercreditor Agreement,

(vi) make any change in Sections 5.03 or 5.06,

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(vii) release any Guarantor from any of its obligations under its Guarantee or the Indenture otherwise than in accordance with the Indenture and the Intercreditor Agreement,

(viii) waive a continuing Default in the payment of principal of, premium, if any, or interest on the Notes, or

(ix) effect a release of all or substantially all of the Collateral other than pursuant to the terms of the Intercreditor Agreement and the Security Documents or as otherwise permitted under the Indenture.

(c) It is not necessary for Holders to approve the particular form of any proposed amendment, supplement or waiver, but is sufficient if their consent approves the substance thereof.

(d) An amendment, supplement or waiver under this Section will become effective on receipt by the Trustee of written consents from the Holders of the requisite percentage in principal amount of the outstanding Notes. After an amendment, supplement or waiver under this Section becomes effective, the Issuers (or the Trustee at the request and expense of the Issuers) will send to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. The Issuers will send supplemental indentures to Holders upon request. Any failure of the Issuers to send such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such supplemental indenture, amendment or waiver.

SECTION 9.03. Effect of Consent. (a) After an amendment, supplement or waiver becomes effective, it will bind every Holder unless it is of the type requiring the consent of each Holder affected. If the amendment, supplement or waiver is of the type requiring the consent of each Holder affected, the amendment, supplement or waiver will bind each Holder that has consented to it and every subsequent Holder of a Note that evidences the same debt as the Note of the consenting Holder.

(b) If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder to deliver it to the Trustee so that the Trustee may place an appropriate notation of the changed terms on the Note and return it to the Holder, or exchange it for a new Note that reflects the changed terms. The Trustee may also place an appropriate notation on any Note thereafter authenticated. However, the effectiveness of the amendment, supplement or waiver shall not be affected or impaired by any failure to annotate or exchange Notes in this fashion.

SECTION 9.04. Trustee’s Rights and Obligations. The Trustee is entitled to receive, in addition to the documents required by Section 13.04, and will be fully protected in relying upon, an Opinion of Counsel stating (i) that the execution of any amendment, supplement or waiver authorized pursuant to this Article is authorized or permitted by the Indenture and, if applicable, the relevant Security Document, and the Indenture, as amended by such amendment, supplement or waiver constitutes the legal, valid and binding obligation of the Issuers enforceable against them in accordance with

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its terms and (ii) in the case of an amendment, supplement or waiver in connection with Section 9.01(h) that such amendment, supplement or waiver does not adversely affect the legal rights of any Holder affected by such change. If the Trustee has received such Opinion of Counsel, it shall sign the amendment, supplement or waiver so long as the same does not adversely affect the rights of the Trustee. The Trustee may, but is not obligated to, execute any amendment, supplement or waiver that affects the Trustee’s own rights, duties or immunities under the Indenture.

SECTION 9.05. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act.

SECTION 9.06. Payments for Consents. Neither the Issuers nor any Affiliate may, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture, the Notes, the Guarantees, any Security Document or the Intercreditor Agreement unless such consideration is offered to be paid or paid to all Holders that consent, waive or agree to amend such term or provision within the time period set forth in the solicitation documents relating to the consent, waiver or amendment.

ARTICLE X

[Reserved]

ARTICLE XI

Collateral and Security

SECTION 11.01. Security Documents. The payment of the principal of and interest and premium, if any, on the Notes when due, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise and whether by the Issuers pursuant to the Notes or by any Guarantor pursuant to its Guarantee, the payment of all other Pari-Passu Lien Obligations and the performance of all other obligations of the Issuers and the Guarantors under the Indenture, the Notes, the Guarantees, the Intercreditor Agreement and the Security Documents are secured by Liens (the “Pari-Passu Liens”) on the Collateral, subject to Permitted Liens, as provided in the Security Documents which the Issuers and the Guarantors have entered into simultaneously with the execution of the Indenture, or in certain circumstances, subsequent to the Issue Date, and will be secured as provided in the Security Documents hereafter delivered as required or permitted by the Indenture.

SECTION 11.02. Collateral Agent. (a) The Issuers hereby acknowledge the appointment of Wells Fargo Bank, National Association as Collateral Agent in accordance with the terms of the Intercreditor Agreement. The Issuers and the Guarantors hereby agree that the Collateral Agent shall hold the Collateral in trust for the benefit of all of the Holders and the Trustee, in each case, pursuant to the terms of the

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Security Documents, the Intercreditor Agreement and the Real Property Collateral Management Agreement, and acknowledge that the Collateral Agent is authorized pursuant to the Intercreditor Agreement to execute and deliver the Security Documents, the Intercreditor Agreement and the Real Property Collateral Management Agreement and that the Collateral Agent may appoint one or more co-Collateral Agents as it deems necessary or appropriate.

(b) Subject to Section 7.01, neither the Trustee nor the Collateral Agent nor any of their respective officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral, for the legality, enforceability, effectiveness or sufficiency of the Security Documents, for the creation, perfection, priority, sufficiency or protection of any Pari-Passu Lien, or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Pari-Passu Liens or Security Documents or any delay in doing so.

(c) The Collateral Agent will be subject to such directions as may be given it by the Trustee from time to time (as required or permitted by the Indenture). Except as directed by the Trustee as required or permitted by the Indenture or as required or permitted by the Security Documents or the Intercreditor Agreement, the Collateral Agent will not be obligated:

(1) to act upon directions purported to be delivered to it by any other Person;

(2) to foreclose upon or otherwise enforce any Pari-Passu Lien with respect to the Notes and the Guarantees; or

(3) to take any other action whatsoever with regard to any or all of the Pari-Passu Liens with respect to the Notes and the Guarantees, Security Documents or Collateral.

(d) The Collateral Agent will be accountable only for amounts that it actually receives as a result of the enforcement of the Pari-Passu Liens with respect to the Notes and the Guarantees or the Security Documents.

(e) In acting as Collateral Agent or co-Collateral Agent, the Collateral Agent and each co-Collateral Agent may rely upon and enforce for its own benefit each and all of the rights, powers, immunities, indemnities and benefits of the Trustee under Article VII, each of which shall also be deemed to be for the benefit of the Collateral Agent.

(f) At all times when the Trustee is not itself the Collateral Agent, the Issuers will deliver to the Trustee copies of all Security Documents delivered to the Collateral Agent and copies of all documents delivered to the Collateral Agent pursuant to the Security Documents.

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SECTION 11.03. Authorization of Actions to be Taken. (a) Each Holder, by its acceptance of a Note, consents and agrees to the terms of each Security Document and the Intercreditor Agreement, as originally in effect on the Issue Date and as amended, supplemented or replaced from time to time in accordance with its terms or the terms of the Indenture, authorizes and directs the Trustee and the Collateral Agent to execute and deliver the Security Documents and the Intercreditor Agreement to which it is a party and authorizes and empowers the Trustee and the Collateral Agent to bind the Holders and other holders of Pari-Passu Lien Obligations as set forth in the Security Documents and the Intercreditor Agreement to which it is a party and to perform its obligations and exercise its rights and powers thereunder.

(b) The Collateral Agent and the Trustee are authorized and empowered to receive for the benefit of the Holders any funds collected or distributed under the Security Documents and the Intercreditor Agreement to which the Collateral Agent or Trustee is a party and to make further distributions of such funds to the Holders according to the provisions of the Indenture.

(c) Subject to the provisions of Sections 7.01 and 7.02 and the Intercreditor Agreement, the Trustee may, in its sole discretion and without the consent of the Holders, direct, on behalf of the Holders, the Collateral Agent to take all actions it deems necessary or appropriate in order to:

(1) foreclose upon or otherwise enforce any or all of the Pari-Passu Liens;

(2) enforce any of the terms of the Security Documents to which the Collateral Agent or Trustee is a party; or

(3) collect and receive payment of any and all Pari-Passu Lien Obligations.

Subject to Sections 7.01 and 7.02, the Intercreditor Agreement and the Collateral Management Agreement, the Trustee is authorized and empowered to institute and maintain, or direct the Collateral Agent to institute and maintain, such suits and proceedings as it may deem expedient to protect or enforce the Pari-Passu Liens or the Security Documents to which the Collateral Agent or Trustee is a party or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Security Documents to which the Collateral Agent or Trustee is a party or the Indenture, and such suits and proceedings as the Trustee or the Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of Holders, the Trustee or the Collateral Agent.

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SECTION 11.04. Release of Pari-Passu Liens. (a) The Pari-Passu Liens will be released, with respect to the Notes and the Guarantees:

(1) in whole, upon payment in full of the principal of, accrued and unpaid interest and premium, if any, on and all other Obligations with respect to the Notes;

(2) in whole, upon satisfaction and discharge of the Indenture pursuant to Section 8.08;

(3) in whole, upon a Legal Defeasance or Covenant Defeasance pursuant to Article VIII;

(4) in part, as to any Property constituting Collateral that is sold or otherwise disposed of to any Person other than the Company, the Corporate Issuer or any Guarantor (but excluding any transaction subject to Section 4.14 where the recipient is required to become the obligor on the Notes or a Guarantee) in a transaction permitted by the Indenture, at the time of such sale or disposition, to the extent of the interest sold or disposed of;

(5) in accordance with and subject to the provisions of Article IX, with the required consent of Holders; or

(6) with respect to Property of a Guarantor constituting Collateral, upon release of such Guarantor of its Guarantee of the Notes in accordance with the Indenture.

(b) If an instrument confirming the release of the Pari-Passu Liens pursuant to Section 11.04(a) is requested by the Issuers or a Guarantor, then upon delivery to the Trustee of an Officers’ Certificate requesting execution of such an instrument, accompanied by:

(1) an Opinion of Counsel confirming that such release is permitted by Section 11.04(a);

(2) all instruments requested by the Issuers to effectuate or confirm such release; and

(3) such other certificates and documents as the Trustee or Collateral Agent may reasonably request to confirm the matters set forth in Section 11.04(a) that are required by the Indenture or the Security Documents,

the Trustee will, if such instruments and documents are reasonably satisfactory to the Trustee and Collateral Agent, instruct the Collateral Agent to execute and deliver, and the Collateral Agent will promptly execute and deliver, such instruments.

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(c) All instruments effectuating or confirming any release of any Pari-Passu Liens will have the effect solely of releasing such Pari-Passu Liens as to the Collateral described therein, on customary terms and without any recourse, representation, warranty or liability whatsoever.

(d) The Company will bear and pay all costs and expenses associated with any release of Pari-Passu Liens pursuant to this Section 11.04, including all reasonable fees and disbursements of any attorneys or representatives acting for the Trustee or for the Collateral Agent.

SECTION 11.05. Filing, Recording and Opinions. (a) The Company will comply with the provisions of TIA § 314(b) and § 314(d), in each case following qualification of the Indenture pursuant to the TIA. Any certificate or opinion required by TIA § 314(d) may be made by an Officer of the Issuers except in cases where TIA § 314(d) requires that such certificate or opinion be made by an independent engineer, appraiser or other expert, who shall be reasonably satisfactory to the Trustee. Notwithstanding anything to the contrary herein, the Issuers and the Guarantors will not be required to comply with all or any portion of TIA § 314(d) if they determine, in good faith based on advice of counsel (which may be internal counsel), that under the terms of that section and/or any interpretation or guidance as to the meaning thereof of the Commission and its staff, including “no action” letters or exemptive orders, all or any portion of TIA § 314(d) is inapplicable to the released Collateral. Following the qualification of the Indenture pursuant to the TIA, to the extent the Issuers are required to furnish to the Trustee an Opinion of Counsel pursuant to TIA § 314(b)(2), the Issuers will furnish such opinion prior to each May 1.

Any actions taken in compliance with (or otherwise contemplated by) the Indenture, the Intercreditor Agreement and the Security Documents, including without limitation, any release of Collateral permitted by Section 11.04 or the Security Documents, will be deemed not to impair the Liens under the Indenture and the Security Documents in contravention thereof and any person that is required to deliver a certificate or opinion pursuant to Section 314(d) of the TIA or otherwise under the Indenture or the Security Documents, shall be entitled to rely upon the foregoing as a basis for delivery of such certificate or opinion. The Trustee may, to the extent permitted by Sections 7.01 and 7.02, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and opinion.

(b) If any Collateral is released in accordance with the Indenture or any Security Document at a time when the Trustee is not itself also the Collateral Agent and if the Issuers have delivered the certificates and documents required by the Security Documents and permitted to be delivered by Section 11.04 (if any), the Trustee will determine whether it has received all documentation required by TIA § 314(d) in connection with such release and, based on such determination and the Opinion of Counsel delivered pursuant to Section 11.04, if any, will, upon request, deliver a certificate to the Collateral Agent setting forth such determination.

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ARTICLE XII

[Reserved]

ARTICLE XIII

Miscellaneous

SECTION 13.01. Trust Indenture Act of 1939. The Indenture shall incorporate and be governed by the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act. To the extent permitted by applicable law, in the event of any inconsistency between the terms of the Notes and the terms of the Indenture, the terms of the Indenture will control; provided, however, that provisions of TIA § 314(b) and § 314(d), in each case, shall not apply until qualification of the Indenture under the TIA.

SECTION 13.02. Holder Communications; Holder Actions. (a) The rights of Holders to communicate with other Holders with respect to the Indenture or the Notes are as provided by the Trust Indenture Act, and the Issuers shall comply with the requirements of Trust Indenture Act § 312(a). Neither the Issuers nor the Trustee will be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.

(b) (i) Any request, demand, authorization, direction, notice, consent to amendment, supplement or waiver or other action provided by the Indenture to be given or taken by a Holder (an “act”) may be evidenced by an instrument signed by the Holder delivered to the Trustee. The fact and date of the execution of the instrument, or the authority of the person executing it, may be proved in any manner that the Trustee deems sufficient.

(ii) The Trustee may make reasonable rules for action by or at a meeting of Holders, which will be binding on all the Holders.

(c) Any act by the Holder of any Note binds that Holder and every subsequent Holder of a Note that evidences the same debt as the Note of the acting Holder, even if no notation thereof appears on the Note. Subject to Section 13.02(d), a Holder may revoke an act as to its Notes, but only if the Trustee receives the notice of revocation before the date the amendment or waiver or other consequence of the act becomes effective.

(d) The Issuers may, but is not obligated to, fix a record date (which need not be within the time limits otherwise prescribed by Trust Indenture Act § 316(c)) for the purpose of determining the Holders entitled to act with respect to any amendment or waiver or in any other regard, except that during the continuance of an Event of Default, only the Trustee may set a record date as to notices of Default, any declaration or acceleration or any other remedies or other consequences of the Event of Default. If a record date is fixed, those Persons that were Holders at such record date and only those

93

Persons will be entitled to act, or to revoke any previous act, whether or not those Persons continue to be Holders after the record date. No act will be valid or effective for more than 90 days after the record date.

SECTION 13.03. Notices. (a) Any notice or communication to the Issuers or the Company will be deemed given if in writing (i) when delivered in person or (ii) five days after mailing when mailed by first class mail or (iii) when sent by facsimile transmission, with transmission confirmed. Notices or communications to a Guarantor will be deemed given if given to the Company. Any notice to the Trustee will be effective only upon receipt. In each case the notice or communication should be addressed as follows:

if to the Issuers:

655 Brea Canyon Road

Walnut, CA 91789

Facsimile: (909) 869-0849

Attention: Chief Financial Officer

if to the Trustee:

Wells Fargo Bank, National Association

707 Wilshire Blvd, 17^th Floor

MAC# E2818-176

Los Angeles, CA 9017

Facsimile: 213-614-3355

Attention: Maddy Hall

The Issuers or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

(b) Except as otherwise expressly provided with respect to published notices, any notice or communication to a Holder will be deemed given when mailed to the Holder at its address as it appears on the Register by first class mail or, as to any Global Note registered in the name of DTC or its nominee, as agreed by the Issuers, the Trustee and DTC. Copies of any notice or communication to a Holder, if given by the Issuers or the Company, will be mailed to the Trustee at the same time. Defect in mailing a notice or communication to any particular Holder will not affect its sufficiency with respect to other Holders.

(c) Where the Indenture provides for notice, the notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and the waiver will be the equivalent of the notice. Waivers of notice by Holders must be filed with the Trustee, but such filing is not a condition precedent to the validity of any action taken in reliance upon such waivers.

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SECTION 13.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuers or the Company to the Trustee to take any action under the Indenture, the Issuers or the Company will furnish to the Trustee:

(a) an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in the Indenture relating to the proposed action have been complied with; and

(b) an Opinion of Counsel stating that all such conditions precedent relating to the proposed action have been complied with.

SECTION 13.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in the Indenture must include:

(a) a statement that each person signing the certificate or opinion has read the covenant or condition and the related definitions;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in the certificate or opinion is based;

(c) a statement that, in the opinion of each such person, that person has made such examination or investigation as is necessary to enable the person to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with; provided, however, that an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials with respect to matters of fact.

Any certificate, statement or opinion of an Officer of the Issuers or the Company, as applicable, may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which such certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or Opinion of Counsel may be based, insofar as it relates to factual matters on information with respect to which is in the possession of the Issuers, or the Company, as applicable, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuers, or the Company, as applicable, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which such certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

Any certificate, statement or opinion of an Officer of the Issuers or the Company, as applicable, or of counsel may be based, insofar as it relates to accounting

95

matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuers or the Company, as applicable, unless such Officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which such certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent.

SECTION 13.06. Payment Date Other Than a Business Day. If any payment with respect to a payment of any principal of, premium, if any, or interest on any Note (including any payment to be made on any date fixed for redemption or purchase of any Note) is due on a day which is not a Business Day, then the payment need not be made on such date, but may be made on the next Business Day with the same force and effect as if made on such date, and no interest will accrue for the intervening period.

SECTION 13.07. Governing Law. This Indenture, the Guarantees and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 13.08. No Adverse Interpretation of Other Agreements. The Indenture may not be used to interpret another indenture or loan or debt agreement of the Issuers or any Subsidiary of the Company, and no such indenture or loan or debt agreement may be used to interpret the Indenture.

SECTION 13.09. Successors. All agreements of the Issuers or any Guarantor in the Indenture and the Notes will bind its successors. All agreements of the Trustee in the Indenture will bind its successor.

SECTION 13.10. Duplicate Originals. The parties may sign any number of copies of the Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Delivery of an executed counterpart by facsimile shall be effective as delivery of a manually executed counterpart thereof.

SECTION 13.11. Severability. To the extent permitted by applicable law, in case any provision in the Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

SECTION 13.12. Table of Contents and Headings. The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of the Indenture have been inserted for convenience of reference only, are not to be considered a part of the Indenture and in no way modify or restrict any of the terms and provisions of the Indenture.

96

SECTION 13.13. No Liability of Directors, Officers, Employees, Partners, Incorporators and Stockholders. No recourse under or upon any obligation, covenant or agreement contained in the Indenture, or in the Notes, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer, director or employee, as such, of the Issuers or the Guarantors or any partner of the Issuers or the Guarantors or of any successor, either directly or through the Issuers or the Guarantors or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Notes by the Holders thereof and as part of the consideration for the issue of the Notes.

SECTION 13.14. Provisions of Indenture for the Sole Benefit of Parties and Holders of Notes. Nothing in the Indenture or in the Notes, expressed or implied, shall give or be construed to give to any Person, other than the parties hereto and their successors and the Holders, any legal or equitable right, remedy or claim under the Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders.

[Signature page follows]

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SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused the Indenture to be duly executed as of the date first written above.

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership
By:	/s/ James G. Shontere
	Name:  Title:	James G. Shontere Secretary

By:	/s/ Robert R. O’Dell
	Name:  Title:	Robert R. O’Dell Treasurer

SHEA HOMES FUNDING CORP., a Delaware corporation
By:	/s/ James G. Shontere
	Name:  Title:	James G. Shontere Chief Financial Officer and Secretary

By:	/s/ Robert R. O’Dell
	Name:  Title:	Robert R. O’Dell Treasurer

[Signature page to the Indenture]

GUARANTORS: HIGHLANDS RANCH DEVELOPMENT CORPORATION, a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere Title: Secretary

By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell Title: Treasurer

MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere Title: Secretary

By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell Title: Treasurer

MOUNTAINBROOK VILLAGE COMPANY, an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere Title: Secretary

By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell Title: Treasurer

[Signature page to the Indenture]

SAND CREEK CATTLE COMPANY, a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere Title: Secretary

By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell Title: Treasurer

SERENADE AT NATOMAS, LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	/s/ James G. Shontere
		Name: James G. Shontere Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell Title: Treasurer

[Signature page to the Indenture]

SEVILLE GOLF AND COUNTRY CLUB, LLC, an Arizona limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature page to the Indenture]

SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature page to the Indenture]

SHEA CAPITAL II, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA COMMUNITIES MARKETING COMPANY, a Delaware corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature page to the Indenture]

SHEA FINANCIAL SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA HOMES, INC., a Delaware corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA HOMES AT MONTAGE, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer

[Signature page to the Indenture]

SHEA HOMES SOUTHWEST, INC., an Arizona corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA HOMES VANTIS, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA INSURANCE SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer

[Signature page to the Indenture]

SHEA LA QUINTA LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	/s/ James G. Shontere
		Name:	James G. Shontere
		Title:	Secretary
	By:	/s/ Robert R. O’Dell
		Name:	Robert R. O’Dell
		Title:	Treasurer

SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name:	James G. Shontere
					Title:	Secretary
				By:	/s/ Robert R. O’Dell
					Name:	Robert R. O’Dell
					Title:	Treasurer

[Signature page to the Indenture]

SHEA OTAY VILLAGE 11, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name:	James G. Shontere
					Title:	Secretary
				By:	/s/ Robert R. O’Dell
					Name:	Robert R. O’Dell
					Title:	Treasurer

[Signature page to the Indenture]

SHEA PROCTOR VALLEY, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature page to the Indenture]

SHEA PROPERTIES OF COLORADO, INC., a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

SHEA RIVERMARK VILLAGE, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature page to the Indenture]

SHEA TONNER HILLS, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA VICTORIA GARDENS, LLC, a Florida limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature page to the Indenture]

SH JUBILEE, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature page to the Indenture]

SHI JV HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHLP JV HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature page to the Indenture]

TOWER 104 GATHERING, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature page to the Indenture]

TOWER 104 OIL, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature page to the Indenture]

TRILOGY ANTIOCH, LLC, a California limited liability company
By:	SHEA CAPITAL II, LLC, a Delaware limited liability company, Its sole Member
	By:	Shea Homes Limited Partnership, a California limited partnership, Its Manager
		By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
			By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
				By:	J.F. Shea Construction Management Inc.,
					a California corporation, Its sole General Partner
					By:	/s/ James G. Shontere
						Name: James G. Shontere
						Title: Secretary
					By:	/s/ Robert R. O’Dell
						Name: Robert R. O’Dell
						Title: Treasurer

UDC ADVISORY SERVICES, INC., an Illinois corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature page to the Indenture]

UDC HOMES CONSTRUCTION, INC., an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

VISTANCIA CONSTRUCTION, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc., an Arizona corporation, Its Manager
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

VISTANCIA MARKETING, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc., an Arizona corporation, Its Manager
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

[Signature page to the Indenture]

WELLS FARGO BANK, NATIONAL     ASSOCIATION, as Trustee,
By:	/s/ Maddy Hall
	Name: Maddy Hall
	Title: Vice President

[Signature page to the Indenture]

RULE 144A/REGULATION S APPENDIX

PROVISIONS RELATING TO INITIAL SECURITIES,

PRIVATE EXCHANGE SECURITIES

AND EXCHANGE SECURITIES

1. Definitions.

1.1 Definitions.

Capitalized terms used but not otherwise defined in this Appendix shall have the meanings assigned thereto in the Indenture. For the purposes of this Appendix, the following terms shall have the meanings indicated below:

“Applicable Procedures” means, with respect to any transfer or transaction prior to the expiration of the Restricted Period and involving a Regulation S Global Note or beneficial interest therein, the rules and procedures of the Depository for such a transfer or transaction, to the extent applicable and as in effect from time to time.

“Definitive Note” means a certificated Initial Note, Additional Note, Exchange Note or Private Exchange Note bearing, if required, the appropriate restricted securities legend set forth in Section 2.3(e).

“Depository” means The Depository Trust Company, its nominees and their respective successors.

“Initial Purchaser” means (1) with respect to the Initial Notes issued on the Issue Date, Credit Suisse Securities (USA) LLC and (2) with respect to each issuance of Additional Notes, the Persons purchasing such Additional Notes under the related Purchase Agreement.

“Notes Custodian” means the custodian with respect to a Global Note (as appointed by the Depository), or any successor Person thereto and shall initially be the Trustee.

“Private Exchange” means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchaser to issue and deliver to the Initial Purchaser, in exchange for the Initial Notes held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Notes.

“Private Exchange Notes” means any 8.625% Senior Secured Notes Due 2019 issued in connection with a Private Exchange.

“Purchase Agreement” means (1) with respect to the Notes issued on the Issue Date, the Purchase Agreement dated May 3, 2011, among the Issuers, the Guarantors and the Initial Purchaser, and (2) with respect to each issuance of Additional Notes, the purchase agreement or underwriting agreement among the Issuers, the Guarantors and the Persons purchasing such Additional Notes.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Registered Exchange Offer” means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Notes, to issue and deliver to such Holders, in exchange for the Initial Notes, a like aggregate principal amount of Exchange Notes registered under the Securities Act.

“Restricted Period” means, with respect to any Notes, the period of 40 consecutive days beginning on and including the later of (i) the day on which such Notes are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the issue date with respect to such Notes.

“Shelf Registration Statement” means the registration statement issued by the Company in connection with the offer and sale of Initial Notes or Private Exchange Notes pursuant to a Registration Rights Agreement.

“Transfer Restricted Notes” means Notes that bear or are required to bear the legend relating to restrictions on transfer relating to the Securities Act set forth in Section 2.3(e) hereto.

1.2 Other Definitions.

Term	Defined in Section:
“Agent Members”		2.1(b)
“Clearstream, Luxembourg”		2.1(a)
“Euroclear”		2.1(a)
“Global Notes”		2.1(a)
“Regulation S”		2.1(a)
“Regulation S Global Note”		2.1(a)
“Regulation S Permanent Global Note”		2.1(a)
“Regulation S Temporary Global Note”		2.1(a)
“Restricted Notes Legend”		2.3(e)
“Rule 144A”		2.1(a)
“Rule 144A Global Note”		2.1(a)

2. The Notes.

2.1 (a) Form and Dating. The Initial Notes were offered and sold by the Issuers pursuant to a Purchase Agreement. The Initial Notes will be resold initially only to (i) QIBs in reliance on Rule 144A under the Securities Act (“Rule 144A”) and (ii) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act (“Regulation S”). The Initial Notes may thereafter be transferred to, among others, QIBs and purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein. The Initial Notes initially resold pursuant to Rule 144A shall be issued initially in the form of one or more securities in registered,

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global form (collectively, the “Rule 144A Global Note”); and Initial Notes initially resold pursuant to Regulation S shall be issued initially in the form of one or more temporary securities in registered, global form (collectively, the “Regulation S Temporary Global Note”), in each case without interest coupons and with the global securities legend and the applicable restricted securities legend set forth in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Initial Notes represented thereby with the Notes Custodian and registered in the name of the Depository or a nominee of the Depository, duly executed by the Issuers and authenticated by the Trustee as provided in the Indenture. Until the expiration of the Restricted Period, beneficial ownership interests in the Regulation S Temporary Global Notes may be held only through Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”), and Clearstream Banking, Société Anonyme (“Clearstream, Luxembourg”), as indirect participants in DTC, unless transferred to a Person that takes delivery through a Rule 144A Global Note in accordance with the certification requirements described in the second succeeding paragraph below. Except as set forth in this Section 2.1(a), beneficial ownership interests in the Regulation S Temporary Global Note will not be exchangeable for interests in the Rule 144A Global Note or any other Note prior to the expiration of the Restricted Period and then, after the expiration of the Restricted Period, may be exchanged for one or more permanent securities in registered, global form without interest coupons (collectively, the “Regulation S Permanent Global Note” and, together with the Regulation S Temporary Global Note, the “Regulation S Global Note”) or a Definitive Note upon (i) delivery to DTC of certification of compliance with the transfer restrictions applicable to the Notes and pursuant to Regulation S as provided in the Indenture, (ii) a certification in form satisfactory to the Trustee that beneficial ownership interests in such Regulation S Temporary Global Note are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act and (iii) in the case of an exchange for Definitive Notes, in compliance with the requirements described in Section 2.4(a) of this Appendix.

Definitive Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such Notes.

Prior to the expiration of the Restricted Period, beneficial interests in Regulation S Global Notes may be exchanged for interests in Rule 144A Global Notes only if (1) such exchange occurs in connection with a transfer of Notes pursuant to Rule 144A and (2) the transferor of the beneficial interest in the Regulation S Global Note first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that the beneficial interest in the Regulation S Global Note is being transferred to a Person (a) whom the transferor reasonably believes to be a QIB, (b) purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A and (c) in accordance with all applicable securities laws of the states of the United States and other jurisdictions and that, if such transfer occurs prior to the expiration of the Restricted Period, the interest transferred will be held immediately thereafter through Euroclear or Clearstream, Luxembourg.

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Beneficial interests in a Rule 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Note, whether before or after the expiration of the Restricted Period, only if the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available).

The Rule 144A Global Note, the Regulation S Global Note and any Global Notes in fully registered form without the Restricted Notes Legend are collectively referred to herein as “Global Notes.” The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.

(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Note deposited with or on behalf of the Depository.

The Issuers shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held by the Trustee as custodian for the Depository.

Members of, or participants in, the Depository (“Agent Members”) shall have no rights under the Indenture with respect to any Global Note held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Note, and the Issuers, the Trustee and any agent of the Issuers or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

(c) Definitive Notes. Except as provided in this Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of Definitive Notes.

2.2 Authentication. The Trustee shall authenticate and deliver: (1) on the Issue Date, an aggregate principal amount of $750,000,000 of 8.625% Senior Secured Notes Due 2019, (2) any Additional Notes for an original issue in an aggregate principal amount specified in the written order of the Issuers pursuant to Section 2.02 of the Indenture, (3) Exchange Notes or Private Exchange Notes for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to a Registration Rights Agreement, for a like principal amount of Initial Notes, and (4) a Global Note without the Restricted Notes Legend pursuant to Section 2.3(e) of this Appendix, in each case upon a

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written order of the Issuers signed by one Officer of each such Issuer. Such order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and, in the case of any issuance of Additional Notes pursuant to Section 2.13 of the Indenture, shall certify that such issuance is in compliance with Sections 4.06 and 4.08 of the Indenture.

2.3 Transfer and Exchange.

(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented to the Registrar with a request:

(x) to register the transfer of such Definitive Notes; or

(y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange:

(i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuers and the Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and

(ii) if such Definitive Notes are required to bear a restricted securities legend, they are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable:

(A) if such Definitive Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or

(B) if such Definitive Notes are being transferred to the Issuers, a certification to that effect; or

(C) if such Definitive Notes are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A, Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a certification to that effect (in the form set forth on the reverse of the Note) and (ii) if the Issuers so request, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).

(b) Restrictions on Transfer of a Definitive Note for a Beneficial Interest in a Global Note. A Definitive Note may not be exchanged for a beneficial interest in a

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Rule 144A Global Note or a Regulation S Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with:

(i) certification, in the form set forth on the reverse of the Note, that such Definitive Note is either (A) being transferred to a QIB in accordance with Rule 144A or (B) being transferred after expiration of the Restricted Period by a Person who initially purchased such Note in reliance on Regulation S to a buyer who elects to hold its interest in such Note in the form of a beneficial interest in the Regulation S Global Note; and

(ii) written instructions directing the Trustee to make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Note (in the case of a transfer pursuant to clause (b)(i)(A)) or Regulation S Global Note (in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an increase in the aggregate principal amount of the Notes represented by the Rule 144A Global Note or Regulation S Global Note, as applicable, such instructions to contain information regarding the Depository account to be credited with such increase,

then the Trustee shall cancel such Definitive Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Notes Custodian, the aggregate principal amount of Notes represented by the Rule 144A Global Note or Regulation S Global Note, as applicable, to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Note or Regulation S Global Note, as applicable, equal to the principal amount of the Definitive Note so canceled. If no Rule 144A Global Notes or Regulation S Global Notes, as applicable, are then outstanding, the Issuers shall issue and the Trustee shall authenticate, upon written order of the Issuers in the form of an Officers’ Certificate thereof, a new Rule 144A Global Note or Regulation S Global Note, as applicable, in the appropriate principal amount.

(c) Transfer and Exchange of Global Notes.

(i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in accordance with the Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Note shall deliver to the Registrar a written order given in accordance with the Depository’s procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Note. The Registrar shall, in accordance with such instructions instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Note and to debit the account of the Person making the transfer the beneficial interest in the Global Note being transferred.

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(ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Note from which such interest is being transferred.

(iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

(iv) In the event that Global Note is exchanged for Definitive Notes pursuant to Section 2.4 of this Appendix, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that such transfers comply with Rule 144A, Regulation S or another applicable exemption under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Issuers.

(d) Restrictions on Transfer of Regulation S Global Notes. During the Restricted Period, beneficial ownership interests in Regulation S Global Notes may only be sold, pledged or transferred in accordance with the Applicable Procedures and only (i) to the Issuers, (ii) in an offshore transaction in accordance with Regulation S or (iii) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States.

(e) Legend.

(i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Note certificate evidencing the Global Notes (and all Notes issued in exchange therefor or in substitution thereof), in the case of Notes offered other than in reliance on Regulation S, shall bear a legend in substantially the following form (together with the legend in the second paragraph of this Section 2.3(e)(i), the “Restricted Notes Legend”):

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES

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ACT OF 1933 (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE ISSUERS, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

Each certificate evidencing a Note offered in reliance on Regulation S shall bear a legend in substantially the following form:

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATIONS UNDER THE SECURITIES ACT.

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Each Definitive Note shall also bear the following additional legend:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

(ii) Upon any sale or transfer of a Transfer Restricted Note (including any Transfer Restricted Note represented by a Global Note) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer Restricted Note for a certificated Note that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Note, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Note); and to the extent permitted by law at any time after one year has elapsed following the Issue Date, if the Notes are freely tradeable without restriction pursuant to Rule 144 under the Securities Act (or successor rule), the Registrar shall permit the removal of the Restricted Notes Legend and rescind any restriction on the transfer of such Transfer Restricted Note if the Issuers deliver to the Trustee an opinion reasonably satisfactory to the Trustee that the removal of the Restricted Notes Legend is in compliance with the Securities Act.

(iii) After a transfer of any Initial Notes or Private Exchange Notes pursuant to and during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Notes or Private Exchange Notes, as the case may be, all requirements pertaining to legends on such Initial Note or such Private Exchange Note will cease to apply, the requirements requiring any such Initial Note or such Private Exchange Note issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Note or Private Exchange Note or an Initial Note or Private Exchange Note in global form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Notes or Private Exchange Notes upon exchange of such transferring Holder’s certificated Initial Note or Private Exchange Note or directions to transfer such Holder’s interest in the Global Note, as applicable.

(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to certain Holders be issued in global form

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will still apply with respect to Holders of such Initial Notes that do not exchange their Initial Notes, and Exchange Notes in certificated or global form, in each case without the restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Notes in such Registered Exchange Offer.

(v) Upon the consummation of a Private Exchange with respect to the Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Notes that do not exchange their Initial Notes, and Private Exchange Notes in global form with the global securities legend and the applicable restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Notes in such Private Exchange.

(f) Cancelation or Adjustment of Global Note. At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, redeemed, purchased or canceled, such Global Note shall be returned to the Depository for cancelation or retained and canceled by the Trustee. At any time prior to such cancelation, if any beneficial interest in a Global Note is exchanged for certificated Notes, redeemed, purchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

(g) No Obligation of the Trustee.

(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.

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(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under the Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depository participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of the Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

2.4 Definitive Notes.

(a) A Global Note deposited with the Depository or with the Trustee as Notes Custodian for the Depository pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 hereof and (i) the Depository notifies the Issuers that it is unwilling or unable to continue as Depository for such Global Note and the Depository fails to appoint a successor depository or if at any time such Depository ceases to be a “clearing agency” registered under the Exchange Act, in either case, and a successor depository is not appointed by the Issuers within 120 days of such notice, (ii) a Default with respect to the Notes has occurred and is continuing and DTC or the Issuers specifically request such exchange, (iii) the Issuers, in their sole discretion, notify the Trustee in writing that they elect to cause the issuance of Definitive Notes under the Indenture or (iv) upon prior written notice given to the Trustee by or on behalf of the Depository in accordance with the Indenture.

(b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depository to the Trustee located at its principal corporate trust office in the Borough of Manhattan, The City of New York, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section 2.4 shall be executed, authenticated and delivered only in minimum denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof and registered in such names as the Depository shall direct. Any Definitive Note delivered in exchange for an interest in the Transfer Restricted Note shall, except as otherwise provided by Section 2.3(e) hereof, bear the applicable restricted securities legend and definitive securities legend set forth in Exhibit 1 hereto unless that legend is not required by applicable law.

(c) Subject to the provisions of Section 2.4(b) hereof, the registered Holder of a Global Note shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under the Indenture or the Notes.

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(d) In the event of the occurrence of one of the events specified in Section 2.4(a) hereof, the Issuers shall promptly make available to the Trustee a reasonable supply of Definitive Notes in definitive, fully registered form without interest coupons.

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EXHIBIT 1

to

RULE 144A/REGULATION S APPENDIX

[FACE OF NOTE]

[Global Securities Legend]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUERS OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED. TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE.

[[FOR REGULATION S GLOBAL SECURITY ONLY] UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]

[Restricted Securities Legend for Securities offered otherwise than in Reliance on

Regulation S]

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.

EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE ISSUERS, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

[Restricted Securities Legend for Securities Offered in Reliance on Regulation S]

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATIONS UNDER THE SECURITIES ACT.

[Definitive Securities Legend]

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

2

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

8.625% Senior Secured Notes Due 2019

	CUSIP No.:
No.	$             [, or such other amount as is provided in the schedule of exchanges of interests in global notes attached hereto]

Shea Homes Limited Partnership, a California limited partnership, and Shea Homes Funding Corp., a Delaware corporation (the “Issuers”, which term includes any successors under the Indenture hereinafter referred to), for value received, promise to pay to                                         , or its registered assigns, the principal sum of                      DOLLARS ($             ), [or such other amount as is provided in the schedule of exchanges of interests in global notes attached hereto]¹, on May 15, 2019.

Interest Rate: 8.625% per annum.

Interest Payment Dates: May 15 and November 15, commencing November 15, 2011.

Record Dates: May 1 and November 1.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the same effect as if set forth at this place.

¹  For Global Notes.

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IN WITNESS WHEREOF, the Issuers have caused this Note to be signed manually or by facsimile by its duly authorized officer.

Dated:

SHEA HOMES LIMITED PARTNERSHIP
By:
	Name: Title:
SHEA HOMES FUNDING CORP.
By:
	Name: Title:

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[Form of] Trustee’s Certificate of Authentication

This is one of the 8.625% Senior Secured Notes Due 2019 described in the Indenture referred to in this Note.

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:
	Authorized Signatory

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[REVERSE SIDE OF NOTE]

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

8.625% Senior Secured Notes Due 2019

Capitalized terms used herein are used as defined in the Indenture referred to below unless otherwise indicated.

1. Principal and Interest.

Shea Homes Limited Partnership, a California limited partnership, and Shea Homes Funding Corp., a Delaware corporation (the “Issuers”, which term includes any successors under the Indenture hereinafter referred to), promise to pay the principal of this Note on May 15, 2019.

The Issuers promise to pay interest on the principal amount of this Note on each interest payment date, as set forth on the face of this Note, at the rate of 8.625% per annum.

Interest will be payable semiannually (to the holders of record of the Notes at the close of business on the May 1 or November 1 immediately preceding the interest payment date) on each interest payment date, commencing November 15, 2011.

[The Holder of this Note is entitled to the benefits of the Registration Rights Agreement, dated [                    ], among the Issuers, the Guarantors party thereto and the Initial Purchaser named therein (the “Registration Rights Agreement”). In the event of a Registration Default (as defined in the Registration Rights Agreement), the Holder shall be entitled to Additional Interest as specified in the Registration Rights Agreement until the Registration Default is cured.]²

Interest on this Note will accrue from the most recent date to which interest has been paid on this Note or the Note surrendered in exchange for this Note (or, if there is no existing default in the payment of interest and if this Note is authenticated between a regular record date and the next interest payment date, from such interest payment date) or, if no interest has been paid, from May 10, 2011. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Paying Agent and Registrar.

Initially, Wells Fargo Bank, National Association (the “Trustee”) will act as Paying Agent and Registrar. The Issuers may change or appoint any Paying Agent, Registrar or co- Registrar without notice to any Holder. The Issuers or any of its Subsidiaries may act as Paying Agent, Registrar or co-Registrar.

²  This paragraph can be excluded when the Registration Rights Agreement is no longer applicable to the Notes.

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3. Indenture; Liens; Guarantees.

This is one of the Notes issued under an Indenture dated as of May 10, 2011 (as amended from time to time, the “Indenture”), among the Issuers, the Guarantors party thereto and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture will control.

The Notes are general obligations of the Issuers, secured by Liens on the Collateral as described in the Indenture and the Note Documents. The Indenture limits the original aggregate principal amount of the Notes issued thereunder to $750,000,000 but Additional Notes may be issued pursuant to the Indenture (subject to the conditions stated therein), and the originally issued Notes and all such Additional Notes vote together for all purposes as a single class. This Note is guaranteed by the Guarantors as set forth in the Indenture.

Reference is hereby made to the Indenture for a statement of the respective rights, duties and obligations thereunder of the Issuers, Guarantors, the Trustee and the Holders.

4. Optional Redemption; Redemption with Proceeds of Equity Offering.

At any time or from time to time prior to May 15, 2015, the Issuers will be entitled at their option to redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date).

At any time or from time to time on and after May 15, 2015, the Issuers will be entitled at their option to redeem all or a portion of the Notes at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on May 15 of the years set forth below:

Period	Redemption Price
2015		104.313	%
2016		102.156	%
2017 and thereafter		100.000	%

In addition, at any time prior to May 15, 2014, the Issuers will be entitled at their option on one or more occasions to redeem the Notes (which includes Additional Notes,

7

if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 108.625%, plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), with the net cash proceeds from one or more Equity Offerings; provided, however, that

(1) at least 65% of such aggregate principal amount of Notes (which includes Additional Notes, if any) remains outstanding immediately after the occurrence of each such redemption (other than the Notes held, directly or indirectly, by the Issuers or Affiliates of the Issuers); and

(2) each such redemption occurs within 60 days after the date of the consummation of the related Equity Offering.

“Adjusted Treasury Rate” means, with respect to any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities”, for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after May 15, 2015, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third Business Day immediately preceding the redemption date, plus 0.50%.

“Applicable Premium” means with respect to a Note at any redemption date, the excess of (A) the present value at such redemption date of (1) the redemption price of such Note on May 15, 2015 (as set forth above exclusive of any accrued interest) plus (2) all required remaining scheduled interest payments due on such Note through May 15, 2015 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, over (B) the principal amount of such Note on such redemption date.

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Notes from the redemption date to May 15, 2015, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to May 15, 2015.

8

“Comparable Treasury Price” means, with respect to any redemption date, if clause (ii) of the definition of “Adjusted Treasury Rate” is applicable, the average of three, or such lesser number as is obtained by the Trustee, Reference Treasury Dealer Quotations for such redemption date.

“Quotation Agent” means the Reference Treasury Dealer selected by the Issuers after consultation with the Trustee.

“Reference Treasury Dealer” means Credit Suisse Securities (USA) LLC and two other primary U.S. Government securities dealers in New York City (each, a “Primary Treasury Dealer”), and their respective successors and assigns; provided, however, that if any such entity ceases to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day immediately preceding such redemption date.

If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to the procedures of DTC), unless such method is otherwise prohibited, in which case, by lot or by such other method as the Trustee in its sole discretion shall deem appropriate and fair. Notice of each redemption shall be mailed by first-class mail to each Holder’s registered address, not less than 30 nor more than 60 days prior to the applicable redemption date.

No Notes of $2,000 in original principal amount or less shall be redeemed in part. Notices of redemption may not be conditional.

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancelation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions thereof called for redemption.

5. Repurchase Provisions.

If a Change of Control occurs, each Holder shall have the right, at such Holder’s option, to require the Issuers to purchase all or any part (equal to $2,000 principal amount or any integral multiple of $1,000 in excess thereof of such Holder’s Notes on a date that

9

is no later than 90 days after notice of the Change of Control, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase as provided in, and subject to the terms of, the Indenture.

6. Mandatory Redemption.

There is no sinking fund for, or mandatory redemption of, the Notes.

7. Discharge and Defeasance.

If the Issuers deposit with the Trustee money and/or U.S. Government Obligations sufficient to pay the then outstanding principal of, premium and interest, if any, and accrued interest on the Notes to redemption or maturity, as the case may be, the Issuers and the Guarantors may in certain circumstances be discharged from the Indenture, the Notes, the Guarantees, the Intercreditor Agreement and the Note Documents or may be discharged from certain of their obligations under certain provisions of the Indenture.

8. Registered Form; Denominations; Transfer; Exchange.

The Notes are in registered form only without coupons in denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof. A Holder may register the transfer or exchange of Notes in accordance with the Indenture. The Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. Pursuant to the Indenture, there are certain periods during which the Trustee will not be required to issue, register the transfer of, or exchange any Note or certain portions of a Note.

9. Persons Deemed Owners.

The registered Holder of this Note shall be treated as the owner of it for all purposes.

10. Defaults and Remedies.

If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all the Notes to be due and payable immediately. If a bankruptcy or insolvency default with respect to the Issuers occurs and is continuing, the Notes automatically become immediately due and payable. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of remedies.

10

11. Amendment, Supplement and Waiver.

Subject to certain exceptions, the Indenture, the Notes, the Guarantees, the Intercreditor Agreement and the Note Documents may be amended or supplemented, or future compliance therewith may be waived, with the consent of the Holders of a majority in principal amount of the outstanding Notes. Without notice to or the consent of any Holder, the Issuers, the Guarantors, the Trustee, and with respect to the Note Documents, the Collateral Agent, may amend or supplement the Indenture, the Notes, the Guarantees, the Intercreditor Agreement or the Note Documents to, among other things, cure any ambiguity, defect or inconsistency or if such amendment or supplement does not adversely affect the legal rights of any Holder.

12. Trustee Dealings With Issuers.

The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuers or their affiliates, with the same rights as if it were not Trustee; however, if it acquires any conflicting interest (as defined in the Trust Indenture Act), it must eliminate such conflict, apply to the Commission for permission to continue or resign.

13. No Recourse Against Others.

An incorporator, and any past, present or future director, officer, partner, employee or stockholder, as such, of the Issuers or the Guarantors shall not have any liability for any obligations of the Issuers or the Guarantors under the Notes, the Indenture or the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

14. Governing Law.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

15. CUSIP Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice and reliance may be placed only on the other identification numbers placed thereon.

16. Collateral Arrangements.

Each Holder, by its acceptance of this Note, (i) consents and agrees to the terms of each Security Document and the Intercreditor Agreement, as originally in effect on the

11

Issue Date and as amended, supplemented or replaced from time to time in accordance with its terms or the terms of the Indenture, (ii) authorizes and directs the Trustee and the Collateral Agent to execute and deliver the Security Documents and the Intercreditor Agreement to which it is a party and (iii) authorizes and empowers the Trustee and the Collateral Agent to bind the Holders and other holders of Pari-Passu Lien Obligations as set forth in the Security Documents and the Intercreditor Agreement to which it is a party and to perform its obligations and exercise its rights and powers thereunder.

17. Authentication.

This Note is not valid until the Trustee (or Authenticating Agent) manually signs the certificate of authentication on the other side of this Note.

18. Abbreviations.

Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act).

The Issuers will furnish a copy of the Indenture to any Holder upon written request and without charge.

12

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint agent                      to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date:                     Your Signature:

Sign exactly as your name appears on the other side of this Note.

In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144 under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Issuers or any Affiliate of the Issuers, the undersigned confirms that such Notes are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

(1)	¨	to the Issuers; or
(2)	¨	pursuant to an effective registration statement under the Securities Act of 1933, as amended; or
(3)	¨	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or

13

(4)	¨	outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933, as amended; or
(5)	¨	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) is checked, the Trustee shall be entitled to require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Issuers has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended, such as the exemption provided by Rule 144 under such Act.

Signature

Signature Guarantee:

Signature must be guaranteed Signature

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

14

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:
	Notice:	To be executed by an executive officer

15

OPTION OF HOLDER TO ELECT PURCHASE

If you wish to have all of this Note purchased by the Issuers pursuant to Section 4.10 or Section 4.12 of the Indenture, check the box:  ¨

If you wish to have a portion of this Note purchased by the Issuers pursuant to Section 4.10 or Section 4.12 of the Indenture, state the amount (in original principal amount) below:

$            .

Date:                    

Your Signature:

(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:³

³  Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Trustee, which requirements include membership or participation in the Securities Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

16

SCHEDULE OF EXCHANGES OF INTERESTS IN GLOBAL NOTES⁴

The following exchanges of a part of this Global Note for Certificated Notes or an interest in another Global Note, or exchanges of a part of another Global Note or Certificated Note for an interest in this Global Note, have been made:

Date of Exchange Amount of
decrease in
principal amount
of this Global
Note Amount of
increase in
principal amount
of this Global
Note Principal amount
of this Global
Note following
such decrease or
increase Signature of authorized
officer of Trustee

⁴  For Global Notes.

17

EXHIBIT A

SUPPLEMENTAL INDENTURE

dated as of                     ,             

among

SHEA HOMES LIMITED PARTNERSHIP,

SHEA HOMES FUNDING CORP.,

The Guarantors Party Hereto

and

[—]

as Trustee

8.625% Senior Secured Notes Due 2019

THIS [                    ] SUPPLEMENTAL INDENTURE (this “[                    ] Supplemental Indenture”), entered into as of                     ,             , among Shea Homes Limited Partnership (the “Company”), a California limited partnership, Shea Homes Funding Corp., a Delaware corporation (together with the Company, the “Issuers”), [each of the guarantors listed on Schedule I hereto] (each an “Undersigned”) and Wells Fargo Bank, National Association, a national banking association, as Trustee (the “Trustee”).

RECITALS

WHEREAS, the Issuers, the Guarantors party thereto and the Trustee entered into an indenture, dated as of May 10, 2011 (the “Indenture”), relating to the Company’s 8.625% Senior Secured Notes Due 2019 (the “Notes”);

WHEREAS, as a condition to the purchase of the Notes by the Holders, the Company agreed pursuant to the Indenture to cause any newly acquired or created Restricted Subsidiaries to provide Guarantees.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and intending to be legally bound, the parties hereto hereby agree as follows:

SECTION 1. Capitalized terms used herein and not otherwise defined herein are used as defined in the Indenture.

SECTION 2. Each Undersigned, by its execution of this [                    ] Supplemental Indenture, agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article VI thereof, and hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns, on the terms and subject to the conditions set forth in Article VI thereof, (1) the full and punctual payment of principal of and interest on the Notes when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Issuers under the Indenture and the Notes and (2) the full and punctual performance within applicable grace periods of all other obligations of the Issuers under the Indenture and the Notes. This Supplemental Indenture shall constitute the legal, valid binding obligation of the Issuers enforceable against it in accordance with its terms.

SECTION 3. This [                    ] Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York.

SECTION 4. This [                    ] Supplemental Indenture may be signed in various counterparts which together will constitute one and the same instrument.

A-1

SECTION 5. This [                    ] Supplemental Indenture is an amendment supplemental to the Indenture (as amended and supplemented to the date hereof) and the Indenture and this [                    ] Supplemental Indenture will henceforth be read together.

SECTION 6. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the Recitals contained herein, all of which are made solely by the Issuers and each of the undersigned.

A-2

IN WITNESS WHEREOF, the parties hereto have caused this [                    ] Supplemental Indenture to be duly executed as of the date first above written.

SHEA HOMES LIMITED PARTNERSHIP,
By:
	Name: Title:
SHEA HOMES FUNDING CORP.,
By:
	Name: Title:
[On behalf of each entity listed on Schedule I hereto],
By:
	Name: Title:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee,
By:
	Name: Title:

A-3

EXHIBIT B

FORM OF MORTGAGE

EX-4.2

Exhibit 4.2

$750,000,000

Shea Homes Limited Partnership

Shea Homes Funding Corp.

8.625% Senior Secured Notes due 2019

REGISTRATION RIGHTS AGREEMENT

May 10, 2011

Credit Suisse Securities (USA) LLC,

Eleven Madison Avenue,

New York, NY 10010-3629

Dear Sirs:

Shea Homes Limited Partnership, a California limited partnership (the “LP”), and Shea Homes Funding Corp., a Delaware corporation (the “Corporate Issuer” and, together with the LP, the “Issuers”), propose to issue and sell to Credit Suisse Securities (USA) LLC (the “Initial Purchaser”), upon the terms set forth in a purchase agreement of even date herewith (the “Purchase Agreement”), $750 million aggregate principal amount of its 8.625% Senior Secured Notes due 2019 (the “Initial Securities”) to be unconditionally guaranteed (the “Guarantees”) by the direct and indirect subsidiaries of the LP party hereto (the “Guarantors” and, together with the Issuers, the “Company”). The Initial Securities will be issued pursuant to an Indenture, dated as of May 10, 2011 (the “Indenture”), among the Issuers, the Guarantors named therein and Wells Fargo Bank, National Association (the “Trustee”). As an inducement to the Initial Purchaser, the Company agrees with the Initial Purchaser, for the benefit of the holders of the Initial Securities (including, the Initial Purchaser), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively, the “Holders”), as follows:

1. Registered Exchange Offer. The Company shall, at its own cost, prepare and, not later than 180 days after (or if the 180th day is not a business day, the first business day thereafter) (the “Exchange Offer Filing Deadline”) the date of original issue of the Initial Securities (the “Issue Date”), file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to a proposed offer (the “Registered Exchange Offer”) to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities (the “Exchange Securities”) of the Company issued under the Indenture and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) that would be registered under the Securities Act. The Company shall use its reasonable efforts to cause such Exchange Offer Registration Statement to be

1

declared effective under the Securities Act as promptly as possible and shall consummate the Registered Exchange Offer within 360 days (or if the 360th day is not a business day, the first business day thereafter) (the “Consummation Deadline”) after the Issue Date and shall keep the Exchange Offer Registration Statement effective for not less than 20 business days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the “Exchange Offer Registration Period”).

If the Company effects the Registered Exchange Offer, the Company will be entitled to close the Registered Exchange Offer 20 business days after the commencement thereof provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer.

Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder’s business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.

The Company acknowledges that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market-making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section and (c) Annex C hereto in the “Plan of Distribution” section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) if the Initial Purchaser elects to sell Exchange Securities acquired in exchange for Securities constituting any portion of an unsold allotment, it is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.

The Company shall use its reasonable efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or the Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchaser have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 180 days after the consummation of the Registered Exchange Offer.

If, upon consummation of the Registered Exchange Offer, the Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of

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the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the “Private Exchange”) for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the “Private Exchange Securities”). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the “Securities.”

In connection with the Registered Exchange Offer, the Company shall:

(a) distribute to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

(b) keep the Registered Exchange Offer open for not less than 20 business days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;

(c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;

(d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and

(e) otherwise comply with all applicable laws.

As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:

(x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;

(y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and

(z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.

The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.

Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities.

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Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.

Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

2. Shelf Registration. If, (i) the Company is not required to file the Exchange Offer Registration Statement or is not permitted to consummate the Registered Exchange Offer, as contemplated by Section 1 hereof, because the Registered Exchange Offer is not permitted by applicable law or Commission policy, (ii) the Registered Exchange Offer is not consummated on or prior to the Consummation Deadline, (iii) the Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder of Transfer Restricted Securities notifies the Issuers in writing prior to the 20th business day following consummation of the Registered Exchange Offer that (x) it is prohibited by law or Commission policy from participating in the Registered Exchange Offer or (y) it is a broker-dealer and owns Initial Securities acquired directly from the Issuer:

(a) The Company shall, at its cost, as promptly as practicable (but in no event more than 30 days after so required or requested pursuant to this Section 2) file with the Commission and thereafter shall use its reasonable efforts to cause to be declared effective (unless it becomes effective automatically upon filing) as promptly as possible (but in any event prior to the date that is 90 days after so required or requested pursuant to this Section 2 (the “Shelf Registration Deadline”)) a registration statement (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, a “Registration Statement”) on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the “Shelf Registration”); provided, however, that no Holder (other than the Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.

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(b) The Company shall use its reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the Issue Date or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement have been sold pursuant thereto. The Company shall be deemed not to have used its reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law, as reasonably determined by the Company in good faith.

(c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:

(a) The Company shall (i) furnish to the Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that the Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section and in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by the Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled “Plan of Distribution” reasonably acceptable to the Initial Purchaser, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchaser based upon advice of counsel (which may be in-house

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counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include in the prospectus included in the Shelf Registration Statement (or, if permitted by Commission Rule 430B(b), in a prospectus supplement that becomes a part thereof pursuant to Commission Rule 430B(f)) that is delivered to any Holder pursuant to Sections 3(d) and (f), the names of the Holders, who propose to sell Securities pursuant to the Shelf Registration Statement, as selling security holders.

(b) The Company shall give written notice to the Initial Purchaser, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

(i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, of the issuance by the Commission of a notification of objection to the use of the form on which the Registration Statement has been filed, and of the happening of any event that causes the Company to become an “ineligible issuer,” as defined in Commission Rule 405;

(iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.

(c) The Company shall make reasonable efforts to obtain the withdrawal as promptly as possible of any order suspending the effectiveness of the Registration Statement.

(d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment or supplement thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). The Company shall not, without the prior consent of the Initial Purchaser, make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Commission Rule 405.

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(e) The Company shall deliver to each Exchanging Dealer and the Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference).

(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

(g) The Company shall deliver to the Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by the Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.

(h) Prior to any public offering of the Securities, pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.

(i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.

(j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the

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circumstances under which they were made, not misleading. If the Company notifies the Initial Purchaser, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchaser, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchaser, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j). During the period during which the Company is required to maintain an effective Shelf Registration Statement pursuant to this Agreement, the Company will prior to the three-year expiration of that Shelf Registration Statement file, and use its reasonable efforts to cause to be declared effective (unless it becomes effective automatically upon filing) within a period that avoids any interruption in the ability of Holders of Securities covered by the expiring Shelf Registration Statement to make registered dispositions, a new registration statement relating to the Securities, which shall be deemed the “Shelf Registration Statement” for purposes of this Agreement.

(k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.

(l) The Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.

(m) The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

(n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.

(o) The Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.

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(p) In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of Securities covered by such Shelf Registration, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by such Holders of Securities or any such underwriter all material and relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all material and relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated by the Initial Purchaser and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof.

(q) In the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include matters customarily covered in opinions delivered by counsel to an issuer of securities in connection with an offering of securities by one or more selling security holders pursuant to a shelf registration statement); (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

(r) In the case of the Registered Exchange Offer, if requested by the Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the forms referenced in Sections 7(c) and (d) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Registration Statement to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in Section 7(a) of the Purchase Agreement, with appropriate date changes.

(s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or cause to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.

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(t) The Company will use its reasonable efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.

(u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the Financial Industry Regulatory Authority, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including by (i) if such Rules, including Rule 2720, shall so require, engaging a “qualified independent underwriter” (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.

(v) The Company shall use its reasonable efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.

4. Registration Expenses. The Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of Cravath, Swaine & Moore LLP, counsel for the Initial Purchaser, incurred in connection with the Registered Exchange Offer), whether or not the Registered Exchange Offer or a Shelf Registration is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith.

5. Indemnification. (a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the “Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or “issuer free writing prospectus,” as defined in Commission Rule 433 (“Issuer FWP”), relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state

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therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or Issuer FWP relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered (including through satisfaction of the conditions of Commission Rule 172) by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not conveyed to such person, at or prior to the time of the sale of such Securities to such person, an amended or supplemented prospectus or, if permitted by Section 3(d), an Issuer FWP correcting such untrue statement or omission or alleged untrue statement or omission if the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.

(b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or Issuer FWP relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons.

(c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights

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or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the exchange of the Securities, pursuant to the Registered Exchange Offer or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.

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(e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

6. Additional Interest Under Certain Circumstances. (a) Additional interest (the “Additional Interest”) with respect to the Transfer Restricted Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iv) below a “Registration Default”:

(i) the Company fails to file the Exchange Offer Registration Statement on or before the Exchange Offer Filing Deadline;

(ii) any Shelf Registration Statement required hereunder is not declared effective by the Commission on or prior to Shelf Registration Deadline;

(iii) the Issuers fail to consummate the Exchange Offer on or prior to the Consummation Deadline; or

(iv) after either the Exchange Offer Registration Statement or the Shelf Registration Statement is declared (or becomes automatically) effective (A) such Registration Statement thereafter ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b)) in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder or (3) such Registration Statement is a Shelf Registration Statement that has expired before a replacement Shelf Registration Statement has become effective.

Additional Interest shall accrue on the then outstanding Transfer Restricted Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to, but excluding, the date on which all such Registration Defaults have been cured, at a rate of $0.05 per week per $1,000 principal amount of Transfer Restricted Securities with respect to the first 90-day period immediately following the occurrence of any Registration Default, and such rate will increase by an additional $0.05 per week per $1,000 principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, provided that Additional Interest shall not accrue at a rate in excess of $0.25 per week per $1,000 principal amount of Transfer Restricted Securities.

(b) A Registration Default referred to in Section 6(a)(iv)(B) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 45 days, Additional Interest shall be payable in accordance with the above paragraph from the 46^th day following the occurrence of such Registration Default until such Registration Default is cured.

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(c) Any amounts of Additional Interest due pursuant to clause (i), (ii), (iii) or (iv) of Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the then outstanding Transfer Restricted Securities at the same time and in the same manner as interest. Following the cure of all Registration Defaults, the accrual of Additional Interest shall cease. Additional Interest shall only be payable in respect of one Registration Default at a time. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Transfer Restricted Securities, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.

(d) “Transfer Restricted Securities” means (i) each Security until the earliest to occur of: (x) the date on which such Initial Security is exchanged in the Registered Exchange Offer for an Exchange Security, which is entitled to be resold to the public by the holder thereof without complying with the prospectus delivery requirements of the Securities Act; (y) the date on which such Initial Security has been disposed of in accordance with a Shelf Registration Statement; or (z) the date on which such Initial Security is actually distributed to the public pursuant to Rule 144 under the Securities Act; and (ii) Exchange Securities issued to a broker-dealer until the date on which such Exchange Securities are disposed of by such broker-dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including the delivery of the offering circular contained therein).

7. Rules 144 and 144A. The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchaser upon request.

8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering.

No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

9. Miscellaneous.

(a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents.

(b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:

(1) if to a Holder of the Securities, at the most current address given by such Holder to the Company.

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(2) if to the Initial Purchaser;

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010-3629

Fax No.: (212) 325-4296

Attention: Transactions Advisory Group

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

Fax No.: (212) 474-3700

Attention: Kris F. Heinzelman, Esq.

(3) if to the Issuer, at their addresses as follows:

Shea Homes Funding Corp.

655 Brea Canyon Road

Walnut, CA 91789

Attention: General Counsel

Shea Homes Limited Partnership

655 Brea Canyon Road

Walnut, CA 91789

Attention: General Counsel

with a copy to:

Gibson, Dunn & Crutcher LLP

2029 Century Park East

Los Angeles, CA 90067

Fax No.: (310) 551-8741

Attention: Cromwell Montgomery

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next-day delivery.

(c) No Inconsistent Agreements. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof.

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(d) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns.

(e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

(h) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(i) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(j) Submission to Jurisdiction. By the execution and delivery of this Agreement, the Company (i) agrees that any suit or proceeding arising out of or relating to this Agreement that may be instituted in any federal or state court in the State of New York or brought under federal or state securities laws, and (ii) submits to the nonexclusive jurisdiction of any such court in any such suit or proceeding.

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If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Issuers a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Initial Purchaser, the Issuers and the Guarantors in accordance with its terms.

Very truly yours,
SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHEA HOMES FUNDING CORP., a Delaware corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Chief Financial Officer and Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Vice President

Signature Page to Registration Rights Agreement

GUARANTORS:
HIGHLANDS RANCH DEVELOPMENT CORPORATION, a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
MOUNTAINBROOK VILLAGE COMPANY, an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

Signature Page to Registration Rights Agreement

SAND CREEK CATTLE COMPANY, a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name : Robert R. O’Dell
	Title : Treasurer

SERENADE AT NATOMAS, LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

Signature Page to Registration Rights Agreement

SEVILLE GOLF AND COUNTRY CLUB, LLC, an Arizona limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

SHEA CAPITAL II, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA COMMUNITIES MARKETING COMPANY,
a Delaware corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

Signature Page to Registration Rights Agreement

SHEA FINANCIAL SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA HOMES, INC., a Delaware corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA HOMES AT MONTAGE, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer

Signature Page to Registration Rights Agreement

SHEA HOMES SOUTHWEST, INC., an Arizona corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA HOMES VANTIS, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA INSURANCE SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer

Signature Page to Registration Rights Agreement

SHEA LA QUINTA LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	/s/ James G. Shontere
		Name:	James G. Shontere
		Title:	Secretary
	By:	/s/ Robert R. O’Dell
		Name:	Robert R. O’Dell
		Title:	Treasurer

SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

SHEA OTAY VILLAGE 11, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

SHEA PROCTOR VALLEY, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

SHEA PROPERTIES OF COLORADO, INC., a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

SHEA RIVERMARK VILLAGE, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

SHEA TONNER HILLS, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA VICTORIA GARDENS, LLC, a Florida limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

Signature Page to Registration Rights Agreement

SH JUBILEE, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

Signature Page to Registration Rights Agreement

SHI JV HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHLP JV HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

Signature Page to Registration Rights Agreement

TOWER 104 GATHERING, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

TOWER 104 OIL, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

Signature Page to Registration Rights Agreement

TRILOGY ANTIOCH, LLC, a California limited liability company
By:	SHEA CAPITAL II, LLC, a Delaware limited liability company, Its sole Member
	By:	Shea Homes Limited Partnership, a California limited partnership, Its Manager
		By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
			By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
				By:	J.F. Shea Construction Management, Inc.,
					a California corporation, Its sole General Partner
					By:	/s/ James G. Shontere
						Name:James G. Shontere
						Title: Secretary
					By:	/s/ Robert R. O’Dell
						Name: Robert R. O’Dell
						Title: Treasurer

UDC ADVISORY SERVICES, INC., an Illinois corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

Signature Page to Registration Rights Agreement

UDC HOMES CONSTRUCTION, INC., an Arizona corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
VISTANCIA CONSTRUCTION, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc., an Arizona corporation, Its Manager
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

VISTANCIA MARKETING, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc., an Arizona corporation, Its Manager
	By:	/s/ James G. Shontere
		Name:	James G. Shontere
		Title:	Secretary
	By:	/s/ Robert R. O’Dell
		Name:	Robert R. O’Dell
		Title:	Treasurer

Signature Page to Registration Rights Agreement

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written.
by:	CREDIT SUISSE SECURITIES (USA) LLC
	By:	/s/ Colin Bathgate
	Name:	Colin Bathgate
	Title:	Director

Signature Page to Registration Rights Agreement

ANNEX A

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

ANNEX B

Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See “Plan of Distribution.”

ANNEX C

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until             , 2011 all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.⁽¹⁾

The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

⁽¹⁾  In addition, the legend required by Item 502(b) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus.

ANNEX D

¨ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:

Address:

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

EX-5.1

Exhibit 5.1

Client Matter No.: C 46350-00023

October 14, 2011

Shea Homes Limited Partnership

Shea Homes Funding Corp.

655 Brea Canyon Road

Walnut, California 91789

(909) 594-9500

Re: Shea Homes Limited Partnership and Shea Homes Funding Corp. Registration Statement on Form S-4

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-4 (the “Registration Statement”), of Shea Homes Limited Partnership, a California limited partnership (the “Company”), Shea Homes Funding Corp., a Delaware corporation and certain direct and indirect wholly-owned subsidiaries of the Company listed as co-registrants thereto (collectively, the “Guarantors”), filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”), in connection with the offering by the Company of up to $750,000,000 principal amount of the Company’s 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) and the guarantees of the Company’s payment obligations under the Exchange Notes (the “Guarantees”), in exchange for a like principal amount of the Company’s outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”).

We have examined the originals, or copies certified or otherwise identified to our satisfaction, of the Indenture dated May 10, 2011 by and among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, governing the Exchange Notes (the “Indenture”), and such other documents, corporate records, certificates of officers of the Company and the Guarantors and of public officials and other instruments as we have deemed necessary or advisable to enable us to render these opinions. In our examination, we have assumed, without independent investigation, the genuineness of all signatures, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies. As to any facts material to these opinions, we have relied to the extent we deemed appropriate and without independent investigation upon statements and representations of officers and other representatives of the Company and the Guarantors and others.

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 14, 2011

Page 2

Based upon the foregoing, and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that:

1. With respect to the Exchange Notes, when the Exchange Notes are executed and authenticated in accordance with the provisions of the Indenture and issued and delivered in exchange for the Outstanding Notes in the manner described in the Registration Statement, the Exchange Notes will constitute legal, valid and binding obligations of the Company.

2. With respect to the Guarantees, when the Exchange Notes are executed and authenticated in accordance with the provisions of the Indenture and issued and delivered in exchange for the Outstanding Notes in the manner described in the Registration Statement, the Guarantees will constitute legal, valid and binding obligations of the Guarantors.

The opinions expressed above are subject to the following additional exceptions, qualifications, limitations and assumptions:

A. We render no opinion herein as to matters involving the laws of any jurisdiction other than the State of New York, the United States of America and to the extent relevant for our opinions herein, the California Corporations Code, the Beverly-Killea Limited Liability Company Act, the California Revised Limited Partnership Act, the Colorado Business Corporation Act, the Colorado Limited Liability Company Act, the Delaware General Corporation Law and the Delaware Limited Liability Company Act. This opinion is limited to the effect of the current state of the laws of the State of New York, the United States of America and, to the limited extent set forth above, the States of California, Colorado and Delaware and the facts as they currently exist. We assume no obligation to revise or supplement this opinion in the event of future changes in such laws or the interpretations thereof or such facts after such time as the Registration Statement is declared effective.

B. Our opinions above are subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement, or similar laws affecting the rights and remedies of creditors generally, including, without limitation, the effect of statutory or other laws regarding fraudulent transfers or preferential transfers and (ii) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies regardless of whether enforceability is considered in a proceeding in equity or at law.

C. We express no opinion regarding the effectiveness of (i) any waiver of stay, extension or usury laws or of unknown future rights, (ii) provisions relating to

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 14, 2011

Page 3

indemnification, exculpation or contribution, to the extent such provisions may be held unenforceable as contrary to public policy or federal or state securities laws, (iii) any provision that would require payment of any unamortized original issue discount (including any original issue discount effectively created by payment of a fee), (iv) any purported fraudulent transfer “savings” clause, (v) any provision waiving the right to object to venue in any court, (vi) any agreement to submit to the jurisdiction of any Federal court or (vii) any waiver of the right to jury trial.

We consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption “Legal Matters” in the Registration Statement and the prospectus that forms a part thereof. In giving these consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

Very truly yours,

/s/ GIBSON, DUNN & CRUTCHER LLP

EX-5.2

Exhibit 5.2

October 5, 2011

Shea Homes Limited Partnership

Shea Homes Funding Corp.

655 Brea Canyon Road

Walnut, California 91789

(909) 594-9500

Re: Shea Homes Limited Partnership and Shea Homes Funding Corp. Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as special Arizona counsel to certain subsidiaries of SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership (the “Company”), as set forth on Schedule I attached hereto (each, an “Arizona Guarantor,” and collectively, the “Arizona Guarantors”), in connection with the Registration Statement on Form S-4 (the “Registration Statement”), of Shea Homes Limited Partnership, a California limited partnership (the “Company”), Shea Homes Funding Corp., a Delaware corporation and certain direct and indirect wholly-owned subsidiaries of the Company listed as co-registrants thereto, including the Arizona Guarantors (collectively, the “Guarantors”), filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”), in connection with the offering by the Company of up to $750,000,000 principal amount of the Company’s 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) and the guarantees of the Company’s payment obligations under the Exchange Notes (the “Guarantees”), in exchange for a like principal amount of the Company’s outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”).

We have examined the originals, or copies certified or otherwise identified to our satisfaction, of the Indenture dated May 10, 2011 by and among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, governing the Exchange Notes (the “Indenture”), and such other documents, corporate records, certificates of officers of the Company and the Arizona Guarantors and of public officials and other instruments as we have deemed necessary or advisable to enable us to render these opinions. In our examination, we have assumed, without independent investigation, the genuineness of all signatures, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies. As to any facts material to these opinions, we have relied to the extent we deemed appropriate and without

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 5, 2011

Page 2

independent investigation upon statements and representations of officers and other representatives of the Company and the Arizona Guarantors and others.

Based upon the foregoing, and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that:

1. With respect to the Guarantees executed by the Arizona Guarantors (the “Arizona Guarantors”), when the Exchange Notes are executed and authenticated in accordance with the provisions of the Indenture and issued and delivered in exchange for the Outstanding Notes in the manner described in the Registration Statement, the Arizona Guarantees will constitute valid and binding obligations of the Arizona Guarantors.

2. Based solely on the Good Standing Certificates issued by the Arizona Corporations Commission, which are identified on Schedule II attached hereto, each of the Arizona Guarantors is validly existing and in good standing as a corporation or limited liability company, as applicable, under the laws of the State of Arizona, with company power to authorize, execute and deliver the Indenture, the Exchange Notes and the Arizona Guarantees (collectively, the “Note Documents”) and to perform its obligations thereunder.

3. Each of the Note Documents has been duly authorized by all necessary company action on the part of the Arizona Guarantors.

4. The authorization, execution, delivery and performance of the Note Documents do not and will not violate (a) the organizational documents of the Arizona Guarantors, (b) any order, judgment, writ or decree of any Arizona court or other agency of government that is material to the Arizona Guarantors taken as a whole and that is binding on the Arizona Guarantors or (c) any law or regulation currently in effect in the State of Arizona applicable to the Arizona Guarantors.

5. No registration with, consent, authorization or approval of or notice to, or other action to, with or by, any Arizona governmental or regulatory body by or on behalf of the Arizona Guarantors is required to make valid and legally binding the execution and delivery by the Arizona Guarantors of the Note Documents and the performance of their obligations thereunder provided that our opinion in this Paragraph is limited to those laws, statutes and governmental rules of the State of Arizona of general application to business entities.

The opinions expressed above are subject to the following additional exceptions, qualifications, limitations and assumptions:

A. We render no opinion herein as to matters involving the laws of any jurisdiction other than the State of Arizona. This opinion is limited to the effect of the current state of the

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 5, 2011

Page 3

laws of the State of Arizona and the facts as they currently exist. We assume no obligation to revise or supplement this opinion in the event of future changes in such laws or the interpretations thereof or such facts after such time as the Registration Statement is declared effective.

B. Our opinions above are subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement, or similar laws affecting the rights and remedies of creditors generally, including, without limitation, the effect of statutory or other laws regarding fraudulent transfers or preferential transfers and (ii) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies regardless of whether enforceability is considered in a proceeding in equity or at law.

C. We express no opinion regarding the effectiveness of (i) any waiver of stay, extension or usury laws or of unknown future rights, (ii) provisions relating to indemnification, exculpation or contribution, to the extent such provisions may be held unenforceable as contrary to public policy or federal or state securities laws, (iii) any provision that would require payment of any unamortized original issue discount (including any original issue discount effectively created by payment of a fee), (iv) any purported fraudulent transfer “savings” clause, (v) any provision waiving the right to object to venue in any court, (vi) any agreement to submit to the jurisdiction of any Federal court or (vii) any waiver of the right to jury trial.

D. We express no opinion regarding the validity or enforceability of: (i) provisions releasing, exculpating or exempting a party from, or requiring indemnification or contribution of a party for, liability for its own willful, reckless or criminal acts, or negligence or to the extent that the same are inconsistent with the public policy underlying any law, rule or regulation; (ii) provisions purporting to waive, subordinate or not give effect to rights to notice, demands, legal defenses or other rights or benefits that cannot be waived, subordinated or rendered ineffective under applicable law or provisions purporting to provide remedies inconsistent with applicable law (and we express no opinion as to the economic consequences, if any, of any such delays); (iii) provisions relating to powers of attorney, severability or set-offs; (iv) provisions restricting access to courts or purporting to affect the jurisdiction or venue of courts; (v) provisions purporting to exclude all conflicts-of-law rules; (vii) provisions setting out methods or procedures for service of process; (viii) provisions providing that decisions by a party are conclusive or may be made in its sole discretion; (ix) provisions constituting agreements to agree; (x) provisions imposing penalties or forfeitures or any late charges, prepayment penalties, premiums or fees, default interest, liquidated damages or other pre measured damages or other similar provisions which may be deemed to constitute penalties; (xi) provisions constituting a waiver of illegality as a defense to

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 5, 2011

Page 4

performance of contract obligations; (xii) provisions purporting to waive or affect any rights to notices; (xiii) provisions allowing any party to declare indebtedness due and payable without notice (as some courts have held that acceleration may not be made except by an unequivocal act of the holder evidencing acceleration, which may include notice to the debtor); and (xiv) provisions providing for specific performance.

E. We express no opinion as to federal or state securities laws or tax laws, antitrust, local laws, rules or ordinances adopted below the state level, fiduciary duties, or any other statute, regulation, treaty or other law governing international trade, commerce or investment, or any Federal Reserve Board margin rules.

We consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption “Legal Matters” in the Registration Statement and the prospectus that forms a part thereof. We further consent to the reliance on this opinion by Gibson, Dunn & Crutcher LLP for the purpose of delivering its opinion to be filed as Exhibit 5.1 to the Registration Statement, as to the enforceability of the Indenture and the Exchange Notes. In giving these consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

Very truly yours,

GREENBERG TRAURIG, LLP

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 5, 2011

Page 5

SCHEDULE I

ARIZONA OBLIGORS

Shea Homes Southwest, Inc., an Arizona corporation

Mountainbrook Village Company, an Arizona corporation

Seville Golf and Country Club, LLC, an Arizona limited liability company

UDC Homes Construction, Inc., an Arizona corporation

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 5, 2011

Page 6

SCHEDULE II

CERTIFICATES OF GOOD STANDING FOR ARIZONA OBLIGORS

NAME	JURISDICTION     OF ORGANIZATION	CERTIFICATE OF GOOD STANDING
SHEA HOMES SOUTHWEST, INC.	ARIZONA	OCTOBER 5, 2011
MOUNTAINBROOK VILLAGE COMPANY	ARIZONA	OCTOBER 5, 2011
SEVILLE GOLF AND COUNTRY CLUB, LLC	ARIZONA	OCTOBER 5, 2011
UDC HOMES CONSTRUCTION, INC.	ARIZONA	OCTOBER 5, 2011

EX-5.3

Exhibit 5.3

October 3, 2011

Shea Homes Limited Partnership

Shea Homes Funding Corp.

655 Brea Canyon Road

Walnut, California 91789

(909) 594-9500

Re: Shea Homes Limited Partnership and Shea Homes Funding Corp. Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as special Florida counsel to Shea Victoria Gardens, LLC, a Florida limited liability company (the “Florida Guarantor”) in connection with the Registration Statement on Form S-4 (the “Registration Statement”) of Shea Homes Limited Partnership, a California limited partnership (the “Company”), Shea Homes Funding Corp., a Delaware corporation and certain direct and indirect wholly-owned subsidiaries of the Company listed as co-registrants thereto, including the Florida Guarantor (collectively, the “Guarantors”), filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”), in connection with the offering by the Company of up to $750,000,000 principal amount of the Company’s 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) and the guarantees of the Company’s payment obligations under the Exchange Notes (the “Guarantees”), in exchange for a like principal amount of the Company’s outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”).

We have examined the originals, or copies certified or otherwise identified to our satisfaction, of the Indenture dated May 10, 2011 by and among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, governing the Exchange Notes (the “Indenture”), and such other documents, corporate records, certificates of officers of the Company and the Florida Guarantor and of public officials and other instruments as we have deemed necessary or advisable to enable us to render these opinions. In our examination, we have assumed, without independent investigation, the genuineness of all signatures, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies. As to any facts material to these opinions, we have relied to the extent we deemed appropriate and without independent investigation upon statements and representations of officers and other representatives of the Company and the Florida Guarantor and others.

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 3, 2011

Page 2

Based upon the foregoing, and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that:

1. With respect to the Guarantee executed by the Florida Guarantor (the “Florida Guarantee”), when the Exchange Notes are executed and authenticated in accordance with the provisions of the Indenture and issued and delivered in exchange for the Outstanding Notes in the manner described in the Registration Statement, the Florida Guarantee will constitute a valid and binding obligation of the Florida Guarantor.

2. Based solely on the Certificate issued by the Florida Secretary of State dated October 3, 2011, the Florida Guarantor is validly existing and in good standing as a limited liability company under the laws of the State of Florida, with limited liability company power to authorize, execute and deliver the Indenture, the Exchange Notes and the Florida Guarantee (collectively, the “Note Documents”) and to perform its obligations thereunder.

3. Each of the Note Documents has been duly authorized by all necessary limited liability company action on the part of the Florida Guarantor.

4. The authorization, execution, delivery and performance of the Note Documents do not and will not violate (a) the organizational documents of the Florida Guarantor, (b) any order, judgment, writ or decree of any Florida court or other agency of government that is material to the Florida Guarantor taken as a whole and that is binding on the Florida Guarantor or (c) any law or regulation currently in effect in the State of Florida applicable to the Florida Guarantor.

5. No registration with, consent, authorization or approval of or notice to, or other action to, with or by, any Florida governmental or regulatory body by or on behalf of the Florida Guarantor is required to make valid and legally binding the execution and delivery by the Florida Guarantor of the Note Documents and the performance of its obligations thereunder.

The opinions expressed above are subject to the following additional exceptions, qualifications, limitations and assumptions:

A. We render no opinion herein as to matters involving the laws of any jurisdiction other than the State of Florida. This opinion is limited to the effect of the current state of the laws of the State of Florida. We assume no obligation to revise or supplement this opinion in the event of future changes in such laws or the interpretations thereof or such facts after such time as the Registration Statement is declared effective.

B. Our opinions above are subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement, or similar laws affecting the rights and remedies of

2

Shea Homes Limited Partnership

Shea Homes Funding Corp.

October 3, 2011

Page 3

creditors generally, including, without limitation, the effect of statutory or other laws regarding fraudulent transfers or preferential transfers and (ii) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies regardless of whether enforceability is considered in a proceeding in equity or at law.

C. We express no opinion regarding the effectiveness of (i) any waiver of stay, extension or usury laws or of unknown future rights, (ii) provisions relating to indemnification, exculpation or contribution, to the extent such provisions may be held unenforceable as contrary to public policy or federal or state securities laws, (iii) any provision that would require payment of any unamortized original issue discount (including any original issue discount effectively created by payment of a fee), (iv) any purported fraudulent transfer “savings” clause, (v) any provision waiving the right to object to venue in any court, (vi) any agreement to submit to the jurisdiction of any Federal court or (vii) any waiver of the right to jury trial.

We consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption “Legal Matters” in the Registration Statement and the prospectus that forms a part thereof. We further consent to the reliance on this opinion by Gibson, Dunn & Crutcher LLP for the purpose of delivering its opinion to be filed as Exhibit 5.1 to the Registration Statement, as to the enforceability of the Indenture and the Exchange Notes. In giving these consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

Very truly yours,

GREENBERG TRAURIG, P.A.

3

EX-5.4

Exhibit 5.4

October 3, 2011

Shea Homes Limited Partnership

Shea Homes Funding Corp.

655 Brea Canyon Road

Walnut, California 91789

(909) 594-9500

Re: Shea Homes Limited Partnership and Shea Homes Funding Corp. Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as special Illinois counsel to UDC Advisory Services, Inc., an Illinois corporation (the “Illinois Guarantor”) in connection with the Registration Statement on Form S-4 (the “Registration Statement”) of Shea Homes Limited Partnership, a California limited partnership (the “Company”), Shea Homes Funding Corp., a Delaware corporation and certain direct and indirect wholly-owned subsidiaries of the Company listed as co-registrants thereto, including the Illinois Guarantor (collectively, the “Guarantors”), filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”), in connection with the offering by the Company of up to $750,000,000 principal amount of the Company’s 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) and the guarantees of the Company’s payment obligations under the Exchange Notes (each, a “Guarantee”), in exchange for a like principal amount of the Company’s outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”).

We have examined the originals, or copies certified or otherwise identified to our satisfaction, of the Indenture dated May 10, 2011 by and among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, governing the Exchange Notes (the “Indenture”), and such other documents, corporate records, certificates of officers of the Company and the Illinois Guarantor and of public officials and other instruments as we have deemed necessary or advisable to enable us to render these opinions. In our examination, we have assumed, without independent investigation, the genuineness of all signatures, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies. As to any facts material to these opinions, we have relied to the extent we deemed appropriate and without independent investigation upon statements and representations of officers and other representatives of the Company and the Illinois Guarantor and others.

Based upon the foregoing, and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that:

1. With respect to the Guarantee executed by the Illinois Guarantor (the “Illinois Guarantee”), when the Exchange Notes are executed and authenticated in accordance with the provisions of the Indenture and issued and delivered in exchange for the Outstanding Notes in the manner described in the Registration Statement, the Illinois Guarantee will constitute a valid and binding obligation of the Illinois Guarantor.

2. Based solely on the Certificate issued by the Illinois Secretary of State dated September 29, 2011 attached hereto as Exhibit A, the Illinois Guarantor is validly existing and in good standing as a corporation under the laws of the State of Illinois, with corporate power to authorize, execute and deliver the Indenture, the Exchange Notes and the Illinois Guarantee (collectively, the “Note Documents”) and to perform its obligations thereunder.

3. Each of the Note Documents has been duly authorized by all necessary corporate action on the part of the Illinois Guarantor.

4. The authorization, execution, delivery and performance of the Note Documents do not and will not violate (a) the organizational documents of the Illinois Guarantor, (b) any order, judgment, writ or decree of any Illinois court or other agency of government that is material to the Illinois Guarantor taken as a whole and that is binding on the Illinois Guarantor or (c) any law or regulation currently in effect in the State of Illinois applicable to the Illinois Guarantor.

5. No registration with, consent, authorization or approval of or notice to, or other action to, with or by, any Illinois governmental or regulatory body by or on behalf of the Illinois Guarantor is required to make valid and legally binding the execution and delivery by the Illinois Guarantor of the Note Documents and the performance of its obligations thereunder provided that our opinion in this Paragraph 5 is limited to those laws, statutes and governmental rules of the State of Illinois of general application to business entities.

The opinions expressed above are subject to the following additional exceptions, qualifications, limitations and assumptions:

A. We render no opinion herein as to matters involving the laws of any jurisdiction other than the State of Illinois. This opinion is limited to the effect of the current state of the laws of the State of Illinois. We assume no obligation to revise or supplement this opinion in the event of future changes in such laws or the interpretations thereof or such facts after such time as the Registration Statement is declared effective.

B. Our opinions above are subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement, or similar laws affecting the rights and remedies of creditors generally, including, without limitation, the effect of statutory or other laws regarding fraudulent transfers or preferential transfers and (ii) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the

2

possible unavailability of specific performance, injunctive relief, or other equitable remedies regardless of whether enforceability is considered in a proceeding in equity or at law.

C. We express no opinion regarding the effectiveness of (i) any waiver of stay, extension or usury laws or of unknown future rights, (ii) provisions relating to indemnification, exculpation or contribution, to the extent such provisions may be held unenforceable as contrary to public policy or federal or state securities laws, (iii) any provision that would require payment of any unamortized original issue discount (including any original issue discount effectively created by payment of a fee), (iv) any purported fraudulent transfer “savings” clause, (v) any provision waiving the right to object to venue in any court, (vi) any agreement to submit to the jurisdiction of any Federal court or (vii) any waiver of the right to jury trial.

We consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption “Legal Matters” in the Registration Statement and the prospectus that forms a part thereof. We further consent to the reliance on this opinion by Gibson, Dunn & Crutcher LLP for the purpose of delivering its opinion to be filed as Exhibit 5.1 to the Registration Statement, as to the enforceability of the Indenture and the Exchange Notes. In giving these consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

Very truly yours,

GREENBERG TRAURIG, LLP

3

EX-10.1

Exhibit 10.1

EXECUTION COPY

LETTER OF CREDIT FACILITY AGREEMENT

dated as of

May 10, 2011,

among

SHEA HOMES LIMITED PARTNERSHIP,

SHEA HOMES FUNDING CORP.,

THE SUBSIDIARY GUARANTORS PARTY HERETO,

THE PARTICIPANTS PARTY HERETO

and

CREDIT SUISSE AG,

as Issuing Bank and Administrative Agent

CREDIT SUISSE SECURITIES (USA) LLC

[CS&M Ref. No. 5865-717    

ARTICLE I
Definitions
SECTION 1.01.	Defined Terms	1
SECTION 1.02.	Terms Generally	28
SECTION 1.03.	Pari-Passu Indebtedness	29
ARTICLE II
The Credits
SECTION 2.01.	The Credits	29
SECTION 2.02.	Fees	34
SECTION 2.03.	Default Interest	35
SECTION 2.04.	Termination and Reduction of Commitments	35
SECTION 2.05.	Reserve Requirements; Change in Circumstances	36
SECTION 2.06.	Pro Rata Treatment	37
SECTION 2.07.	Sharing of Setoffs	37
SECTION 2.08.	Payments	38
SECTION 2.09.	Taxes	39
SECTION 2.10.	Assignment of Commitments Under Certain Circumstances; Duty to Mitigate	42
SECTION 2.11.	Extension of Commitments	44
SECTION 2.12.	Defaulting Participants	44
SECTION 2.13.	Cash Collateral	46
ARTICLE III
Representations and Warranties
SECTION 3.01.	Organization; Powers	47
SECTION 3.02.	Authorization	48
SECTION 3.03.	Enforceability	48
SECTION 3.04.	Governmental Approvals	48
SECTION 3.05.	Financial Statements	49
SECTION 3.06.	No Material Adverse Change	49
SECTION 3.07.	Title to Properties; Possession Under Leases	49
SECTION 3.08.	Subsidiaries	50
SECTION 3.09.	Litigation; Compliance with Laws	50
SECTION 3.10.	Agreements	50
SECTION 3.11.	Federal Reserve Regulations	50
SECTION 3.12.	Investment Company Act	51
SECTION 3.13.	Use of Proceeds	51
SECTION 3.14.	Tax Returns	51
SECTION 3.15.	No Material Misstatements	51

SECTION 3.16.	Employee Benefit Plans	51
SECTION 3.17.	Environmental Matters	52
SECTION 3.18.	Insurance	52
SECTION 3.19.	Security Documents	52
SECTION 3.20.	Location of Real Property and Leased Premises	53
SECTION 3.21.	Labor Matters	54
SECTION 3.22.	Solvency	54
SECTION 3.23.	Pari-Passu Indebtedness	54
SECTION 3.24.	Sanctioned Persons	54
ARTICLE IV
Conditions of Lending
SECTION 4.01.	All Credit Events	55
SECTION 4.02.	First Credit Event	55
ARTICLE V
Affirmative Covenants
SECTION 5.01.	Existence; Rights	57
SECTION 5.02.	Financial Statements, Reports, etc	58
SECTION 5.03.	Properties	59
SECTION 5.04.	Insurance	59
SECTION 5.05.	Further Assurances; Information Regarding Collateral	59
SECTION 5.06.	[Reserved]	62
SECTION 5.07.	Performance of Obligations and Payment of Taxes	62
SECTION 5.08.	Litigation and Other Notices	62
SECTION 5.09.	Compliance with Laws	63
SECTION 5.10.	Subsidiaries	63
ARTICLE VI
Negative Covenants
SECTION 6.01.	Indebtedness	64
SECTION 6.02.	Restricted Payments	66
SECTION 6.03.	Transactions with Affiliates	69
SECTION 6.04.	Limitations on Asset Dispositions	70
SECTION 6.05.	Liens	71
SECTION 6.06.	Sale and Lease-Back Transactions	75
SECTION 6.07.	Restrictions Affecting Restricted Subsidiaries	75
SECTION 6.08.	Mergers, Consolidation and, Sales of Assets	78
SECTION 6.09.	Line of Business	79
SECTION 6.10.	Limitations on Shea Corp.	79

ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01.	Notices	85
SECTION 9.02.	Survival of Agreement	87
SECTION 9.03.	Binding Effect	88
SECTION 9.04.	Successors and Assigns	88
SECTION 9.05.	Expenses; Indemnity	92
SECTION 9.06.	Right of Setoff	94
SECTION 9.07.	Applicable Law	94
SECTION 9.08.	Waivers; Amendment	95
SECTION 9.09.	Interest Rate Limitation	95
SECTION 9.10.	Entire Agreement	96
SECTION 9.11.	WAIVER OF JURY TRIAL	96
SECTION 9.12.	Severability	97
SECTION 9.13.	Counterparts	97
SECTION 9.14.	Headings	97
SECTION 9.15.	Jurisdiction; Consent to Service of Process	97
SECTION 9.16.	Confidentiality	98
SECTION 9.17.	USA PATRIOT Act Notice	99
ARTICLE X
GUARANTEE
SECTION 10.01.	The Guarantee	99
SECTION 10.02.	Guarantee of Payment; Continuing Guarantee	100
SECTION 10.03.	No Limitations	100
SECTION 10.04.	Reinstatement	102
SECTION 10.05.	Agreement To Pay; Contribution; Indemnity and Subrogation	102
SECTION 10.06.	Information	103
SECTION 10.07.	Subordination	103
SECTION 10.08.	Additional Guarantors	103
SECTION 10.09.	Maximum Liability	103
SECTION 10.10.	Release of Guarantors	104

SCHEDULES

Schedule 1.01(b)	–	Subsidiary Guarantors
Schedule 1.10(c)	–	Mortgaged Property
Schedule 2.01	–	Participants and Commitments
Schedule 3.08	–	Subsidiaries
Schedule 3.18	–	Insurance
Schedule 3.19(a)	–	UCC Filing Offices
Schedule 3.19(c)	–	Mortgage Filing Offices
Schedule 3.20(a)	–	Owned Real Property
Schedule 3.20(b)	–	Leased Real Property
Schedule 4.02(a)	–	Local Counsel

EXHIBITS
Exhibit A	–	Form of Administrative Questionnaire
Exhibit B	–	Form of Assignment and Assumption
Exhibit C	–	Form of Security Agreement
Exhibit D	–	Form of Intercreditor Agreement
Exhibit E	–	Form of Mortgage
Exhibit F	–	Form of Supplement

LETTER OF CREDIT FACILITY AGREEMENT dated as of May 10, 2011, among SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership (the “Company”), SHEA HOMES FUNDING CORP., a Delaware corporation and wholly owned subsidiary of the Company (“Shea Corp.”), the Subsidiary Guarantors (as defined in Article I) party hereto, the Participants (as defined in Article I), and CREDIT SUISSE AG, as administrative agent (in such capacity, the “Administrative Agent”) for the Participants.

The Company has requested the Issuing Bank to issue Letters of Credit, in an aggregate face amount at any time outstanding not in excess of $75,000,000, to backstop existing letters of credit and to support obligations of the Company, its Restricted Subsidiaries or their respective joint ventures.

The Issuing Bank is willing to issue Letters of Credit on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:

“Acquired Indebtedness” means (a) with respect to any person that becomes a Restricted Subsidiary (or is merged into the Company, Shea Corp. or any Restricted Subsidiary) after the Closing Date, Indebtedness of such person or any of its subsidiaries existing at the time such person becomes a Restricted Subsidiary (or is merged into the Company, Shea Corp. or any Restricted Subsidiary) that was not incurred in connection with, or in contemplation of, such person becoming a Restricted Subsidiary (or being merged into the Company, Shea Corp. or any Restricted Subsidiary) and (b) with respect to the Company, Shea Corp. or any Restricted Subsidiary, any Indebtedness expressly assumed by the Company, Shea Corp. or any Restricted Subsidiary in connection with the acquisition of any assets from another person (other than the Company, Shea Corp. or any Restricted Subsidiary), which Indebtedness was not incurred by such other person in connection with or in contemplation of such acquisition. Indebtedness incurred in connection with or in contemplation of any transaction described in clause (a) or (b) of the preceding sentence shall be deemed to have been incurred by the Company, Shea Corp. or a Restricted Subsidiary, as the case may be, at the time such person becomes a Restricted Subsidiary (or is merged into the Company, Shea Corp. or any Restricted Subsidiary) in the case of clause (a) or at the time of the acquisition of such assets in the case of clause (b), but shall not be deemed Acquired Indebtedness.

“Additional Notes” shall mean any additional notes permitted to be issued from time to time by Shea Corp. and the Company pursuant to the Indenture.

“Additional Pari-Passu Lien Obligations” shall have the meaning assigned to such term in the Intercreditor Agreement.

“Administrative Agent Fees” shall have the meaning assigned to such term in Section 2.02(b).

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, as the case may be.

“Approved Fund” means any Fund that is administered or managed by (a) a Participant, (b) an Affiliate of a Participant or (c) an entity that administers or manages a Participant, or an Affiliate of such entity.

“Asset Acquisition” means (a) an Investment by the Company, Shea Corp. or any Restricted Subsidiary in any other person if, as a result of such Investment, such person shall become a Restricted Subsidiary or shall be consolidated or merged with or into the Company, Shea Corp. or any Restricted Subsidiary or (b) the acquisition by the Company, Shea Corp. or any Restricted Subsidiary of the assets of any person, which constitute all or substantially all of the assets or of an operating unit or line of business of such person or which is otherwise outside the ordinary course of business.

“Asset Disposition” shall mean:

(a) any sale, transfer, conveyance, lease or other disposition (including by way of merger, consolidation or sale and leaseback or sale of Equity Interests in any Subsidiary) (each, a “transaction”), whether in a single transaction or series of related transactions, of any Property or assets of the Company, Shea Corp. or any Restricted Subsidiary to any other person; or

(b) the issuance or sale of Equity Interests of Shea Corp. or any Restricted Subsidiary, whether in a single transaction or a series of related transactions.

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provided that, the term “Asset Disposition” shall not include:

(i) a transaction between either the Company or Shea Corp. and any Restricted Subsidiary or a transaction between Shea Corp. and the Company or between any Restricted Subsidiaries,

(ii) a transaction in the ordinary course of business, including sales (directly or indirectly), Required Dedications (as defined in the Indenture as in effect on the date hereof), leases and sales and leasebacks of (A) homes, improved land and unimproved land and (B) real estate (including related amenities and improvements),

(iii) a transaction involving the sale of Equity Interests of, or the disposition of assets in, an Unrestricted Subsidiary,

(iv) any exchange or swap of assets (including land swaps) of the Company, Shea Corp. or any Restricted Subsidiary for assets (including Equity Interests of any person that is or will be a Restricted Subsidiary following receipt thereof) that (x) are to be used by the Company, Shea Corp. or any Restricted Subsidiary in the ordinary course of its Real Estate Business and (y) have a Fair Market Value substantially equivalent to the Fair Market Value of the assets exchanged or swapped; provided; however; that to the extent that the assets exchanged or swapped were Collateral, the assets received are pledged as Collateral under the Security Documents substantially contemporaneously with such exchange or swap to the extent required to do so pursuant to the Security Documents,

(v) any sale, transfer, conveyance, lease or other disposition of assets and properties permitted pursuant to Section 6.08,

(vi) the creation of a Lien permitted under Section 6.05 and dispositions in connection with such Liens,

(vii) the making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, pursuant to Section 6.02, or

(viii) any single transaction or series of related transactions that involves property, assets or Equity Interests having a Fair Market Value of less than $1,000,000.

“Assignment and Assumption” shall mean an assignment and assumption entered into by a Participant and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in substantially the form of Exhibit B or any other form approved by the Administrative Agent.

“Attributable Debt” in respect of a Sale-Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale-Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale-Leaseback Transaction results in a Capital Lease Obligation, the amount of

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Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation”.

“Baker JV” means the joint venture conducted by Shea/Baker Ranch Associates LLC, a California limited liability company.

“Bankruptcy Law” shall have the meaning assigned to such term in Article VII, clause (g).

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

“Business Day” shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close.

“Capital Lease Obligations” of any person shall mean the obligations of such person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligations will be the capitalized amount thereof determined in accordance with GAAP.

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Bank or Participants, as collateral for L/C Obligations or obligations of Participants to fund participations in respect of L/C Obligations, cash or deposit account balances or, if the Administrative Agent and the Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“Cash Equivalents” shall mean:

(a) dollars;

(b) securities issued or directly and fully guaranteed or insured by the United States of America (or by any agency or instrumentality thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

(c) investments in commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition, a rating of P-1, A-1 or the equivalent thereof by S&P or Moody’s;

(d) investments in demand deposits, certificates of deposit, bankers’ acceptances and eurodollar time deposits maturing within one year from the date of acquisition thereof and overnight bank deposits, in each case issued or guaranteed by or placed with any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000;

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(e) repurchase obligations with a term of not more than 7 days for securities described in clause (b) or (d) above and entered into with a financial institution satisfying the criteria of clause (d) above; and

(f) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (e) above.

“CCM Proceeding” shall have the meaning assigned to such term in the Tax Distribution Agreement.

A “Change in Control” shall be deemed to have occurred if:

(a) any sale, lease or other transfer (in one transaction or a series of transactions) of all or substantially all the consolidated assets of the Company and its Restricted Subsidiaries to any person (other than a Restricted Subsidiary); provided, however, that a transaction where the holders of all classes of common equity of the Company immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of common equity of such person immediately after such transaction shall not be a Change of Control;

(b) a “person” or “group” (within the meaning of Section 13(d) of the Exchange Act (other than the Permitted Holders)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of common equity of the Company representing more than 50% of the voting power of the common equity of the Company;

(c) the holders of Equity Interests of the Company approve any plan or proposal for the liquidation or dissolution of the Company; provided, however, that a liquidation or dissolution of the Company which is part of a transaction described in the proviso to clause (a) above shall not constitute a Change of Control; or

(d) a change of control shall occur as defined in the instrument governing any publicly traded debt securities of the Company or Shea Corp. which requires the Company or Shea Corp. to repay or repurchase such debt securities.

“Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

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“Closing Date” shall mean May 10, 2011.

“Code” shall mean the Internal Revenue Code of 1986 and the regulations promulgated thereunder, as amended from time to time.

“Collateral” shall mean all the “Collateral” as defined in any Security Document and shall also include the Mortgaged Properties.

“Commitment” shall mean, with respect to any Participant, such Participant’s commitment to acquire participations in Letters of Credit as provided for herein, as set forth in Schedule 2.01, or in the Assignment and Assumption pursuant to which such Participant assumed its Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.04 and (b) reduced or increased from time to time pursuant to assignments by or to such Participant pursuant to Section 9.04.

“Commitment Fee” shall have the meaning assigned to such term in Section 2.02(a).

“Consolidated Cash Flow Available for Fixed Charges” means, for any period, Consolidated Net Income for such period plus the sum of the following, without duplication (but only to the extent deducted in calculating such Consolidated Net Income) for such period:

(1) income taxes and Tax Distributions, plus

(2) Consolidated Interest Expense, plus

(3) depreciation and amortization expenses, plus

(4) all other non-cash charges (unless such non-cash charge represents an accrual of or reserve for cash expenditures in any future period), minus

(5) all non-cash items (other than the receipt of notes receivable) increasing such Consolidated Net Income for such period.

“Consolidated Fixed Charge Coverage Ratio” means, with respect to any date of determination, the ratio of (x) Consolidated Cash Flow Available for Fixed Charges for the prior four full fiscal quarters for which financial statements are available immediately preceding such date, to (y) the aggregate Consolidated Interest Expense for such four quarter period. For purposes of this definition, “Consolidated Cash Flow Available for Fixed Charges” and “Consolidated Interest Expense” shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

(a) the incurrence or the repayment, repurchase, defeasance or other discharge (collectively, “repayment”) of any Indebtedness of the Company, Shea Corp. or any Restricted Subsidiary (and the application of the proceeds thereof) giving rise to the need to make such calculation, and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), at any time on or after the first day of the prior four

6

fiscal quarter period and on or prior such date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of such four quarter period, except that Indebtedness under revolving credit facilities shall be deemed to be the average daily balance of such Indebtedness during such four quarter period (as reduced on such pro forma basis by the application of any proceeds of the incurrence of Indebtedness giving rise to the need to make such calculation);

(b) any Asset Disposition or Asset Acquisition (including any Asset Acquisition giving rise to the need to make such calculation as a result of the Company, Shea Corp. or any Restricted Subsidiary (including any person that becomes a Restricted Subsidiary as a result of any such Asset Acquisition) incurring Acquired Indebtedness at any time on or after the first day of such four quarter period and on or prior to such date of determination), as if such Asset Disposition or Asset Acquisition (including the incurrence or repayment of any such Indebtedness) and the inclusion, notwithstanding clause (b) of the definition of “Consolidated Net Income,” of any Consolidated Cash Flow Available for Fixed Charges associated with such Asset Acquisition as if it occurred on the first day of such four quarter period; provided, however, that the Consolidated Cash Flow Available for Fixed Charges associated with any Asset Acquisition shall not be included to the extent the net income so associated would be excluded pursuant to the definition of “Consolidated Net Income,” other than clause (b) thereof, as if it applied to the person or assets involved before they were acquired; and

(c) the Consolidated Cash Flow Available for Fixed Charges and the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with GAAP, shall be excluded;

provided that, for purposes of calculating “Consolidated Cash Flow Available for Fixed Charges” for purposes of determining the denominator (but not the numerator) of the Consolidated Fixed Charge Coverage Ratio, (i) interest on Indebtedness in respect of which a pro forma calculation is required that is determined on a fluctuating basis as of the date of such determination (including Indebtedness actually incurred on such date) and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on such date and (ii) notwithstanding clause (i), interest on such Indebtedness determined on a fluctuating basis, to the extent such interest is covered for at least one year by agreements relating to Interest Protection Agreements, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

“Consolidated Interest Expense” shall mean, for any period, the total interest expense of the Company, its consolidated Restricted Subsidiaries and Shea Corp. (other than non-cash interest expense attributable to convertible indebtedness under Accounting Practices Bulletin 14 or any successor provision), plus, to the extent not included in such total interest expense, and to the extent incurred by the Company, its Restricted Subsidiaries or Shea Corp., without duplication:

(a) interest expense attributable to Capital Lease Obligations, Attributable Debt and the interest component of any deferred payment obligations;

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(b) amortization of debt discount (including the amortization of original issue discount resulting from the issuance of Indebtedness at less than par) and debt issuance cost; provided, however, that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense;

(c) capitalized interest;

(d) non-cash interest expense; provided, however, that any non-cash interest expense or income attributable to the movement in the mark to mark valuation of Interest Protection Agreements or other derivative instruments pursuant to GAAP shall be excluded from the calculation of Consolidated Interest Expense);

(e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

(f) net payments (or minus net receipts) pursuant to Interest Protection Agreements;

(g) the product of (i) all dividends accrued in respect of all Disqualified Equity Interests of the Company and all Preferred Equity Interests of the Company or any Restricted Subsidiary, in each case, held by persons other than the Company or a Restricted Subsidiary (other than dividends payable solely in Qualified Equity Interests of the Company), times (ii) a fraction of the numerator of which is one and the denominator of which is one minus the effective combined tax rate of the issuer of such Disqualified Equity Interests or Preferred Equity Interests (expressed as a decimal) for such period (as estimated by the chief financial officer of the Company in good faith);

(h) interest incurred in connection with Investments in discontinued operations; and

(i) interest accruing on any Indebtedness of any other person to the extent such Indebtedness is guaranteed by (or secured by a Lien on the assets of) the Company or any Restricted Subsidiary; provided, however, that this clause (i) shall not include any interest accruing on Indebtedness (A) subject to guarantees constituting Specified Obligations of the Company or any Restricted Subsidiary or (B) of the type described in Section 6.01(m)(y).

“Consolidated Net Income” shall mean, for any period, the aggregate net income (or loss) of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided, however, that there will be excluded from such net income (loss) (to the extent otherwise included therein), without duplication:

(a) the net income (or loss) of (x) any Unrestricted Subsidiary or (y) any person (other than a Restricted Subsidiary) in which any person other than the Company, Shea Corp. or any Restricted Subsidiary has an ownership interest, except, in each case, to the extent that any such income has actually been received by the Company, Shea Corp. or

8

any Restricted Subsidiary in the form of cash dividends or similar cash distributions during such period,

(b) except to the extent includable in Consolidated Net Income pursuant to the foregoing clause (a), the net income (or loss) of any person that accrued prior to the date that (i) such person becomes a Restricted Subsidiary or is merged with or into or consolidated with the Company, Shea Corp. or any of its Restricted Subsidiaries (except, in the case of an Unrestricted Subsidiary that is redesignated a Restricted Subsidiary during such period, to the extent of its retained earnings from the beginning of such period to the date of such redesignation) or (ii) the assets of such person are acquired by the Company, Shea Corp. or any Restricted Subsidiary,

(c) the net income of any Restricted Subsidiary that is not a Guarantor to the extent that (but only so long as) the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary during such period; provided, however, that the net income of any such Restricted Subsidiary during such period shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution,

(d) the gains or losses, together with any related provision for taxes, realized during such period by the Company, Shea Corp. or any Restricted Subsidiary resulting from (i) the acquisition of securities, or extinguishment of Indebtedness, of the Company, Shea Corp. or any Restricted Subsidiary or (ii) any Asset Disposition by the Company, Shea Corp. or any Restricted Subsidiary,

(e) any extraordinary gain or loss together with any related provision for taxes, realized by the Company, Shea Corp. or any Restricted Subsidiary and

(f) any Tax Distributions paid during such period by the Company, Shea Corp. or any Restricted Subsidiary.

“Control” shall mean the power to direct the management or policies of a person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

“Control Agreement” shall mean, with respect to any deposit account or securities account maintained by any Credit Party, a control agreement in form and substance reasonably satisfactory to the Administrative Agent, duly executed and delivered by such Credit Party and the depositary bank or the securities intermediary, as the case may be, with which such account is maintained.

“Credit Documents” shall mean this Agreement, the Letters of Credit, the Intercreditor Agreement and the Security Documents.

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“Credit Event” shall have the meaning assigned to such term in Section 4.01.

“Credit Facility” shall mean the letter of credit facility provided for by this Agreement.

“Credit Parties” shall mean the Company, Shea Corp. and the Guarantors.

“Credit Suisse” shall mean Credit Suisse, AG.

“Default” shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

“Defaulting Participant” shall mean, subject to Section 2.12(b), any Participant that (a) has failed to (i) fund all or any portion of its L/C Disbursement (or any participation therein) within two Business Days of the date such payments were required to be funded hereunder unless such Participant notifies the Issuing Bank, the Administrative Agent and the Company in writing that such failure is the result of such Participant’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the Issuing Bank, or any other Participant any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Company, the Administrative Agent or the Issuing Bank in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Participant’s obligation to fund an L/C Disbursement hereunder and states that such position is based on such Participant’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent, the Issuing Bank or the Company, to confirm in writing to the Administrative Agent, the Issuing Bank and the Company that it will comply with its prospective funding obligations hereunder (provided that such Participant shall cease to be a Defaulting Participant pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent, the Issuing Bank and the Company), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Bankruptcy Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Participant shall not be a Defaulting Participant solely by virtue of the ownership or acquisition of any equity interest in that Participant or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Participant with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Participant (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Participant. Any determination by the Administrative Agent that a Participant

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is a Defaulting Participant under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Participant shall be deemed to be a Defaulting Participant (subject to Section 2.12(b)) upon delivery of written notice of such determination to the Company, each Issuing Bank and each Participant.

“Disqualified Equity Interests” shall mean any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to 91 days following the Maturity Date or (b) is convertible into or exchangeable or exercisable for (whether at the option of the issuer or the holder thereof) (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case, at any time prior to 91 days following the Maturity Date; provided, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Company to repurchase or redeem such Equity Interests upon the occurrence of a change in control or asset disposition occurring prior to 91 days following the Maturity Date shall not constitute Disqualified Equity Interests if the change in control or asset disposition provision applicable to such Equity Interests are no more favorable to such holders than the definition of “Change in Control” and Section 6.04 as applicable, and such Equity Interests specifically provide that the Company will not repurchase or redeem any such Equity Interests pursuant to such provisions prior to (A) the Company’s repurchase of the Notes pursuant to Sections 4.10 and 4.12 of the Indenture and (B) the Company’s compliance with the terms of this Agreement, after giving effect to any exercise of remedies or requirement of cash collateralization hereunder. For purposes of this definition, the “Maturity Date” shall be determined assuming that the Company has exercised its right to extend the Maturity Date pursuant to Section 2.11 for the maximum period permitted thereby, unless previously exercised for a shorter period.

“dollars” or “$” shall mean lawful money of the United States of America.

“Eligible Assignee” shall mean any person that meets the requirements to be an assignee under Sections 9.04(b)(iv), (vi) and (vii) (subject to such consents, if any, as may be required under Section 9.04 (b)(iv)).

“Environmental Laws” shall mean all former, current and future Federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments, directives, orders (including consent orders), and agreements in each case, relating to protection of the environment, natural resources, human health and safety or the presence, Release of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, recycling or handling of, or the arrangement for such activities with respect to, Hazardous Materials.

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“Environmental Liability” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” shall mean, with respect to any person, any and all shares, interests, participations or other equivalents (however designated) of or in such person’s capital stock or other equity interests, and options, rights or warrants to purchase such capital stock or other equity interests, whether now outstanding or issued after the Closing Date, including all Disqualified Equity Interests and Preferred Equity Interests.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974 and the regulations promulgated thereunder, as may be amended from time to time.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the Company, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA, with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, whether or not waived, (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code), (e) the incurrence by the Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of the Company or any of its ERISA Affiliates from any Plan or Multiemployer Plan, (f) the receipt by the Company or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (g) the receipt by the Company or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Company or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or in “endangered” or “critical” status, within the meaning of Section 305 of ERISA, (h) the occurrence of a “prohibited transaction” with respect to which the Company or any of the Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or with respect to which the Company or any such Subsidiary could otherwise be liable, or (i) any other event or condition with respect to a

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Plan or Multiemployer Plan that could result in liability of the Company or any Subsidiary.

“Event of Default” shall have the meaning assigned to such term in Article VII.

“Exchange Notes” shall have the meaning assigned to such term in the Indenture.

“Excluded Property” shall have the meaning assigned to such term in the Security Agreement.

“Excluded Taxes” shall mean, with respect to any payment made by any Credit Party under any Credit Document, any of the following Taxes on or with respect to a Recipient: (a) income or franchise taxes imposed on (or measured by) the Recipient’s net income by the United States of America, or by the jurisdiction under the laws of which such Recipient is organized or in which its principal office is located or, in the case of any Participant, in which its applicable lending office is located, (b) any branch profits Taxes imposed on the Recipient by the United States of America or any similar Tax imposed by any other jurisdiction described in clause (a) above, (c) in the case of a Participant (other than an assignee pursuant to a request by the Company under Section 2.10(a)) any U.S. Federal withholding Taxes resulting from any law in effect on the date such Participant becomes a party to this Agreement (or designates a new lending office) or is attributable to such Participant’s failure to comply with Section 2.09(f), except to the extent that such Participant (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Company with respect to such withholding Tax pursuant to Section 2.09(a) and (d) any Taxes imposed under FATCA (or any amended or successor version of FATCA that is substantively comparable and not materially more onerous to comply with).

“Existing Credit Agreement” shall mean the Amended and Restated Credit Agreement dated as of November 5, 2010, among J.F. Shea Co., Inc., the Company, the financial institutions party thereto and Wells Fargo Bank, National Association, as administrative agent.

“Fair Market Value” shall mean, with respect to any property or other asset, the price (after taking into account any liabilities relating to such assets) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction, as such price is determined in good faith by the board of directors of the Company or a duly authorized committee thereof, as evidenced by a resolution of such board or committee; provided, however, that for purposes of Section 6.02(a)(ii), if the Fair Market Value of the property or assets in question is so determined to be in excess of $1,000,000, such determination must be confirmed by an Independent Qualified Party.

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement, and any regulations or official interpretations thereof.

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve

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System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Fees” shall mean the Commitment Fees, the Administrative Agent Fees, the L/C Participation Fees, the Upfront Fees and the Issuing Bank Fees.

“Financial Officer” of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person.

“Foreign Participant” shall mean a Participant that is not a U.S. Person.

“Fronting Exposure” shall mean, at any time there is a Defaulting Participant, such Defaulting Participant’s Pro Rata Percentage of the L/C Exposure with respect to Letters of Credit issued by the Issuing Bank other than Letters of Credit as to which such Defaulting Participant’s participation obligation has been reallocated to other Participants or Cash Collateralized in accordance with the terms hereof.

“Fund” means any person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” shall mean 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 in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Closing Date.

“Governmental Authority” shall mean the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” of or by any person shall mean any obligation, contingent or otherwise, of any person directly or indirectly guaranteeing any Indebtedness of any other person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such person: (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part; provided that the term

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“Guarantee” does not include (x) endorsements for collection or deposit in the ordinary course of business or (y) indemnification obligations of the Company, Shea Corp. or any Restricted Subsidiary entered into in the ordinary course of business.

“Guarantors” shall mean Shea Corp. and the Subsidiary Guarantors.

“Hazardous Materials” shall mean (a) any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances and (b) any chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

“Indebtedness” of any person shall mean, without duplication:

(a) the principal in respect of (i) indebtedness of such person for borrowed money and (ii) indebtedness evidenced by notes, debentures, or other similar instruments for the payment of which such person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;

(b) all Capital Lease Obligations of such person and all Attributable Debt in respect of Sale-Leaseback Transactions entered into by such person;

(c) all obligations of such person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such person and all obligations of such person under any title retention agreement (but excluding (i) any accounts payable or other liability to trade creditors arising in the ordinary course of business and (ii) any obligation to pay a contingent purchase price as long as such obligation remains contingent);

(d) all obligations of such person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations in clauses (a) - (c) above) entered into in the ordinary course of business of such person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth business day following payment on the letter of credit);

(e) the amount of all obligations of such person with respect to the redemption, repayment or other repurchase of any Disqualified Equity Interests of such person or, with respect to any Preferred Equity Interests of any subsidiary of such person, the amount of such Preferred Equity Interests to be determined in accordance with the Indenture (but excluding, in each case, any accrued dividends);

(f) all Guarantees by such person of obligations of the type referred to in clauses (a)-(e) above or dividends of other persons (excluding any preferred returns payable pursuant to any joint venture documentation);

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(g) all obligations of the type referred to in clauses (a)-(f) of other persons secured by any Lien on any property or asset of such person (whether or not such obligation is assumed by such person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or assets and the amount of the obligation so secured; and

(h) to the extent not otherwise included in this definition, the obligations of such person under Interest Protection Agreements or other agreements designed to protect such person against fluctuations in currency values.

Notwithstanding the foregoing, (i) in connection with the purchase by the Company, Shea Corp. or any Restricted Subsidiary of any business, the term “Indebtedness” will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter, (ii) guarantees constituting Specified Obligations shall not constitute Indebtedness and (iii) repayment guarantees constituting Investments made pursuant to the JV Payment Basket shall constitute Indebtedness.

The amount of Indebtedness of any person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.

The amount of any Preferred Equity Interests that has a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Preferred Equity Interests as if such Preferred Equity Interests were redeemed, repaid or repurchased on any date on which the amount of such Preferred Equity Interests are to be determined pursuant to this Agreement; provided, however, that if such Preferred Equity Interests could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be calculated as of the first date thereafter on which such Preferred Equity Interests could be required to be so redeemed, repaid or repurchased. If the Company’s Preferred Equity Interests do not have a fixed redemption, repayment or repurchase price, the amount of such Preferred Equity Interests will be their maximum liquidation value.

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by any Credit Party under any Credit Document and (b) Other Taxes.

“Indenture” shall mean the Indenture dated as of May 10, 2011 among the Company, Shea Corp., the Guarantors and Wells Fargo Bank, National Association., as trustee.

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“Independent Qualified Party” shall mean an accounting, appraisal, investment banking firm or consultant to persons engaged in Real Estate Businesses of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged; provided, however, that such firm or consultant is not an Affiliate of the Company.

“Independent Valuation” of real property means (x) with respect to the sale of real property by the Company, Shea Corp. or any Restricted Subsidiary, any amount proposed to be paid for such real property pursuant to a bona fide offer to purchase made by an unaffiliated person and which the Company, Shea Corp. or the Restricted Subsidiary, as applicable, would be willing to accept or (y) any appraised value of such real property as determined by an Independent Qualified Party.

“Interest Protection Agreement” shall mean any interest rate swap agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement designed to protect a person or any of its subsidiaries against fluctuations in interest rates with respect to Indebtedness permitted to be incurred hereunder and not for speculative purposes.

“Intercreditor Agreement” shall mean the Intercreditor Agreement, substantially in the form of Exhibit D, dated as of May 10, 2011 among the trustee under the Note Documents, the Collateral Agent and the Administrative Agent.

“Investment” shall mean any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Equity Interests, Indebtedness or other similar instruments issued by such person (including, for the avoidance of doubt, the purchase of equity interests in joint ventures pursuant to customary buy/sell provisions contained in the agreements governing such joint ventures). If the Company, Shea Corp. or any Restricted Subsidiary issues, sells or otherwise disposes of any Equity Interests of a person that is a Restricted Subsidiary such that, after giving effect thereto, such person is no longer a Restricted Subsidiary, any Investment by the Company, Shea Corp. or any Restricted Subsidiary in such person remaining after giving effect thereto will be deemed to be a new Investment at such time. The acquisition by the Company, Shea Corp. or any Restricted Subsidiary of a person that holds an Investment in a third person will be deemed to be an Investment by the Company, Shea Corp. or such Restricted Subsidiary, as applicable, in such third person at such time. Except as otherwise provided for herein, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value.

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For purposes of the definition of “Unrestricted Subsidiary”, the definition of “Restricted Payment” and Section 6.02:

(1) “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the board of directors of the Company.

“IRS” shall mean the United States Internal Revenue Service.

“Issuing Bank” shall mean, as the context may require, (a) Credit Suisse, acting through any of its Affiliates or branches, in its capacity as the issuer of Letters of Credit hereunder and (b) any other Participant that may become an Issuing Bank pursuant to Section 2.01(i) or 2.01(k), with respect to Letters of Credit issued by such Participant. The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates or branches of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate or branch with respect to Letters of Credit issued by such Affiliate or branch.

“Issuing Bank Fees” shall have the meaning assigned to such term in Section 2.02(c).

“JFSCI” means J.F. Shea Co., Inc., a Nevada corporation.

“JV Payment Basket” shall have the meaning assigned to such term in Section 6.02(b)(xiii).

“L/C Disbursement” shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit.

“L/C Exposure” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time and (b) the aggregate amount of all L/C Disbursements that have not yet been reimbursed by or on behalf of the Company at such time. The L/C Exposure of any Participant at any time shall equal its Pro Rata Percentage of the aggregate L/C Exposure at such time.

“L/C Participation Fee” shall have the meaning assigned to such term in Section 2.02(c).

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“Letter of Credit” shall mean any standby letter of credit issued pursuant to Section 2.01.

“Lien” shall mean, with respect to any Property, any mortgage, lien, pledge, encumbrance, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this definition, a person shall be deemed to own, subject to a Lien, any Property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such Property.

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

“Material Adverse Effect” shall mean (a) a materially adverse effect on the business, assets, operations, financial condition or operating results of the Company and the Restricted Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Company or any other Credit Party to perform any of its obligations under any Credit Document to which it is a party or (c) a material impairment of the rights and remedies of or benefits available to the Participants or Issuing Bank under any Credit Document.

“Material Indebtedness” shall mean Indebtedness (other than Letters of Credit), or obligations in respect of one or more Interest Protection Agreements, of any one or more of the Company, Shea Corp. or any Restricted Subsidiary in an aggregate principal amount exceeding $10,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Company, Shea Corp. or any Restricted Subsidiary in respect of any Interest Protection Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Company, Shea Corp. or such Restricted Subsidiary would be required to pay if such Interest Protection Agreement were terminated at such time.

“Maturity Date” shall mean May 12, 2014, subject to extension pursuant to Section 2.11.

“Minimum Collateral Amount” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 103% of the Fronting Exposure of the Issuing Banks with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the Issuing Bank in their sole discretion.

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

“Mortgaged Properties” shall mean, initially, the owned real properties specified on Schedule 1.01(c), and shall include each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.05.

“Mortgages” shall mean the mortgages, deeds of trust, assignments of leases and rents, modifications and other security documents delivered pursuant to clause (i) of Section 4.02(h) or pursuant to Section 5.05, each substantially in the form of Exhibit E.

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“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Non-Consenting Participant” means any Participant that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Participants in accordance with the terms of Section 9.08 and (ii) has been approved by the Required Participants.

“Non-Defaulting Participant” means, at any time, each Participant that is not a Defaulting Participant at such time.

“Non-Recourse Indebtedness” means Indebtedness of any person for which (1) the sole legal recourse for collection of principal and interest on such Indebtedness (other than in respect of customary “bad-boy” guarantees) is against the specific property identified in the instruments evidencing or securing such Indebtedness and such property was acquired with the proceeds of such Indebtedness or such Indebtedness was incurred within 90 days after the acquisition of such property and (2) no other assets may be realized upon in collection of principal or interest on such Indebtedness; provided, however, that such Indebtedness cannot serve as a basis for a cross default to any other Indebtedness. Indebtedness which is otherwise Non-Recourse Indebtedness will not lose its character as Non-Recourse Indebtedness because there is recourse for (a) environmental warranties and indemnities or (b) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance and condemnation proceeds and other sums actually received by the obligor from secured assets to be paid to the lender, waste and mechanics’ liens.

“Note Documents” shall mean the Indenture and all other instruments, agreements and other documents evidencing or governing the Notes or providing for any Guarantee or other right in respect thereof.

“Notes” shall mean the Company’s Senior Secured Notes due 2019, in an initial aggregate principal amount of $750,000,000.

“Obligations” shall mean (a) the due and punctual payment by the Credit Parties of (i) each payment required to be made by the Credit Parties or joint ventures under this Agreement in respect of any Letter of Credit, when and as due (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (ii) all other monetary obligations of the Credit Parties to any of the Secured Parties under this Agreement and each of the other Credit Documents, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Credit Parties under or pursuant to this Agreement and each of

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the other Credit Documents, and (c) the due and punctual payment and performance of all the obligations of each other Credit Party under or pursuant to this Agreement and each of the other Credit Documents (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).

“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Taxes (other than a connection arising from such Recipient having executed, delivered, enforced, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to, or enforced, any Credit Document, or sold or assigned an interest in any Credit Document).

“Other Taxes” shall mean any present or future stamp, court, documentary, intangible, recording, filing or similar excise or property Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, or from the registration, receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment under Section 2.10(a)).

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

“Pari-Passu Lien Obligations” means all Indebtedness secured by pari-passu Liens on the Collateral, incurred pursuant to Section 6.05(h), (i) and (j), and all obligations in respect thereof, including in respect of the Notes and each series of Additional Pari-Passu Lien Obligations.

“Participants” shall mean (a) the persons listed on Schedule 2.01 (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Assumption) and (b) any person that has become a party hereto pursuant to an Assignment and Assumption.

“Participation Register” shall have the meaning assigned to such term in Section 9.04(d).

“Partners Insurance Company” means Partners Insurance Company, Inc., a Hawaii corporation, and its successors and assigns.

“Perfection Certificate” shall mean the Perfection Certificate substantially in the form of Exhibit B to the Security Agreement.

“Permitted Holders” means, collectively, John F. Shea, Peter O. Shea, Peter O. Shea, Jr., Mary Shea, John Morrissey and their respective family trusts, spouses, sons and daughters and lineal descendants, siblings and other familial relatives of any of them, including any corporation, limited liability companies or other entities more than 50% of

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the issued and outstanding equity interests of which are held, directly or indirectly, by any of the foregoing persons.

“Permitted Investments” shall mean:

(a) Cash Equivalents;

(b) Guarantees (but not payments thereon) with respect to Specified Obligations;

(c) any Investment in (i) the Company or any Guarantor or (ii) any person that becomes a Guarantor as a result of such Investment or that is consolidated or merged with or into, or transfers all or substantially all of the assets of it or an operating unit or line of business to, the Company or a Guarantor;

(d) any receivables, loans or other consideration taken by the Company, Shea Corp. or any Restricted Subsidiary in connection with any asset sale otherwise permitted hereunder; provided that non-cash consideration received in an Asset Disposition or an exchange or swap of assets shall be pledged as Collateral under the Security Documents to the extent the assets subject to such Asset Disposition or exchange or swap of assets constituted Collateral;

(e) Investments received in connection with any bankruptcy or reorganization proceeding, or as a result of foreclosure, perfection or enforcement of any Lien or any judgment or settlement of any person in exchange for or satisfaction of Indebtedness or other obligations or other property received from such person, or for other liabilities or obligations of such person created, in accordance with the terms hereof;

(f) Investments in Interest Protection Agreements permitted hereunder;

(g) any loan or advance to an executive officer, director or employee of the Company or any Restricted Subsidiary made in the ordinary course of business or in accordance with past practice; provided, however, that any such loan or advance exceeding $1,000,000 shall have been approved by the board of directors of the Company or a committee thereof consisting of disinterested members;

(h) obligations (but not payments thereon) with respect to homeowners association obligations, community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds and similar bonding requirements arising in the ordinary course of business of a homebuilder;

(i) guarantee or indemnification obligations (other than for the payment of borrowed money) entered into in the ordinary course of business and incurred for the benefit of any adjoining landowner, seller of real property or municipal government authority (or enterprises thereof) in connection with the acquisition, entitlement and development of real property;

(j) guarantee and indemnification obligations arising in connection with surety bonds issued in the ordinary course of business;

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(k) prepaid expenses, negotiable instruments held for collection and insurance, lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business;

(l) current Investments acquired in the ordinary course of business for cash management purposes; and

(m) guarantees and related extensions of credit constituting Permitted Indebtedness (other than Indebtedness incurred pursuant to Section 6.01(n), but including any payments made in respect of Letters of Credit) or Covered Indebtedness.

“person” shall mean any individual, corporation, trust, joint venture, incorporated or unincorporated association, joint stock company, limited liability company, partnership, unincorporated organization or government or any agency or political subdivision thereof.

“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Company or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Preferred Equity Interests” of any person means all Equity Interests of such person which have a preference in liquidation or with respect to the payment of dividends.

“Prime Rate” shall mean the rate of interest per annum determined from time to time by Credit Suisse as its prime rate in effect at its principal office in New York City and notified to the Company.

“Pro Rata Percentage” of any Participant at any time shall mean the percentage of the Total Commitment represented by such Participant’s Commitment. In the event the Commitments shall have expired or been terminated, the Pro Rata Percentages shall be determined on the basis of the Commitments most recently in effect, giving effect to any subsequent assignments.

“Property” of any person shall all types of real, personal, tangible, intangible or mixed property owned by such person, whether or not included in the most recent consolidated balance sheet of such person and its Subsidiaries under GAAP, including Equity Interests and Indebtedness of other persons.

“Qualified Equity Interests” of any person shall mean any Equity Interest of such person other than (a) Disqualified Equity Interests, (b) any Equity Interests sold to a subsidiary of such person or a company equity plan, (c) any Equity Interests financed, directly or indirectly, using funds borrowed from such person, a subsidiary of such person or any company equity plan or contributed, extended, advanced or guaranteed by such person, a subsidiary of such person or any company equity plan, (d) any Equity Interests issued upon conversion of, or issued in exchange for, debt securities owned by

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any subsidiary of such person or company equity plan, (e) any Equity Interests issued in connection with any cash contribution made in accordance with Section 6.02(b)(vi) and (f) except for purposes of the definition of “Excluded Contribution”, any Equity Interest to the extent the cash or Cash Equivalents received in connection therewith are designated as Excluded Contributions; provided, however, except for purposes of the definition of Excluded Contribution, Qualified Equity Interests will not include any Equity Interests to the extent the Company has designated the net proceeds or marketable securities received from the sale of such Equity Interests as Excluded Contributions. Unless otherwise specified, Qualified Equity Interests refer to Qualified Equity Interests of the Company.

“Real Estate Business” has the meaning assigned to such term in Section 6.09.

“Recipient” shall mean (a) the Administrative Agent, (b) any Participant and (c) any Issuing Bank, as applicable.

“Refinancing Indebtedness” shall mean Indebtedness that refinances any Indebtedness of the Company, Shea Corp. or any Restricted Subsidiary existing on the Closing Date or incurred in compliance with this Agreement, including Indebtedness that refinances Refinancing Indebtedness; provided, however, that:

(a) such Refinancing Indebtedness has a maturity date no earlier than the maturity date of the Indebtedness being refinanced;

(b) such Refinancing Indebtedness has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the weighted average life to maturity of the Indebtedness being refinanced;

(c) such Refinancing Indebtedness has an aggregate principal amount (or if incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if incurred with original issue discount, the aggregate accreted value) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being refinanced; and

(d) if the Indebtedness being Refinanced is subordinated in right of payment to the Notes, such Refinancing Indebtedness is subordinated in right of payment to the Notes to at least the same extent as the Indebtedness being refinanced;

provided further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of Shea Corp. or the Company or (B) Indebtedness of the Company, Shea Corp. or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.

“Register” shall have the meaning assigned to such term in Section 9.04(c).

“Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

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“Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Related Parties” shall mean, with respect to any specified person, such person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such person and of such person’s Affiliates.

“Release” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

“Required Participants” shall mean, at any time, Participants having L/C Exposure and unused Commitments representing more than 50% of the total L/C Exposure and unused Commitments at such time; provided that the L/C Exposure and unused Commitments of any Defaulting Participant shall be disregarded in the determination of the Required Participants at any time unless such Defaulting Participant is the only Participant at such time.

“Responsible Officer” of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof responsible for the administration of the obligations of such person in respect of this Agreement.

“Restricted Payment” shall mean any of the following:

(i) the declaration or payment of any dividend or any other distribution on Equity Interests of the Company, Shea Corp. or any Restricted Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Company, Shea Corp. or any Restricted Subsidiary (other than (a) dividends or distributions payable solely in Qualified Equity Interests and (b) in the case of Shea Corp. or Restricted Subsidiaries, dividends or distributions payable ratably to of the Company, Shea Corp. or a Restricted Subsidiary and each other person entitled thereto);

(ii) the purchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company, Shea Corp. or any Restricted Subsidiary (other than a payment made to the Company, Shea Corp. or any Restricted Subsidiary);

(iii) any Investment (other than any Permitted Investment), including any Investment in any joint venture, any Investment in an Unrestricted Subsidiary (including by the designation of a Subsidiary of the Company as an Unrestricted Subsidiary) or any Investment in a Restricted Subsidiary that is not a Guarantor (each Investment described in this clause (iii), a “Restricted Investment”);

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(iv) the purchase, repurchase, redemption, acquisition or retirement for value, prior to one year before the date for any scheduled maturity, sinking fund or amortization or other principal installment payment, of any Subordinated Indebtedness (other than Indebtedness incurred pursuant to Section 6.01(d)) or (b) the purchase, repurchase, redemption, defeasance, or other acquisition or retirement of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, amortization or principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement); and

(v) any payment by the Company, Shea Corp. or any Restricted Subsidiary with respect to a Specified Obligation.

“Restricted Subsidiary” shall mean any Subsidiary of the Company that is not an Unrestricted Subsidiary, including Shea Corp.

“S&P” shall mean Standard & Poor’s Ratings Service, or any successor thereto.

“Secured Parties” shall mean (a) the Participants, (b) the Issuing Bank, (c) the Administrative Agent, (d) the beneficiaries of each indemnification or expense reimbursement obligation undertaken by the Company or any Guarantor under any Credit Document and (e) the successors and assigns of each of the foregoing.

“Security Agreement” shall mean the Security Agreement, substantially in the form of Exhibit C, among the Company, Shea Corp., the Subsidiaries party thereto, the Collateral Agent and the Administrative Agent for the benefit of the Secured Parties.

“Security Documents” shall mean the Mortgages, the Security Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.05.

“Significant Subsidiary” shall have the meaning assigned to such term in the Indenture (as in effect on the date hereof).

“Specified Obligations” shall mean (a) interest-coverage, re-margin and completion guarantees with respect to (i) any joint venture in which the Company, Shea Corp. or any Restricted Subsidiary has a direct or an indirect equity interest or (ii) the Baker JV, (b) customary “bad-boy” guarantees, (c) guarantees of Affiliate obligations existing on the Closing Date (and any extension, modification or replacement of such Affiliate obligation provided that such extension, modification or replacement does not increase the obligations of the Company or any Restricted Subsidiary with respect to such Affiliate obligations) and (d) tax payments (including interest and penalties) or Tax Distributions, as applicable, attributable to any U.S. federal income tax proceeding (whether or not still contested or subject to appeal) regarding the completed contract method (as defined in U.S. Treasury Regulation Section 1.460-4(d)) of accounting for periods prior to 2011 (other than any increase in taxes payable for periods after 2010 as a result of such proceeding).

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“Subordinated Indebtedness” means Indebtedness subordinated in right of payment to the Obligations, pursuant to a written agreement and includes any Indebtedness ranking equally in right of payment to the Obligations, but unsecured or secured by the Collateral on a basis entirely junior to that of the Obligations.

“subsidiary” shall mean, with respect to any person (herein referred to as the “parent”), any corporation or other entity of which a majority of the Equity Interests having ordinary voting power to elect a majority of the governing body or other persons performing similar functions is at the time directly or indirectly owned or controlled by such person.

“Subsidiary” shall mean any subsidiary of the Company.

“Subsidiary Guarantor” shall mean each Subsidiary listed on Schedule 1.01(b), and each other Subsidiary that is or becomes a party to the Security Agreement and this Agreement.

“Supplement” has the meaning assigned to such term in Section 10.08.

“Tax Distribution Agreement” means the Tax Distribution Agreement dated May 10, 2011 between the Company, the direct and indirect holders of ownership interests in the Company, and each of the persons party to the Sixth Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership, dated as of April 1, 2005 (as amended, restated, supplemented or otherwise modified from time to time).

“Tax Distributions” means, so long as the Company is treated as a pass-through or disregarded entity for United States federal income tax purposes, the distributions in respect of income taxes permitted under Section 2 of the Tax Distribution Agreement as in effect on the Closing Date.

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Total Commitment” shall mean, at any time, the aggregate amount of the Commitments, as in effect at such time. The initial Total Commitment is $75,000,000.

“Transactions” shall mean, collectively, (a) the receipt by the Company of at least $121,000,000 (at least $75,000,000 of which shall be in cash) on account of receivables due from certain of its affiliates, (b) the execution, delivery and performance by the Company, Shea Corp. and the Subsidiaries party thereto of the Note Documents and the issuance of the Notes, (c) the execution, delivery and performance by the Credit Parties of the Credit Documents to which they are a party, (d) the repayment of all amounts due or outstanding under or in respect of, and the termination of, the Existing Credit Agreement and (e) the payment of related fees and expenses.

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“Unrestricted Subsidiary” shall mean:

(a) Partners Insurance Company and its subsidiaries and

(b) any other Subsidiary of the Company (other than Shea Corp.) so designated after the Closing Date by a resolution adopted by the board of directors of the Company or a duly authorized committee thereof as provided below; provided, however, that (i) the holders of Indebtedness of such Subsidiary of the Company do not have direct or indirect recourse against the Company, Shea Corp. or any Restricted Subsidiary, and neither the Company, Shea Corp. nor any Restricted Subsidiary otherwise has liability for, or any payment obligations in respect of such Indebtedness (including any undertaking, agreement or instrument evidencing such Indebtedness), except, in each case, to the extent that (A) the amount thereof constitutes a Restricted Payment permitted by Section 6.02, (B) in the case of Non-Recourse Indebtedness, such recourse or liability is for the matters discussed in the last sentence of the definition of “Non-Recourse Indebtedness,” or (C) such Indebtedness is a guarantee by such Subsidiary of Indebtedness of the Company, Shea Corp. or a Restricted Subsidiary and (ii) no holder of any Indebtedness of such Subsidiary shall have a right to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity as a result of a default on any Indebtedness of the Company, Shea Corp. or any Restricted Subsidiary.

“Upfront Fees” shall have the meaning assigned to such term in Section 2.02(d).

“U.S. Person” shall mean a “United States person” within the meaning of Section 7701(a)(30) of the Code.

“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“Withholding Agent”“ shall mean any Credit Party and the Administrative Agent.

SECTION 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to

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any person shall be construed to include such person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.03. Pari-Passu Indebtedness. The Obligations are hereby designated as “Pari-Passu Lien Obligations” for all purposes of the Note Documents.

ARTICLE II

The Credits

SECTION 2.01. The Credits. (a) General. Subject to the terms and conditions set forth herein, the Company may request the issuance of Letters of Credit for its own account or for the account of any of its Restricted Subsidiaries or their respective joint ventures (in which case the Company and such subsidiary or joint venture shall be co-applicants with respect to such Letter of Credit and the Company shall be liable for obligations in respect thereof as provided herein), in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time while the Commitments remain in effect. This Section shall not be construed to impose an obligation upon the Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of Credit), the Company shall deliver a notice, in accordance with Section 9.01, to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of Credit; provided that no Letters of Credit shall be issued after the date that is 30 days prior to the Maturity Date. A Letter of Credit shall be issued, amended, renewed or extended only if, and upon issuance, amendment, renewal or extension of each Letter of Credit the Company shall be

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deemed to represent and warrant that, after giving effect to such issuance, amendment, renewal or extension the L/C Exposure shall not exceed the Total Commitment.

(c) Expiration Date. Each Letter of Credit shall expire at the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit and the date that is five Business Days prior to the Maturity Date, unless such Letter of Credit expires by its terms on an earlier date; provided, however, that a Letter of Credit may, upon the request of the Company, include a provision whereby such Letter of Credit shall be renewed automatically for additional consecutive periods of 12 months or less (but not beyond the date that is five Business Days prior to the Maturity Date) unless the Issuing Bank notifies the beneficiary thereof at least 30 days (or such longer period as may be specified in such Letter of Credit) prior to the then-applicable expiration date that such Letter of Credit will not be renewed.

(d) Participations. By the issuance of a Letter of Credit and without any further action on the part of the Issuing Bank or the Participants, the Issuing Bank hereby grants to each Participant, and each such Participant hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Participant’s Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing, each Participant hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Participant’s Pro Rata Percentage of each L/C Disbursement made by the Issuing Bank and not reimbursed by the Company (or, if applicable, another party pursuant to its obligations under any other Credit Document) forthwith on the date due as provided in Section 2.01(l). Each Participant acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Company shall pay to the Administrative Agent an amount equal to such L/C Disbursement on the same Business Day that the Company shall have received notice from the Issuing Bank that payment of such draft will be made, or, if the Company shall have received such notice later than 10:00 a.m., New York City time, on any Business Day, not later than 10:00 a.m., New York City time, on the immediately following Business Day.

(f) Obligations Absolute. The Company’s obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of:

(i) any lack of validity or enforceability of any Letter of Credit or any Credit Document, or any term or provision therein;

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(ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Credit Document;

(iii) the existence of any claim, setoff, defense or other right that the Company, any other party guaranteeing, or otherwise obligated with, the Company, any Subsidiary or other Affiliate thereof or any other person may at any time have against the beneficiary under any Letter of Credit, the Issuing Bank, the Administrative Agent or any Participant or any other person, whether in connection with this Agreement, any other Credit Document or any other related or unrelated agreement or transaction;

(iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; and

(vi) any other act or omission to act or delay of any kind of the Issuing Bank, the Participants, the Administrative Agent or any other person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Company’s obligations hereunder.

Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligation of the Company hereunder to reimburse L/C Disbursements will not be excused by the gross negligence or wilful misconduct of the Issuing Bank. However, the foregoing shall not be construed to excuse the Issuing Bank from liability to the Company to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Company to the extent permitted by applicable law) suffered by the Company that are caused by the Issuing Bank’s gross negligence or wilful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. It is further understood and agreed that the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (i) the Issuing Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms

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thereof shall, in each case, be deemed not to constitute gross negligence or wilful misconduct of the Issuing Bank.

(g) Disbursement Procedures. (i) The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic notification, confirmed by fax, to the Administrative Agent and the Company of such demand for payment and whether the Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Company of its obligation to reimburse the Issuing Bank and the Participants with respect to any such L/C Disbursement.

(ii) If the Issuing Bank shall not have received from the Company the payment required to be made by Section 2.01(e) within the time specified in such Section, the Issuing Bank will promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each Participant of such L/C Disbursement and its Pro Rata Percentage thereof. Each Participant shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Participant shall have received such notice later than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Participant’s Pro Rata Percentage of such L/C Disbursement (it being understood that any such amount paid by any Participant shall not constitute a loan and shall not relieve the Company from its obligation to reimburse such L/C Disbursement), and the Administrative Agent will promptly pay to the Issuing Bank amounts so received by it from the Participants. The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from the Company pursuant to Section 2.01(e) prior to the time that any Participant makes any payment pursuant to this paragraph; any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Participants that shall have made such payments and to the Issuing Bank, as their interests may appear. If any Participant shall not have made its Pro Rata Percentage of such L/C Disbursement available to the Administrative Agent as provided above, such Participant agrees to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at, for the first such day, the Federal Funds Effective Rate, and for each day thereafter, the Alternate Base Rate.

(h) Interim Interest. If the Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, then, unless the Company shall reimburse such L/C Disbursement in full on such date, the unpaid amount thereof shall bear interest for the account of the Issuing Bank, for each day from and including the date of such L/C Disbursement, to but excluding the earlier of the date of payment by the Company or the

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date on which interest shall commence to accrue thereon as provided in Section 2.03, at the rate per annum equal to the Alternate Base Rate plus 3.0%.

(i) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign at any time by giving 30 days’ prior written notice to the Administrative Agent, the Participants and the Company, and may be removed at any time by the Company by notice to the Issuing Bank, the Administrative Agent and the Participants. Upon the acceptance of any appointment as the Issuing Bank hereunder by a Participant that shall agree to serve as successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Bank. At the time such removal or resignation shall become effective, the Company shall pay all accrued and unpaid fees pursuant to Section 2.02(c)(ii). The acceptance of any appointment as the Issuing Bank hereunder by a successor Participant shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Company and the Administrative Agent, and, from and after the effective date of such agreement, (i) such successor Participant shall have all the rights and obligations of the previous Issuing Bank under this Agreement and the other Credit Documents and (ii) references herein and in the other Credit Documents to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or removal of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Credit Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be continuing, the Company shall, on the Business Day it receives notice thereof from the Issuing Bank or the Required Participants together with a demand for cash collateral pursuant to this Section 2.01(j) and specifying the amount to be deposited, deposit in an account with the Administrative Agent, for the benefit of the Issuing Bank and the Participants, an amount in cash equal to 105% of the L/C Exposure as of such date. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Obligations. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits in Cash Equivalents, which investments shall be made at the option and sole discretion of the Administrative Agent, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall (i) automatically be applied by the Administrative Agent to reimburse the Issuing Bank for L/C Disbursements for which it has not been reimbursed and (ii) be held for the satisfaction of the reimbursement obligations of the Company for the L/C Exposure at such time. If the Company is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Company within three Business Days after all Defaults and Events of Default have been cured or waived.

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(k) Additional Issuing Banks. The Company may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and such Participant, designate one or more additional Participants to act as an issuing bank under the terms of this Agreement. Any Participant designated as an issuing bank pursuant to this paragraph (k) shall be deemed to be an “Issuing Bank” (in addition to being a Participant) in respect of Letters of Credit issued or to be issued by such Participant, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Issuing Bank and such Participant.

SECTION 2.02. Fees. (a) The Company agrees to pay to each Participant, through the Administrative Agent, on the last Business Day of March, June, September and December in each year and on each date on which any Commitment of such Participant shall expire or be terminated as provided herein, a commitment fee (a “Commitment Fee”) equal to 0.50% per annum on the daily unused amount of the Commitment of such Participant during the preceding quarter (or other period commencing with the date hereof or ending with the Maturity Date or the date on which the Commitment of such Participant shall expire or be terminated). All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(b) The Company agrees to pay to the Administrative Agent, for its own account, in consideration for its agreement to act as Administrative Agent for the Credit Facility, an annual administration fee of $30,000 for each year the Credit Facility shall remain in effect (the “Administrative Agent Fees”). The first payment of such Administrative Agent Fee shall be earned by, and payable to the Administrative Agent, quarterly in advance on the Closing Date for the first quarter to occur after the Closing Date and, thereafter, quarterly in advance on the first day of every third month after the Closing Date for so long as the Credit Facility is in effect. Such Administrative Agent Fee will be in addition to reimbursement of the Administrative Agent’s out-of-pocket expenses in accordance with Section 9.05.

(c) The Company agrees to pay (i) to each Participant, through the Administrative Agent, on the last Business Day of March, June, September and December of each year and on the date on which the Commitment of such Participant shall be terminated as provided herein, a fee (an “L/C Participation Fee”) calculated on such Participant’s Pro Rata Percentage of the daily aggregate L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements) during the preceding quarter (or shorter period commencing with the date hereof or ending with the Maturity Date or the date on which all Letters of Credit have been canceled or have expired and the Commitments of all Participants shall have been terminated) at a rate equal to 3.0% per annum, and (ii) to the Issuing Bank with respect to each Letter of Credit (A) on the last Business Day of March, June, September and December of each year, on the Maturity Date and on the date on which all Letters of Credit have been canceled or have expired and the Commitments shall have been terminated, a fronting fee, which shall accrue at a rate equal to 0.125% per annum on the aggregate face amount of outstanding Letters of Credit issued by such Issuing Bank and (B) the standard issuance and drawing fees in amounts

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and at times specified from time to time by the Issuing Bank pursuant to arrangements made between the Issuing Bank and the Company (the “Issuing Bank Fees”). All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(d) The Company agrees to pay an upfront fee (the “Upfront Fee”) for the account of each Participant in an amount equal to 1.0% of such Participant’s Commitment on the Closing Date. Such Upfront Fee will be in all respects fully earned, due and payable on the Closing Date and non-refundable and non-creditable thereafter.

(e) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Participants, except that the Issuing Bank Fees shall be paid directly to the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.03. Default Interest. If the Company shall default in the payment of any amount due hereunder, by acceleration or otherwise, or under any other Credit Document, then, until such defaulted amount shall have been paid in full, to the extent permitted by law, such defaulted amount shall bear interest (after as well as before judgment), payable on demand, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) equal to the Alternate Base Rate plus 5.00% per annum.

SECTION 2.04. Termination and Reduction of Commitments. (a) The Commitments shall automatically terminate on the Maturity Date. Notwithstanding the foregoing, the Commitments shall automatically terminate at 5:00 p.m., New York City time, on May 10, 2011, if the conditions set forth in Section 4.02 shall not have been satisfied or waived by such time.

(b) Upon at least three Business Days’ prior irrevocable written or fax notice to the Administrative Agent, the Company may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Commitments; provided, however, that (i) each partial reduction of the Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000 and (ii) the Commitments shall not be reduced to an amount that is less than the L/C Exposure at the time; provided further, that any notice of termination of the Commitments in full given by the Company may state that such termination notice is conditioned upon the effectiveness of other credit facilities or capital raising, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(c) Each reduction in the Commitments hereunder shall be made ratably among the Participants in accordance with their respective applicable Commitments. The Company shall pay to the Administrative Agent for the account of the applicable

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Participants, on the date of each termination or reduction, the Commitment Fees on the amount of the Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction.

SECTION 2.05. Reserve Requirements; Change in Circumstances.

(a) Notwithstanding any other provision of this Agreement, if any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of or credit extended or participated in by any Participant or the Issuing Bank, (ii) impose on such Participant or the Issuing Bank any other condition affecting this Agreement or any Letter of Credit or participation therein or (iii) subject any Recipient to any Taxes on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto (other than (A) Indemnified Taxes, (B) Excluded Taxes and (B) Other Connection Taxes on gross or net income, profits or revenue (including value-added or similar Taxes)), and the result of any of the foregoing shall be to increase the cost to such Participant or the Issuing Bank of issuing or maintaining any Letter of Credit or purchasing or maintaining a participation therein or to reduce the amount of any sum received or receivable by such Participant or the Issuing Bank hereunder (whether of principal, interest or otherwise), the Company will pay to such Participant or the Issuing Bank, as the case may be, upon demand such additional amount or amounts as will compensate such Participant or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Participant or the Issuing Bank shall have determined that any Change in Law affecting such Participant or Issuing Bank or any lending office of such Participant or such Participant’s or Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Participant’s or the Issuing Bank’s capital or on the capital of such Participant’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement or participations in Letters of Credit purchased by such Participant pursuant hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a level below that which such Participant or the Issuing Bank or such Participant’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Participant’s or the Issuing Bank’s policies and the policies of such Participant’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time, upon delivery by such Participant or Issuing Bank of a certificate as set forth in Section 2.05(c), the Company shall pay to such Participant or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Participant or the Issuing Bank or such Participant’s or the Issuing Bank’s holding company for any such reduction suffered.

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(c) A certificate of a Participant or the Issuing Bank setting forth the amount or amounts necessary to compensate such Participant or the Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) above shall be delivered to the Company and shall be conclusive absent manifest error. The Company shall pay such Participant or the Issuing Bank the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same.

(d) Failure or delay on the part of any Participant or the Issuing Bank to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Participant’s or the Issuing Bank’s right to demand such compensation; provided that the Company shall not be under any obligation to compensate any Participant or the Issuing Bank under paragraph (a) or (b) above with respect to increased costs or reductions with respect to any period prior to the date that is nine months prior to such request (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine month period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 2.06. Pro Rata Treatment. Each payment of the Commitment Fees and each reduction of the Commitments shall be allocated pro rata among the Participants in accordance with their respective applicable Commitments, which amounts may, at the Administrative Agent’s discretion, be rounded to the next higher or lower whole dollar amount.

SECTION 2.07. Sharing of Setoffs. Each Participant agrees that if it shall, through the exercise of a right setoff or counterclaim or otherwise, obtain payment in respect of any principal or interest in respect of any L/C Disbursement resulting in such Participant receiving payment of a proportion of the aggregate amount of its participations in L/C Disbursements greater than its pro rata share thereof as provided herein, then the Participant receiving such greater proportion shall (a) notify the Administrative Agent of such fact and (b) purchase (for cash at face value) participations in the L/C Exposure of such other Participant, so that the aggregate unpaid principal amount of the L/C Exposure and participations in L/C Exposure held by each Participant shall be in the same proportion to the aggregate unpaid principal amount of L/C Exposure then outstanding as the principal amount of its L/C Exposure prior to such exercise of setoff or counterclaim or other event was to the principal amount of L/C Exposure outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided, however, that (A) if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.07 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest and (B) the provisions of this paragraph shall not be construed to apply to (x) any payment made by the Company pursuant to and in accordance with the

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express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Participant), or (y) any payment obtained by a Participant as consideration for the assignment of or sale of a participation in any of its L/C Disbursements to any assignee or participant, other than to the Company or any Subsidiary thereof (as to which the provisions of this paragraph shall apply). The Company and Shea Corp. expressly consent to the foregoing arrangements and agree that any Participant holding a participation in an L/C Disbursement deemed to have been so purchased may exercise any and all rights of setoff or counterclaim or otherwise with respect to any and all moneys owing by the Company and Shea Corp. to such Participant by reason thereof as fully as if such Participant had made a loan directly to the Company in the amount of such participation.

SECTION 2.08. Payments. (a) The Company shall make each payment (including principal of or interest on any L/C Disbursement or any Fees or other amounts) hereunder and under any other Credit Document not later than 1:00 p.m., New York City time, on the date when due in immediately available dollars, without setoff, defense or counterclaim. Each such payment (other than Issuing Bank Fees, which shall be paid directly to the Issuing Bank) shall be made to the Administrative Agent at its offices at Eleven Madison Avenue, New York, NY 10010. The Administrative Agent shall promptly distribute to each Participant (or the Issuing Bank, if applicable) any payments received by the Administrative Agent on behalf of such Participant (or Issuing Bank, if applicable).

(b) Except as otherwise expressly provided herein, whenever any payment (including any Fees or other amounts) hereunder or under any other Credit Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

(c) Unless the Administrative Agent shall have received notice from the Company prior to the date on which any payment is due to the Administrative Agent for the account of the Participants or the Issuing Bank hereunder that the Company will not make such payment, the Administrative Agent may assume that the Company has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Participants or the Issuing Bank, as the case may be, the amount due. In such event, if the Company does not in fact make such payment, then each of the Participants or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Participant, and to pay interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

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SECTION 2.09. Taxes. (a) Any and all payments by any Credit Party under any Credit Document shall be made without withholding for any Taxes, unless such withholding is required by any law. If any Withholding Agent determines, in its sole discretion exercised in good faith, that it is so required to withhold Taxes, then such Withholding Agent may so withhold and shall timely pay the full amount of withheld Taxes to the relevant Governmental Authority in accordance with applicable law. If such Taxes are Indemnified Taxes, then the sum payable by the relevant Credit Party shall be increased as necessary so that after making all required withholdings (including withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding been made.

(b) In addition, the Company shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) The Company shall indemnify each Recipient within 10 days after written demand therefor, for the full amount of any Indemnified Taxes that are paid or payable by such Recipient on or with respect to any payment by or on account of any obligation of the Company or any other Credit Party under any Credit Document (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. The indemnity under this Section 2.09(e) shall be paid within 10 days after the Recipient delivers to the Company a certificate stating the amount of any Indemnified Taxes so paid or payable by such Recipient and describing the basis for the indemnifiable claim. Such certificate shall be conclusive absent manifest error.

(d) Each Participant shall severally indemnify the Administrative Agent for any Taxes (but, in the case of any Indemnified Taxes, only to the extent that the Company or any Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Company or any such Credit Parties to do so) attributable to such Participant that are paid or payable by the Administrative Agent in connection with any Credit Document and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. The indemnity under this Section 2.09(d) shall be paid within 10 days after the Administrative Agent delivers to the applicable Participant a certificate stating the amount of Taxes so paid or payable by the Administrative Agent. Such certificate shall be conclusive of the amount so paid or payable absent manifest error.

(e) As soon as practicable after any payment of Indemnified Taxes by the Company or any other Credit Party to a Governmental Authority, the Company shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting

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such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(f) (i) Any Participant that is entitled to an exemption from, or reduction of, U.S. Federal withholding Tax (including U.S. backup withholding Tax) with respect to any payments under any Credit Document shall deliver to the Company and the Administrative Agent, at the time or times reasonably requested by the Company or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Company or the Administrative Agent as will permit such payments to be made without, or at a reduced rate of, withholding. In addition, any Participant, if requested by the Company or the Administrative Agent, shall deliver such other documentation prescribed by law or reasonably requested by the Company or the Administrative Agent as will enable the Company or the Administrative Agent to determine whether or not such Lender is subject to any U.S. Federal withholding (including U.S. backup withholding) or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.09(f)(ii)(A) through (E) below) shall not be required if in the Participant’s judgment such completion, execution or submission would subject such Participant to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Participant. Upon the reasonable request of the Company or the Administrative Agent, any Participant shall update any form or certification previously delivered pursuant to this Section 2.09(f). If any form or certification previously delivered pursuant to this Section 2.09(f) expires or becomes obsolete or inaccurate in any respect with respect to a Participant, such Participant shall promptly (and in any event within 10 days after such expiration, obsolescence or inaccuracy) notify the Company and the Administrative Agent in writing of such expiration, obsolescence or inaccuracy and update the form or certification if it is legally eligible to do so.

(ii) Without limiting the generality of the foregoing, in the event that the Company is a U.S. Person, any Participant with respect to the Company shall, if it is legally eligible to do so, deliver to the Company and the Administrative Agent (in such number of copies reasonably requested by the Company and the Administrative Agent) on or prior to the date on which such Participant becomes a party hereto, duly completed and executed copies of whichever of the following is applicable:

(A) in the case of a Participant that is a U.S. Person, IRS Form W-9 certifying that such Participant is exempt from U.S. Federal backup withholding Tax;

(B) in the case of a Foreign Participant claiming the benefits of an income tax treaty to which the United States is a party (1) with respect to payments of interest under any Credit Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (2) with respect to any other applicable

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payments under any Credit Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(C) in the case of a Foreign Participant for whom payments under any Credit Document constitute income that is effectively connected with such Participant’s conduct of a trade or business in the United States, IRS Form W-8ECI;

(D) in the case of a Foreign Participant claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code both (1) IRS Form W-8BEN and (2) a certificate substantially in the form of Exhibit C (a “U.S. Tax Certificate”) to the effect that such Participant is not (a) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of the Company within the meaning of Section 881(c)(3)(B) of the Code, (c) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (d) conducting a trade or business in the United States with which the relevant interest payments are effectively connected;

(E) in the case of a Foreign Participant that is not the beneficial owner of payments made under any Credit Document (including a partnership or a person purchasing a participation) (1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms prescribed in clauses (A), (B), (C), (D) and (F) of this paragraph (f)(ii) that would be required of each such beneficial owner or partner of such partnership if such beneficial owner or partner were a Lender; provided, however, that if the Participant is a partnership and one or more of its partners are claiming the exemption for portfolio interest under Section 881(c) of the Code, such Participant may provide a U.S. Tax Certificate on behalf of such partners; or

(F) any other form prescribed by applicable law as a basis for claiming exemption from, or a reduction of, U.S. Federal withholding Tax together with such supplementary documentation as may be reasonably requested by the Company or the Administrative Agent in order to enable the Company or the Administrative Agent to determine the amount of Tax (if any) required by law to be withheld.

(iii) If a payment made to a Participant under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Participant were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Participant shall deliver to the Withholding Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Withholding Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Withholding Agent as may be necessary for the Withholding Agent to comply with its obligations under FATCA, to determine that such Participant has or has not complied with such

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Participant’s obligations under FATCA and, as necessary, to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.09(f)(iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(g) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.09 (including additional amounts paid pursuant to this Section 2.09), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including any Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid to such indemnified party pursuant to the previous sentence (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.09(g), in no event will any indemnified party be required to pay any amount to any indemnifying party pursuant to this Section 2.09(g) if such payment would place such indemnified party in a less favorable position (on a net after-Tax basis) than such indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This Section 2.09(g) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to the indemnifying party or any other person.

(h) Each party’s obligations under this Section 2.09 shall survive any assignment of rights by, or the replacement of, a Participant, the termination of the Commitments and the repayment, satisfaction or discharge of all other obligations under any Credit Document.

(i) For purposes of Section 2.09(d) and (f), the term “Participant” includes any Issuing Bank.

SECTION 2.10. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate. (a)In the event (i) any Participant or the Issuing Bank delivers a certificate requesting compensation pursuant to Section 2.05, (ii) the Company is required to pay any additional amount to any Participant or the Issuing Bank or any Governmental Authority on account of any Participant or the Issuing Bank pursuant to Section 2.09 or (iii) any Participant refuses to consent to any amendment, waiver or other modification of any Credit Document requested by the Company that requires the consent of a greater percentage of the Participants than the Required Participants and such amendment, waiver or other modification is consented to by the Required Participants and, in the case of clauses (i) and (ii) above, such Participant has declined or is unable to designate a different lending office in accordance with Section 2.10(b), the Company may, at its

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sole expense and effort (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.04, including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Participant or the Issuing Bank, as the case may be, and the Administrative Agent, require such Participant or the Issuing Bank to transfer and assign, without recourse, all its interests, rights and obligations under this Agreement (or, in the case of clause (iii) above, all its interests, rights and obligation with respect to the Commitments that are the subject of the related consent, amendment, waiver or other modification) to an Eligible Assignee that shall assume such assigned obligations and, with respect to clause (iii) above, shall consent to such requested amendment, waiver or other modification of any Credit Document (which Eligible Assignee may be another Participant, if a Participant accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Company shall have received the prior written consent of the Administrative Agent and the Issuing Bank, which consents shall not unreasonably be withheld, conditioned or delayed, and (z) the Company or such Eligible Assignee shall have paid to the affected Participant or the Issuing Bank in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the L/C Disbursements of such Participant or the Issuing Bank, respectively, plus all Fees and other amounts accrued for the account of such Participant or the Issuing Bank hereunder with respect thereto (including any amounts under Sections 2.05 and 2.09); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Participant’s or the Issuing Bank’s claim for compensation under Section 2.05 or the amounts paid pursuant to Section 2.09, as the case may be, cease to cause such Participant or the Issuing Bank to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to result in amounts being payable under Section 2.09, as the case may be (including as a result of any action taken by such Participant or the Issuing Bank pursuant to paragraph (b) below), or if such Participant or the Issuing Bank shall waive its right to claim further compensation under Section 2.05 in respect of such circumstances or event or shall waive its right to further payments under Section 2.09 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Participant or the Issuing Bank shall not thereafter be required to make any such transfer and assignment hereunder.

(b) If (i) any Participant or the Issuing Bank shall request compensation under Section 2.05, or (ii) the Company is required to pay any additional amount to any Participant or the Issuing Bank or any Governmental Authority on account of any Participant or the Issuing Bank, pursuant to Section 2.09, then such Participant or the Issuing Bank shall use reasonable efforts (which shall not require such Participant or the Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or suffer any

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disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by the Company or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.05 or would reduce amounts payable pursuant to Section 2.09, as the case may be, in the future. The Company hereby agrees to pay all reasonable costs and expenses incurred by any Participant or the Issuing Bank in connection with any such filing or assignment, delegation and transfer.

SECTION 2.11. Extension of Commitments. The Company may, at its option, elect to extend the initial Maturity Date to a date that is not more than one year after the initial Maturity Date by delivering written notice of such election to the Administrative Agent and the Issuing Bank not later than the date that is 120 days prior to the initial Maturity Date, specifying the effective date of such extension (which shall be a Business Day prior to the initial Maturity Date) and the Maturity Date shall be so extended on the effective date of such written notice; provided that (i) on and as of such effective date, the conditions specified in Section 4.01(b) and (c) are satisfied as though a Letter of Credit was being issued on such date (and such written notice shall include a representation to such effect) and (ii) on or prior to such effective date, the Company shall have paid to the Administrative Agent, for the account of each Participant, a fee equal to 0.25% of the Commitment of such Participant as of such effective date.

SECTION 2.12. Defaulting Participants. (a) Notwithstanding anything to the contrary contained in this Agreement, if any Participant becomes a Defaulting Participant, then, until such time as such Participant is no longer a Defaulting Participant, to the extent permitted by applicable law:

(i) Such Defaulting Participant’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Participants.

(ii) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Participant (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from a Defaulting Participant pursuant to Section 9.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Participant to the Administrative Agent hereunder; second, to the payment of any amounts owing by such Defaulting Participant to the Issuing Bank hereunder; third, to Cash Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting Participant in accordance with Section 2.13; fourth, if so determined by the Administrative Agent and the Company, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Participant’s potential future funding obligations with respect to L/C

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Disbursements under this Agreement and (y) Cash Collateralize the Issuing Bank’s future Fronting Exposure with respect to such Defaulting Participant with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.13; fifth, to the payment of any amounts owing to the Participants or the Issuing Bank as a result of any judgment of a court of competent jurisdiction obtained by any Participant or the Issuing Bank against such Defaulting Participant as a result of such Defaulting Participant’s breach of its obligations under this Agreement; sixth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Company as a result of any judgment of a court of competent jurisdiction obtained by the Company against such Defaulting Participant as a result of such Defaulting Participant’s breach of its obligations under this Agreement; and seventh, to such Defaulting Participant or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any L/C Disbursements (or any participation therein) in respect of which such Defaulting Participant has not fully funded its appropriate share, and (y) such Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the L/C Disbursements owed to all Non-Defaulting Participants on a pro rata basis prior to being applied to the payment of any L/C Disbursements (or participations therein) owed to, such Defaulting Participant until such time as unfunded participations in L/C Obligations are held by the Participants pro rata in accordance with the Commitments under the Facility without giving effect to Section 2.12(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Participant that are applied (or held) to pay amounts owed by a Defaulting Participant or to post Cash Collateral pursuant to this Section 2.12(a)(ii) shall be deemed paid to and redirected by such Defaulting Participant, and each Participant irrevocably consents hereto.

(iii) (A) No Defaulting Participant shall be entitled to receive any Commitment Fee for any period during which that Participant is a Defaulting Participant (and the Company shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Participant), (B) each Defaulting Participant shall be entitled to receive L/C Participation Fees for any period during which that Participant is a Defaulting Participant only to the extent allocable to its Pro Rata Percentage of the L/C Exposure for which it has provided Cash Collateral pursuant to Section 2.13 and (C) with respect to any other fees not required to be paid to any Defaulting Participant pursuant to clause (A) or (B) above, the Company shall (x) pay to each Non-Defaulting Participant that portion of any such fee otherwise payable to such Defaulting Participant with respect to such Defaulting Participant’s participation in L/C Exposure that has been reallocated to such Non-Defaulting Participant pursuant to clause (iv) below, (y) pay to the Issuing Bank, the amount of any such fee otherwise payable to such Defaulting Participant to the extent allocable to the Issuing Bank’s Fronting Exposure to such Defaulting Participant, and (z) not be required to pay the remaining amount of any such fee.

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(iv) All or any part of such Defaulting Participant’s participation in L/C Exposure shall be reallocated among the Non-Defaulting Participants in accordance with their respective Pro Rata Percentages (calculated without regard to such Defaulting Participant’s Commitment) but only to the extent that (x) the conditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless the Company shall have otherwise notified the Administrative Agent at such time, the Company shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate L/C Exposure of any Non-Defaulting Participant to exceed such Non-Defaulting Participant’s Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Participant arising from that Participant having become a Defaulting Participant, including any claim of a Non-Defaulting Participant as a result of such Non-Defaulting Participant’s increased exposure following such reallocation.

(v) If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Company shall, without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in Section 2.13.

(b) If the Company, the Administrative Agent and the Issuing Bank agree in writing that a Participant is no longer a Defaulting Participant, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Participant will, to the extent applicable, purchase at par that portion of participations of the other Participants or take such other actions as the Administrative Agent may determine to be necessary to cause the funded and unfunded participations in Letters of Credit to be held pro rata by the Participants in accordance with the Commitments hereunder (without giving effect to Section 2.12(a)(iv)), whereupon such Participant will cease to be a Defaulting Participant; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Company while that Participant was a Defaulting Participant; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Participant to Participant will constitute a waiver or release of any claim of any party hereunder arising from that Participant’s having been a Defaulting Participant.

(c) So long as any Participant is a Defaulting Participant, the Issuing Bank shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

SECTION 2.13. Cash Collateral. (a)At any time that there shall exist a Defaulting Participant, within one Business Day following the written request of the Administrative Agent or the Issuing Bank (with a copy to the Administrative Agent) the Company shall Cash Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting

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Participant (determined after giving effect to Section 2.12(a)(iv) and any Cash Collateral provided by such Defaulting Participant) in an amount not less than the Minimum Collateral Amount.

(b) The Company, and to the extent provided by any Defaulting Participant, such Defaulting Participant, hereby grants to the Administrative Agent, for the benefit of the Issuing Bank, and agrees to maintain, a security interest in all such Cash Collateral as security for the Defaulting Participants’ obligation to fund participations in respect of L/C Obligations, to be applied pursuant to paragraph (c) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any person other than the Administrative Agent and the Issuing Bank as herein provided (subject to the terms of the Intercreditor Agreement), or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Company will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Participant).

(c) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.13 or Section 2.12 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Participant’s obligation to fund participations in respect of L/C Exposure (including, as to Cash Collateral provided by a Defaulting Participant, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(d) Cash Collateral (or the appropriate portion thereof) provided to reduce the Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.13 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Participant status of the applicable Participant), or (ii) the determination by the Administrative Agent and the Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section 2.12 the person providing Cash Collateral and the Issuing Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Company, such Cash Collateral shall remain subject to the security interest granted pursuant to the Credit Documents.

ARTICLE III

Representations and Warranties

Each of Shea Corp. and the Company represents and warrants to the Administrative Agent, the Issuing Bank and each of the Participants that:

SECTION 3.01. Organization; Powers. The Company, Shea Corp. and each of the Restricted Subsidiaries (a) is duly organized, validly existing and in good standing

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under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the power and authority to execute, deliver and perform its obligations under each of the Credit Documents and each other agreement or instrument contemplated thereby to which it is or will be a party.

SECTION 3.02. Authorization. The Transactions (a) have been duly authorized by all requisite corporate, limited partnership or limited liability company and, if required, stockholder or equityholder action and (b) will not (i) violate (A) any provision of law, statute, rule or regulation which violations could reasonably be expected to result in a Material Adverse Effect, or of the certificate or articles of incorporation or other constitutive documents or by-laws of the Company, Shea Corp. or any Restricted Subsidiary, (B) any order of any Governmental Authority applicable to the Company, Shea Corp. or any Restricted Subsidiary or (C) any provision of any indenture or other material agreement or instrument to which the Company, Shea Corp. or any Restricted Subsidiary is a party or by which any of them or any of their property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture or other material agreement or instrument or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Company, Shea Corp. or any Restricted Subsidiary (other than any Lien created hereunder or under the Security Documents).

SECTION 3.03. Enforceability. This Agreement has been duly executed and delivered by Shea Corp. and the Company and constitutes, and each other Credit Document when executed and delivered by each Credit Party party thereto will constitute, a legal, valid and binding obligation of such Credit Party enforceable against such Credit Party in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

SECTION 3.04. Governmental Approvals. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, except for (a) the filing of Uniform Commercial Code financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) recordation of the Mortgages, (c) such as have been made or obtained and are in full force and effect, or that will be made contemporaneously with the Closing Date and (d) such actions, consents, approvals, registrations and filings with the United States Securities and Exchange Commission and other Governmental Authorities as may be necessary or appropriate in connection with the obligations of the Credit Parties under the Note Documents or Credit

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Documents that (i) are not required in connection with the consummation of the Transactions that are to be consummated on the Closing Date and (ii) in the case of the Credit Documents, are reasonably expected to be made or obtained without burdensome conditions or expense within the time required.

SECTION 3.05. Financial Statements. (a)The Company has heretofore furnished to the Participants its consolidated balance sheet and related statements of income, changes in equity and cash flows as of and for the fiscal year ended December 31, 2010, audited by and accompanied by the opinion of Ernst & Young, independent public accountants. Such financial statements fairly present in all material respects the financial condition and results of operations and cash flows of the Company and its consolidated Subsidiaries as of such date and for such period. Such balance sheet and the notes thereto disclose all material liabilities, direct or contingent, of the Company and its consolidated Subsidiaries as of the date thereof, to the extent required by GAAP. Such financial statements were prepared in accordance with GAAP applied on a consistent basis.

(b) The Company has heretofore delivered to the Participants its unaudited pro forma consolidated balance sheet and related pro forma statements of income, stockholder’s equity and cash flows as of December 31, 2010, prepared giving effect to the Transactions as if they had occurred, with respect to such balance sheet, on such date and, with respect to such other financial statements, on the first day of the 12-month period ending on such date. Such pro forma financial statements have been prepared in good faith by the Company, based on the assumptions used to prepare the pro forma financial information contained in the offering documents circulated in connection with the Notes (which assumptions are believed by the Company on the date hereof and on the Closing Date to be reasonable), are based on the best information available to the Company as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Transactions and present fairly on a pro forma basis the estimated consolidated financial position of the Company and its consolidated Subsidiaries as of such date and for such period, assuming that the Transactions had actually occurred at such date or at the beginning of such period, as the case may be.

SECTION 3.06. No Material Adverse Change. No event, change or condition has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect, since December 31, 2010.

SECTION 3.07. Title to Properties; Possession Under Leases. (a)Each of the Company, Shea Corp. and the Subsidiary Guarantors has good and marketable title to, or valid leasehold interests in, all its material properties and assets (including all Mortgaged Property), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes. All such material properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.05.

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(b) Each of the Company, Shea Corp. and the Subsidiary Guarantors has complied with all obligations under all material leases to which it is a party and all such leases are valid and in full force and effect.

SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing Date a list of all Subsidiaries of the Company and whether such Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary. The shares of capital stock or other ownership interests so indicated on Schedule 3.08 are owned by the Company, directly or indirectly, free and clear of all Liens (other than Liens created under the Security Documents or otherwise permitted by Section 6.05).

SECTION 3.09. Litigation; Compliance with Laws. (a)There are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending (other than the CCM Proceeding) or, to the knowledge of Shea Corp. or the Company, threatened against or affecting Shea Corp. or the Company or any Subsidiary or any business, property or rights of any such person (i) that involve any Credit Document or the Transactions or (ii) which could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

(b) None of the Company, Shea Corp. or any of the Subsidiaries or any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10. Agreements. (a)None of the Company, Shea Corp. or any of the Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(b) None of the Company, Shea Corp. or any of the Subsidiaries is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11. Federal Reserve Regulations. (a)None of the Company, Shea Corp. or any of the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

(b) No part of the proceeds of any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that

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entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation T, U or X.

SECTION 3.12. Investment Company Act. None of the Company, Shea Corp. or any Subsidiary is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.13. Use of Proceeds. The Company will request the issuance of Letters of Credit only for the purposes specified in the introductory statement to this Agreement.

SECTION 3.14. Tax Returns. Each of the Company, Shea Corp. and the Restricted Subsidiaries has filed or caused to be filed all Federal and other material tax returns or materials required to have been filed by it in any jurisdiction and has paid or caused to be paid all material taxes due and payable by it, except taxes that are being contested in good faith by appropriate proceedings and for which the Company, Shea Corp. or such Subsidiary, as applicable, shall have set aside on its books adequate reserves.

SECTION 3.15. No Material Misstatements. None of the information, reports, financial statements, exhibits or schedules furnished by or on behalf of Shea Corp. or the Company to the Administrative Agent or any Participant in connection with the negotiation of any Credit Document or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, each of Shea Corp. and the Company represents only that it acted in good faith on the basis of information and assumptions that the Company believed to be reasonable as of the date such material was prepared (based upon accounting principles consistent with the historical audited financial statements of the Company) and utilized due care in the preparation of such information, report, financial statement, exhibit or schedule (it being understood that the projections are subject to significant uncertainties and contingencies, many of which are beyond the Company’s control, and that no assurance can be given that the projections will be realized).

SECTION 3.16. Employee Benefit Plans. Each of the Company and its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in material liability of the Company or any of its ERISA Affiliates. The present value of all benefit liabilities under each Plan (based on the assumptions used for purposes of Accounting Standards Codification Topic 715) did not, as of the last annual valuation date applicable thereto, exceed by more than $1,000,000 the fair market value of the assets of such Plan, and the present value of all benefit liabilities of all underfunded Plans (based on the

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assumptions used for purposes of Accounting Standards Codification Topic 715) did not, as of the last annual valuation dates applicable thereto, exceed by more than $1,000,000 the fair market value of the assets of all such underfunded Plans.

SECTION 3.17. Environmental Matters. (a)Except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of the Company, Shea Corp. or any of the Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

(b) Since the date of this Agreement, there has been no change in the status of the matters disclosed on Schedule 3.17 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct description of all insurance maintained by the Company or by the Company for its Restricted Subsidiaries as of the date hereof and the Closing Date. As of each such date, such insurance is in full force and effect and all premiums have been duly paid. The Company and its Restricted Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice.

SECTION 3.19. Security Documents. (a)The Security Agreement, upon execution and delivery thereof by the parties thereto, will create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and the proceeds thereof and (i) when the Pledged Collateral (as defined in the Security Agreement) is delivered to the Collateral Agent, the Lien created under the Security Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the Credit Parties in such Pledged Collateral, in each case prior and superior in right to any other person, and (ii) (A) on the Closing Date, when financing statements in appropriate form are filed in the offices specified on Schedule 3.19(a) and (B) at any time after the Closing Date, when financing statements or amendments thereto are filed pursuant to the Security Documents, the Lien created under the Security Agreement will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Credit Parties in such Collateral (other than Intellectual Property, as defined in the Security Agreement) to the extent the Liens created by the Security Agreement can be perfected by the filing of a financing statement under the Uniform Commercial Code, in each case prior and superior in right to any other Lien, other than with respect to Liens expressly permitted by Section 6.05.

(b) Upon the recordation of the Security Agreement (or a short-form security agreement in form and substance reasonably satisfactory to the Company and the Collateral Agent) with the United States Patent and Trademark Office and the United States Copyright Office, together with the financing statements in appropriate form filed

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in the offices specified on Schedule 3.19(a), (A) on the Closing Date, when such financing statements are filed and (B) at any time after the Closing Date, when financing statements or amendments thereto are filed pursuant to the Security Documents, the Lien created under the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Credit Parties in the Intellectual Property (as defined in the Security Agreement) in which a security interest may be perfected by filing in the United States and its territories and possessions, in each case prior and superior in right to any other Lien (other than the Liens expressly permitted by Section 6.05) (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks and patents, trademark and patent applications and registered copyrights acquired by the Credit Parties after the date hereof).

(c) The Mortgages (upon recordation thereof) are effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Credit Parties’ right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 3.19(c), the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Credit Parties in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other person, other than with respect to the rights of persons pursuant to Liens expressly permitted by Section 6.05.

(d) Each Control Agreement, upon execution and delivery thereof by the parties thereto and the taking of the other actions provided for therein, will constitute a fully perfected security interest in all right, title and interest of the Credit Parties in the Collateral subject thereto, prior and superior to the rights of any other Person, except for rights secured by Liens permitted under Section 6.05.

SECTION 3.20. Location of Real Property and Leased Premises. (a) Schedule 3.20(a) lists completely and correctly as of the Closing Date all real property owned by the Company and the Subsidiary Guarantors which shall comprise part of the Collateral and the addresses thereof, other than any Properties that are not material to the operations of the Company and the Subsidiary Guarantors, including, without limitation, reserved mineral rights, reserved easements, deed restrictions, strips, gores and open space and other similar immaterial real property interests. As of the Closing Date, the Company and the Subsidiary Guarantors own in fee all the real property set forth on Schedule 3.20(a).

(b) Schedule 3.20(b) lists completely and correctly as of the Closing Date all real property leased by the Company and the Subsidiary Guarantors and the addresses thereof other than leases of de minimis real property that are not material, individually or in the aggregate, to the operations of the Company and the Restricted Subsidiaries. As of the Closing Date, the Company and the Subsidiary Guarantors have valid leases in all the real property set forth on Schedule 3.20(b).

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SECTION 3.21. Labor Matters. As of the date hereof and the Closing Date, there are no strikes, lockouts or slowdowns against the Company, Shea Corp. or any Restricted Subsidiary pending or, to the knowledge of Shea Corp. or the Company, threatened. The hours worked by and payments made to employees of the Company, Shea Corp. and the Restricted Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from the Company, Shea Corp. or any Restricted Subsidiary, or for which any claim may be made against the Company, Shea Corp. or any Restricted Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Company, Shea Corp. or such Restricted Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Company, Shea Corp. or any Restricted Subsidiary is bound.

SECTION 3.22. Solvency. Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the issuance of each Letter of Credit, (a) the fair value of the consolidated assets of the Credit Parties, at a fair valuation, will exceed their consolidated debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the consolidated properties of the Credit Parties will be greater than the amount that will be required to pay the probable liability of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Credit Parties will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Credit Parties will not have unreasonably small capital with which to conduct the business in which they are engaged as such business is now conducted and is proposed to be conducted following the Closing Date.

SECTION 3.23. Pari-Passu Indebtedness. The Obligations constitute “Pari-Passu Lien Obligations” under and as defined in the Note Documents.

SECTION 3.24. Sanctioned Persons. None of the Company, Shea Corp. or any Subsidiary nor, to the knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company, Shea Corp. or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the Letters of Credit or otherwise make available such proceeds to any person, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

ARTICLE IV

Conditions of Lending

The obligations of the Issuing Bank to issue Letters of Credit hereunder are subject to the satisfaction of the following conditions:

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SECTION 4.01. All Credit Events. On the date of each issuance, amendment, extension or renewal of a Letter of Credit (each such event being called a “Credit Event”):

(a) The Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by Section 2.01(b).

(b) The representations and warranties set forth in Article III and in each other Credit Document shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

(c) At the time of and immediately after such Credit Event, no Default or Event of Default shall have occurred and be continuing.

Each Credit Event shall be deemed to constitute a representation and warranty by the Company and Shea Corp. on the date of such Credit Event as to the matters specified in paragraphs (b) and (c) of this Section 4.01.

SECTION 4.02. First Credit Event. On the Closing Date:

(a) The Administrative Agent shall have received, on behalf of itself, the Participants and the Issuing Bank, a favorable written opinion of (i) Gibson, Dunn & Crutcher, counsel for Shea Corp. and the Company in form and substance reasonably satisfactory to the Administrative Agent, and (ii) each local counsel listed on Schedule 4.02(a), in form and substance reasonably satisfactory to the Administrative Agent, in each case (A) dated the Closing Date, (B) addressed to the Issuing Bank, the Administrative Agent and the Participants, and (C) covering such matters relating to the Credit Documents and the Transactions as the Administrative Agent shall reasonably request, and Shea Corp. and the Company hereby request such counsel to deliver such opinions.

(b) All legal matters incident to this Agreement and extensions of credit hereunder and the other Credit Documents shall be satisfactory to the Participants, to the Issuing Bank and to the Administrative Agent.

(c) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each Credit Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Credit Party as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant Secretary of each Credit Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Credit Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Credit Party authorizing the execution, delivery and performance of the Credit Documents to which such person is a party and that such

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resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Credit Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Credit Document or any other document delivered in connection herewith on behalf of such Credit Party; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above; and (iv) such other documents as the Participants, the Issuing Bank or the Administrative Agent may reasonably request.

(d) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Financial Officer of the Company, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01.

(e) The Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder or under any other Credit Document.

(f) The Security Agreement shall have been duly executed by each Credit Party that is to be a party thereto and shall be in full force and effect on the Closing Date. The Collateral Agent shall have received all documents and instruments (including UCC financing statements) necessary or appropriate to be filed or recorded in order to perfect the security interest under the Security Documents (except as expressly set forth with respect to the Mortgaged Property) and except in the case of any security interests in the Collateral (as defined in the Security Agreement) that can be perfected solely by possession.

(g) The Intercreditor Agreement shall have been duly executed by the Company, the Administrative Agent, the Collateral Agent and the other parties thereto and shall be in full force and effect on the Closing Date.

(h) The Collateral Agent shall have received a Perfection Certificate with respect to the Credit Parties dated the Closing Date and duly executed by a Responsible Officer of the Company, and shall have received the results of a search of the Uniform Commercial Code filings (or equivalent filings) made with respect to the Credit Parties in the states (or other jurisdictions) of formation of such persons, in which the chief executive office of each such person is located and in the other jurisdictions in which such persons maintains material Equipment (as defined in the Security Agreement) or other Collateral, in each case as indicated on such Perfection Certificate, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence satisfactory to the Collateral Agent that the Liens indicated in any such financing statement (or similar document) would be permitted under Section 6.05 or have been or will be contemporaneously released or terminated.

(i) [Reserved].

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(j) The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.04 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a customary lender’s loss payable endorsement and to name the Collateral Agent as additional insured, in form and substance satisfactory to the Administrative Agent.

(k) Shea Corp. and the Company shall have received gross cash proceeds of not less than $750,000,000 from the issuance of the Notes. The Administrative Agent shall have received copies of the Note Documents, certified by a Financial Officer as being complete and correct.

(l) The Company and the Subsidiary Guarantors shall have received at least $121,000,000 (at least $75,000,000 of which shall be in cash) on account of receivables due from certain of its affiliates.

(m) All principal, premium, if any, interest, fees and other amounts due or outstanding under the Existing Credit Agreement shall have been paid in full, the commitments thereunder terminated and all guarantees and security in support thereof discharged and released (or, in the case of existing mortgages, provisions satisfactory to the Administrative Agent shall have been made), and the Administrative Agent shall have received reasonably satisfactory evidence thereof. Immediately after giving effect to the Transactions and the other transactions contemplated hereby, the Company, Shea Corp. and the Subsidiaries shall have outstanding no Indebtedness or preferred stock other than (a) Indebtedness outstanding under this Agreement, (b) the Notes and (c) Indebtedness described in the offering documents relating to the Notes.

(n) The Participants shall have received, to the extent requested, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

ARTICLE V

Affirmative Covenants

Each of Shea Corp. and the Company covenants and agrees with each Participant that so long as this Agreement shall remain in effect and until the Commitments have been terminated, all Fees and all other expenses or amounts payable under any Credit Document shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Participants shall otherwise consent in writing, each of Shea Corp. and the Company will, and will cause each of the Restricted Subsidiaries to:

SECTION 5.01. Existence; Rights. Do or cause to be done all things necessary to preserve and keep in full force and effect their existence in accordance with their respective organizational documents, and the material rights, licenses and franchises of

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the Company and Shea Corp. and each Restricted Subsidiary; provided, however, that neither the Company nor Shea Corp. are required to preserve any such right, license or franchise, nor the existence of any Restricted Subsidiary, if the maintenance or preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole; and provided further, however, that this Section 5.01 not prohibit any transaction otherwise permitted by Section 6.04 or Section 6.08.

SECTION 5.02. Financial Statements, Reports, etc. In the case of the Company, furnish to the Administrative Agent, which shall furnish to each Participant:

(a) (i) the description of the business of the Company and all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) all current reports that would be required to be filed with the United States Securities and Exchange Commission on Form 8-K if the Company were required to file such reports.

(b) (i) concurrently with any delivery of financial statements under paragraph (a) above, a certificate of the accounting firm (with respect to annual financial statements) or Financial Officer (with respect to quarterly financial statements) opining on or certifying such statements (which certificate, when furnished by an accounting firm, may be limited to accounting matters and disclaim responsibility for legal interpretations), certifying that no Default or Event of Default has occurred or, if such Default or Event of Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto and (ii) concurrently with the delivery of annual financial statements and financial statements for the second fiscal quarter period under paragraph (a) above, a certificate executed by the chief legal officer of the Company (x) setting forth a list of all Property owned by the Company or any Subsidiary that, to such officer’s knowledge based upon reasonable inquiry, is located in a designated “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency) and (y) certifying that no Material Adverse Effect could reasonably be expected to arise from the classification of the location of such Properties as “flood hazard areas”.

(c) promptly after the request by any Participant, all documentation and other information that such Participant reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act;

(d) promptly after the request by the Administrative Agent or any Participant, copies of (i) any documents described in Section 101(k)(1) of ERISA that the Company or any of its ERISA Affiliates may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l)(1) of ERISA that the Company or any of its ERISA Affiliates may request with respect to any Multiemployer Plan; provided that if the Company or any of its ERISA Affiliates has not requested such documents or notices

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from the administrator or sponsor of the applicable Multiemployer Plan, the Company or the applicable ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof; and

(e) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the Company, Shea Corp. or any Subsidiary, or compliance with the terms of any Credit Document, as the Administrative Agent or any Participant may reasonably request.

SECTION 5.03. Properties. Do or cause to be done all things necessary to at all times maintain and preserve all property material to the conduct of its business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times.

SECTION 5.04. Insurance. (a)Keep its insurable properties adequately insured at all times by financially sound and reputable insurers (including co-insurance and self-insurance); maintain such other insurance, to such extent (including co-insurance and self-insurance) and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses operating in the same or similar locations, including public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; and maintain such other insurance as may be required by law.

(b) With respect to any Mortgaged Property, carry and maintain comprehensive general liability insurance including the “broad form CGL endorsement” and coverage on an occurrence basis against claims made for personal injury (including bodily injury, death and property damage) and umbrella liability insurance against any and all claims, naming the Collateral Agent as an additional insured, on forms satisfactory to the Administrative Agent.

SECTION 5.05. Further Assurances; Information Regarding Collateral. (a) Cause each wholly-owned Restricted Subsidiary (other than any wholly-owned Subsidiary that is prohibited from becoming a Guarantor as a result of any requirement of law, rule or regulation binding on such Subsidiary or as a result of an existing contractual limitation where a waiver is not reasonably able to be obtained) that incurs any Indebtedness to, and any other person that guarantees the Notes to, contemporaneously, (i) execute and deliver to the Administrative Agent a supplement in the form of Exhibit F pursuant to which such Restricted Subsidiary or person will guarantee payment of the Obligations on the same terms and conditions as those set forth herein and applicable to the other Guarantors in accordance with Section 10.08 and (ii) execute and deliver an amendment, supplement or other instrument in respect of the Security Documents necessary to cause such Restricted Subsidiary or person to become a grantor thereunder and take all action required thereunder to perfect the Liens created thereunder, as well as

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to execute and deliver to the Collateral Agent and Administrative Agent joinders to the Intercreditor Agreement, in each case at the time such person becomes a Restricted Subsidiary, guarantees the Notes, or Guarantees any such other Indebtedness, as applicable.

(b) On the Closing Date, the Company, Shea Corp. and each Guarantor shall grant Liens on all their Property (other than Excluded Property) and take all appropriate steps to cause such Liens to be perfected Liens (subject to Liens permitted pursuant to Section 6.05), including through recordation of Mortgages, entry into control agreements, filing of UCC-1 financing statements or otherwise, pursuant to, and to the extent required by, the Security Documents to be entered into on the Closing Date and this Agreement. In addition, the Company shall provide a Title Policy to the Collateral Agent with respect to each Mortgage granted pursuant to this Section 5.05 and the real property described in such Mortgage. For the avoidance of doubt, the requirements of this Section 5.05(b) are subject to Section 5.05(e) below.

(c) If any of the Company, Shea Corp., or the Guarantors at any time grants, assumes, perfects or becomes subject to any Lien upon any of its Property (other than Excluded Property) then owned or thereafter acquired as security for any other Pari-Passu Lien Obligation, the Company or Shea Corp. will, or will cause such Guarantor to, as promptly as practical (subject to Section 5.05(e) below):

(i) grant a Lien on such Property to the Collateral Agent for the benefit of the Secured Parties and, to the extent such grant would require the execution and delivery of a Security Document, the Company, Shea Corp. or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the agreement or instrument executed and delivered to secure such other Pari-Passu Lien Obligations;

(ii) cause the Lien granted in such Security Document to be duly perfected in any manner permitted by law to the same extent as the Liens granted for the benefit of such other Pari-Passu Lien Obligations are perfected; and

(iii) instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this Section 5.05(c), including as necessary under the Security Documents.

(d) If the Company, Shea Corp. or any Guarantor at any time after the Closing Date acquires any new Property (other than Excluded Property) that is not automatically subject to a Lien under the Security Documents, or a Restricted Subsidiary becomes a Guarantor, the Company or Shea Corp. will, or will cause such Guarantor, subject to the requirements of the Security Documents, to as soon as practical after such Property’s acquisition or it no longer being Excluded Property (subject to the provisions of Section 5.05(e)):

(i) grant a Lien on such Property (or, in the case of a new Guarantor, all its assets except Excluded Property) to the Collateral Agent for the benefit of the

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Secured Parties (and, to the extent such grant would require the execution and delivery of a Security Document, the Company, Shea Corp. or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the Security Documents executed and delivered on the Closing Date);

(ii) cause the Lien granted in such Security Document to be duly perfected in any manner permitted by law to the same extent as the Liens granted on the Closing Date are perfected (including, in the case of real property, through the recordation of Mortgages); and

(iii) instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this paragraph including as necessary under the Security Documents.

(e) The Company shall deliver a favorable written opinion of counsel to the Administrative Agent and the Collateral Agent in respect of any Lien grant referred to by the foregoing provisions of this paragraph by a new Guarantor or with respect to real property, addressing customary matters (and containing customary exceptions) consistent with the opinion of counsel delivered on the Closing Date pursuant to Section 4.02(a), or within 90 days after the Closing Date in accordance with Section 5.05(e) below, in respect of such matters; provided, however, that an opinion of counsel shall not be required with respect to any Mortgage on real property located in a jurisdiction for which an opinion of counsel has been previously delivered to the Administrative Agent pursuant to this Agreement. In addition, the Company shall provide a Title Policy to the Collateral Agent with respect to each Mortgage granted pursuant to this Section 5.05(d) and the real property described in such Mortgage.

(f) Notwithstanding anything to the contrary set forth in this Section 5.05 or elsewhere in this Agreement or any Security Document, any Mortgages (and any related Security Documents) required to be granted pursuant to this Agreement or the Security Documents with respect to real property owned by the Company, Shea Corp. or a Guarantor on the Closing Date shall be granted, together with opinions of counsel delivered to the Administrative Agent in respect of the enforceability and validity of such Mortgages and Title Policies to the Collateral Agent with respect to each Mortgage granted pursuant to this Section 5.05 and the real property described in such Mortgage, as soon as commercially reasonable following the Closing Date, but in no event later than 90 days following the Closing Date.

(g) The Company and Shea Corp. will bear and pay all legal expenses, filing fees, insurance premiums and other costs associated with the performance of the obligations of the Company, Shea Corp. and the Guarantors set forth in this Section 5.05 and will also pay or reimburse the Administrative Agent and Collateral Agent for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Administrative Agent and Collateral Agent in connection therewith, including the reasonable compensation and expenses of the Administrative Agent’s and Collateral Agent’s agents and counsel.

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(h) None of the Company, Shea Corp. nor any of the Guarantors will be permitted to take any action, or knowingly or negligently omit to take any action, which action or omission would reasonably be expected to materially impair the security interest with respect to the Collateral for the benefit of the Secured Parties.

(i) Notwithstanding anything else herein, in no event shall the Obligations be secured by a security interest in any Property located in a designated “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency) for the duration of such designation. If and when such Property is no longer located in a designated “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), such Property shall, automatically and without any further action on the part of the Collateral Agent or the Company, secure the Obligations.

SECTION 5.06. [Reserved].

SECTION 5.07. Performance of Obligations and Payment of Taxes. Pay its Indebtedness and other obligations promptly and in accordance with their terms and pay and discharge promptly when due all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits in respect of its property, before the same shall become delinquent or in default, as well as all material lawful claims for labor, materials and supplies or otherwise that, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and the Company shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, assessment or charge and enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture of such property.

SECTION 5.08. Litigation and Other Notices. Furnish to the Administrative Agent, the Issuing Bank and each Participant prompt written notice of the following:

(a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

(b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Company or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Company and the Restricted Subsidiaries in an aggregate amount exceeding $2,000,000; and

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(d) any development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

SECTION 5.09. Compliance with Laws. Except where the failure to do, cause or comply with any of the following could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect: do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; maintain and operate such business in substantially the manner in which it is presently conducted and operated; comply in all material respects with all applicable laws, rules, regulations and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted; and at all times maintain and preserve all property material to the conduct of such business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times.

SECTION 5.10. Subsidiaries. (a)Subject to the requirements in the definition of “Unrestricted Subsidiary”, the board of directors of the Company or a duly authorized committee thereof may designate any Subsidiary to be an Unrestricted Subsidiary; provided, however, that (a) the net amount (the “Designation Amount”) then outstanding of all previous Investments by the Company and the Restricted Subsidiaries in such Subsidiary and its Subsidiaries will be deemed to be a Restricted Payment at the time of such designation and will reduce the amount available for Restricted Payments under Section 6.02, to the extent provided therein, (b) the Company must be permitted under Section 6.02 to make the Restricted Payment deemed to have been made pursuant to clause (a), and (c) after giving effect to such designation, no Default or Event of Default shall have occurred or be continuing. In accordance with the foregoing, and not in limitation thereof, Investments made by any person in any subsidiary of such person prior to such person’s merger with the Company or any Restricted Subsidiary (but not in contemplation or anticipation of such merger) shall not be counted as an Investment by the Company or such Restricted Subsidiary if such subsidiary of such person is designated as an Unrestricted Subsidiary.

(b) The board of directors of the Company or a duly authorized committee thereof may also redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that (1) the Indebtedness of such Unrestricted Subsidiary as of the date of such redesignation could then be incurred under Section 6.01 and (2) immediately after giving effect to such redesignation and the incurrence of any such additional Indebtedness, the Company and the Restricted Subsidiaries could incur $1.00 of additional Coverage Indebtedness in accordance with Section 6.01

(c) Any such designation or redesignation by the G board of directors of the Company or a committee thereof will be evidenced to the Administrative Agent by the filing with the Administrative Agent of a certified copy of the resolution of the board of directors of the Company or a committee thereof giving effect to such designation or

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redesignation and an Officers’ Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth the underlying calculations of such Officers’ Certificate. The designation of any person as an Unrestricted Subsidiary shall be deemed to include a designation of all subsidiaries of such person as Unrestricted Subsidiaries.

ARTICLE VI

Negative Covenants

Each of Shea Corp. and the Company covenants and agrees with each Participant that, so long as this Agreement shall remain in effect and until the Commitments have been terminated, all Fees and all other expenses or amounts payable under any Credit Document have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Participants shall otherwise consent in writing, neither Shea Corp. nor the Company will, nor will they cause or permit any of the Restricted Subsidiaries to:

SECTION 6.01. Indebtedness. Incur, create, assume, become liable for or guarantee the payment of any Indebtedness (including Acquired Indebtedness) unless, immediately after giving effect thereto and the application of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 (such Indebtedness, “Coverage Indebtedness”), except:

(a) Indebtedness existing on the date hereof and set forth in Schedule 6.01 (after giving effect to the anticipated use of proceeds from the issuance and sale of the Notes) but not any extensions, renewals or replacements of such Indebtedness;

(b) Indebtedness created hereunder and under the other Credit Documents;

(c) Indebtedness with respect to the Notes (and Exchange Notes) and Guarantees thereof, other than Additional Notes;

(d) Indebtedness owed to and held by the Company, Shea Corp. or a Restricted Subsidiary; provided that (A) any subsequent issuance or transfer of any Equity Interests which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company, Shea Corp. or a Restricted Subsidiary) shall be deemed, in each case, to constitute the incurrence of such Indebtedness by the obligor thereon and (B) if the Company or Shea Corp. is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes and the Obligations;

(e) Indebtedness of the Company or any Restricted Subsidiary under any Interest Protection Agreements in a notional amount no greater than the outstanding principal amount (at the time the related Interest Protection Agreement is entered into) of the Indebtedness being hedged;

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(f) Indebtedness of the Company or any Restricted Subsidiary incurred to finance the acquisition of equipment and fixtures or other property; provided that the aggregate principal amount of Indebtedness permitted by this Section 6.01(f), when combined with the aggregate principal amount of all Capital Lease Obligations incurred pursuant to Section 6.01(g), shall not exceed $10,000,000 (including all Refinancing Indebtedness, but excluding any obligations that would not be required to be classified or accounted for as Capital Lease Obligations in accordance with GAAP as of March 31, 2011, without giving effect to any changes therein after the Closing Date) at any time outstanding;

(g) Capital Lease Obligations in an aggregate principal amount, when combined with the aggregate principal amount of all Indebtedness incurred pursuant to Section 6.01(f), not in excess of $10,000,000 (including all Refinancing Indebtedness) at any time outstanding (which amount shall not include any obligations that would not be required to be classified or accounted for as Capital Lease Obligations in accordance with GAAP as of March 31, 2011, without giving effect to any changes therein after the Closing Date);

(h) to the extent a portion of the Notes are redeemed or repurchased and retired, Indebtedness of the Company or any Guarantor in an aggregate amount (including all Refinancing Indebtedness incurred to refinance any Indebtedness incurred pursuant to this Section 6.01(h)) not to exceed the lesser of (x) 75% of the aggregate principal amount of the Notes so redeemed or repurchased and retired and (y) $100,000,000;

(i) all obligations under any arrangement (including (x) adjustments to land purchase price and (y) profit participations) by which future payments are due to the sellers of real property acquired by either the Company, Shea Corp. or any Restricted Subsidiary after a specified period of time following such acquisition or at the time of the subsequent sale of the subject real property, which future payments (i) are based on the subsequent sale price of the subject real property, the allocated costs of developing the subject real property or an amount specified at the time of such acquisition and (ii) may include fixed minimum amounts in respect of such arrangements and true-up payments;

(j) bank overdrafts arising in the ordinary course of business;

(k) obligations under an agreement with any government authority, adjoining (or common masterplan) landowner or seller of real property, in each case entered into in the ordinary course of business in connection with the acquisition of real property, to entitle, develop or construct infrastructure thereupon;

(l) Indebtedness deemed to exist pursuant to the terms of a joint venture agreement as a result of the failure of the Company or any Restricted Subsidiary to make a required capital contribution therein; provided that the only recourse on such Indebtedness is limited to the Company’s or such Restricted Subsidiary’s equity interests in the related joint venture;

(m) obligations relating to, and guarantees and pledges of assets incurred in the ordinary course of business in respect of (x) surety bonds and (y) payments due in respect

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of community facility district, metro-district, mello-roos, subdivision improvement and similar bonding requirements;

(n) repayment guarantees that constitute Investments made pursuant to the JV Basket; provided that, after giving effect to such guarantees, the Company could invest at least $1.00 in a Restricted Investment pursuant to the JV Basket;

(o) Indebtedness that is Non-Recourse Indebtedness with respect to the Company and the Restricted Subsidiaries;

(p) any guarantee by the Company or any Guarantor of any Indebtedness permitted to be incurred hereunder (other than Sections 6.01(l) and (o)); provided that, in the event such Indebtedness that is being guaranteed is subordinated to the Obligations or a Guarantee, as the case may be, then the related guarantee shall be subordinated in right of payment to the Obligations or such Guarantee, as the case may be;

(q) any Indebtedness incurred by Shea Corp. as a co-issuer or co-guarantor of such Indebtedness with the Company;

(r) Refinancing Indebtedness incurred by the Company or any Guarantor in respect of any Coverage Indebtedness or any Indebtedness incurred pursuant to Sections 6.01(a), (c) and (r); and

(s) other Indebtedness of the Company or any Guarantor in an aggregate principal amount not exceeding $25,000,000 at any time outstanding (including any Refinancing Indebtedness thereof).

SECTION 6.02. Restricted Payments. (a)Declare or make, or agree to declare or make, directly or indirectly, any Restricted Payment; provided, however, that a Restricted Payment may be made if (i) no Default or Event of Default shall have occurred and be continuing at the time of or immediately after giving effect to such Restricted Payment, (ii) immediately after giving effect to such Restricted Payment the Company could incur at least $1.00 of Coverage Indebtedness in accordance with Section 6.01 and (iii) immediately after giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments (including the Fair Market Value of any non-cash Restricted Payment) declared or made on or after the Closing Date (other than those Restricted Payments described in clauses (iii) through (xiii) of the next paragraph) does not exceed the sum of:

(i) 50% of the Consolidated Net Income of the Company on a cumulative basis during the period (taken as one accounting period) from and including the first day of the Company’s fiscal quarter during which the Closing Date occurs and ending on the last day of the Company’s fiscal quarter immediately preceding the date of such Restricted Payment (or in the event such Consolidated Net Income shall be a deficit, minus 100% of such deficit), plus

(ii) 100% of the aggregate net cash proceeds of and the Fair Market Value of any property or other asset received by the Company from (1) any capital contribution to the

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Company after the Closing Date or any issue or sale after the Closing Date of any Qualified Equity Interests and (2) the issue or sale after the Closing Date of any Indebtedness or other securities of the Company convertible into or exercisable for Qualified Equity Interests that have been so converted or exercised, plus

(iii) in the case of a distribution on or disposition or repayment of any Restricted Investment, an amount (to the extent not included in the calculation of Consolidated Net Income referred to in (i)) equal to the lesser of (x) the return of capital with respect to such Investment (including by dividend, distribution or sale of Equity Interests) and (y) the amount of such Investment that was treated as a Restricted Payment, in either case, less the cost of the disposition or repayment of such Investment (to the extent not included in the calculation of Consolidated Net Income referred to in (i)), plus

(iv) with respect to any Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary after the Closing Date in accordance with the definition of Unrestricted Subsidiary (so long as the designation of such Subsidiary as an Unrestricted Subsidiary was treated as a Restricted Payment made after the Closing Date, and only to the extent not included in the calculation of Consolidated Net Income referred to in (i)), an amount equal to the lesser of (x) the proportionate interest of the Company or any Restricted Subsidiary in an amount equal to the excess of (I) the total assets of such Unrestricted Subsidiary, valued on an aggregate basis at the lesser of book value and Fair Market Value thereof, over (II) the total liabilities of such Unrestricted Subsidiary, determined in accordance with GAAP, and (y) the Designation Amount at the time of such Unrestricted Subsidiary’s designation as an Unrestricted Subsidiary.

(b) Notwithstanding the foregoing, the Company, Shea Corp. and any Restricted Subsidiary may make, or agree to pay or make, the following Restricted Payments:

(i) the payment of any dividend or redemption of any Equity Interests or Subordinated Indebtedness within 60 days after the date of declaration thereof or call for redemption if, at such date of declaration or call for redemption, such payment or redemption was permitted by the provisions of the preceding paragraph as of the date of declaration and the payment itself will be deemed to have been paid on such date of declaration);

(ii) any Restricted Payment made in exchange for, or out of the net proceeds of the substantially concurrent sale of, Qualified Equity Interests;

(iii) the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value by the Company of any Subordinated Indebtedness of the Company, Shea Corp. or any Restricted Subsidiary in exchange for, or out of proceeds of, Refinancing Indebtedness incurred as permitted by and in compliance with Section 6.01;

(iv) Restricted Investments after the Closing Date not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $10,000,000;

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(v) Restricted Investments after the Closing Date in joint ventures not to exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $100,000,000; provided, however, that, at the time any such Investment is made, the net book value of the Company’s inventory (including “work-in-progress” inventory, land held for development and land held for sale) and cash securing the Obligations and any other Pari-Passu Lien Obligations is at least 275% of the aggregate principal amount of the Letters of Credit then outstanding plus the aggregate amount of such other Pari-Passu Lien Obligations;

(vi) Restricted Payments made after the Closing Date in respect of Specified Obligations not to exceed $70,000,000; provided, however, that such Restricted Payments may exceed $70,000,000 to the extent that the Company receives a cash equity contribution from JFSCI in the amount of such excess within 10 Business Days following such Restricted Payment;

(vii) Tax Distributions (other than payments with respect to Specified Obligations);

(viii) the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Company, Shea Corp. or any Restricted Subsidiary with the proceeds of the offering of the Notes;

(ix) the declaration and payment of dividends to holders of any class or series of Disqualified Equity Interests of the Company or any of its Restricted Subsidiaries issued in accordance with and to the extent permitted by Section 6.01; provided, however, that, at the time of payment of such dividend, no Default or Event of Default shall have occurred and be continuing (or result therefrom);

(x) repurchases of Equity Interests deemed to occur upon exercise of equity options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

(xi) Restricted Payments that are made with cash or Cash Equivalents received by the Company as capital contributions to its equity or from the issuance or sale of Qualified Equity Interests of the Company, in each case, after the Closing Date and are designated at such time as an “Excluded Contribution” pursuant to an officer’s certificate delivered by the Company;

(xii) the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to Section 6.04; provided, however, that all Notes tendered by Holders in connection with a Change of Control Offer or Asset Sale Offer (each, as defined in the Indenture), as applicable, have been purchased, redeemed, defeased or acquired for value; or

(xiii) Restricted Investments after the Closing Date in joint ventures (other than amounts expended in respect of Specified Obligations) in an amount not to

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exceed an aggregate amount (net of any returns of capital with respect to such Investments (including by dividend, distribution or sale)) of $70,000,000 (the “JV Payment Basket”);

provided that, for purposes of determining the aggregate and permitted amounts of Restricted Payments made, the amount of any guarantee of any Investment in any person that was initially treated as a Restricted Payment and which was subsequently terminated or expired, net of any amounts paid by the Company, Shea Corp. or any Restricted Subsidiary in respect of such guarantee, shall be deducted.

SECTION 6.03. Transactions with Affiliates. (a)Make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to, or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of (i) any Affiliate of the Company, (ii) any Affiliate of any of the Subsidiaries or (iii) any holder of 10% or more of the common equity of the Company (or Affiliates of such holders) (such persons, collectively “Affiliated Persons” and such transactions, collectively, “Affiliate Transactions”), except that the Company or any Restricted Subsidiary may engage in any of the foregoing transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Company or such Restricted Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties.

(b) Engage in any Affiliate Transaction (i) in the case of transfers of real property involving more than $10,000,000, unless the consideration paid in respect thereof exceeds the greatest of not less than three Independent Valuations and (ii) in all other cases (A) having a value of more than $2,000,000 unless the terms of such Affiliate Transaction are set forth in writing and a majority of the board of directors of the Company has determined in good faith that the criterion in Section 6.03(a) has been satisfied and (B) having a value of more than $5,000,000 unless the terms of such Affiliate Transaction are set forth in writing and the Company has received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm’s-length transaction with a person who is not an Affiliated Person.

(c) Notwithstanding the foregoing, the following transactions shall not be prohibited by this Section 6.03:

(i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the board of directors of the Company,

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(ii) Equity Interests issuances to directors, officers and employees of the Company or its Subsidiaries pursuant to plans approved by the holders of Equity Interests of the Company,

(iii) any Permitted Investment (other than Permitted Investments described in clause (c)(ii) of the definition of “Permitted Investments”) or Restricted Payment permitted pursuant to Section 6.02,

(iv) any transaction between or among the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries; provided, however, no such transaction shall involve any other Affiliate (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by Section 6.02),

(v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously issued as a dividend, or otherwise distributed or transferred without charge, to the Company or a Restricted Subsidiary,

(vi) any Affiliate Transactions consummated in accordance with existing written agreements with Affiliates, or entities in which an Affiliate owns an interest, including amendments thereto, that are no more favorable to the Affiliate in any material respect than the existing terms;

(vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Holding, the Company or any Restricted Subsidiary; and

(viii) any transaction with an Affiliate that is a joint venture in which the Company or any Restricted Subsidiary has a direct or indirect equity interest so long as the other joint venture partners not constituting Affiliates of the Company approve the subject transaction.

SECTION 6.04. Limitations on Asset Dispositions. (a)Engage in any Asset Disposition unless (i) the Company, Shea Corp. (or such Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Disposition at least equal to the Fair Market Value thereof (or at least 90% of the Fair Market Value thereof in the case of a Sale-Leaseback Transaction of a model house) and (ii) not less than 70% of the consideration received by the Company, Shea Corp. (or such Restricted Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and/or securities (such securities (x) in the case of equity securities, that are listed on the New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market and (y) in the case of debt securities, that are rated by a nationally recognized rating agency, listed on the New York Stock Exchange or the American Stock Exchange or are covered by at least two reputable market makers); provided that, the amount of (A) any Indebtedness (other than any Subordinated Indebtedness) of any of the Company, Shea Corp. or any Restricted

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Subsidiary that is actually assumed by the transferee in such Asset Disposition (provided that the Company, Shea Corp. or Restricted Subsidiary, as the case may be, making the Asset Disposition is released from its obligations with respect to such Indebtedness), (B) any notes or other obligations received by the Company, Shea Corp. or any Restricted Subsidiary which are immediately converted into cash and (C) the Fair Market Value of any property or other asset (including Equity Interests of any person that will be a Restricted Subsidiary following receipt thereof) received that are used or useful in a Real Estate Business (as defined below) (provided that to the extent that the assets disposed of in such Asset Disposition were Collateral, such property or assets are pledged as Collateral under the Security Documents substantially contemporaneously with such sale, to the extent required to do so pursuant to such Security Documents), shall be deemed to be consideration required by clause (b) above for purposes of determining the percentage of such consideration received by the Company, Shea Corp. or the Restricted Subsidiary.

(b) The net cash proceeds of an Asset Disposition shall, within one year of such Asset Disposition, at the Company’s election, be utilized in a manner permitted under the Note Documents; provided that, if the Company, Shea Corp. or the applicable Restricted Subsidiary do not reinvest the proceeds from such Asset Dispositions as necessary to avoid any requirement to offer to repurchase Notes then, if the cumulative repurchasing of Notes would exceed $50,000,000, the Company shall cash collateralize any then outstanding Letters of Credit (at the Minimum Collateral Amount) and as a condition to the issuance of a Letter of Credit or any increase in the amount of any Letter of Credit thereafter, the Company shall cash collateralize such Letters of Credit so that at all times, the outstanding Letters of Credit are cash collateralized (at the Minimum Collateral Account).

SECTION 6.05. Liens. Create, incur, assume or suffer to exist any Lien on any property or assets (including Equity Interests or other securities or Indebtedness of any person, including the Company or any Restricted Subsidiary) now owned or hereafter acquired by it, except:

(a) Liens for taxes, assessments or governmental or quasi-government charges or claims that (i) are not yet delinquent, (ii) are being contested in compliance with Section 5.07 or (iii) encumber solely property abandoned or in the process of being abandoned;

(b) landlords, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, suppliers’ or other Liens arising in the ordinary course of business and securing obligations that are not delinquent or which are being contested in compliance with Section 5.07;

(c) Liens (other than Liens imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workmen’s compensation, unemployment insurance and other types of social security;

(d) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, development

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obligations, progress payments, government contracts, utility services, developer’s or other obligations to make on-site or off-site improvements and other obligations of a like nature (other than obligations for the payment of borrowed money), in each case incurred in the ordinary course of business;

(e) attachment or judgment Liens; provided that such Liens do not violate Article VII;

(f) recorded or unrecorded easements, rights-of-way, dedications, covenants, conditions, restrictions, reservations, assessment district or similar Liens in connection with municipal or special district financing, agreements with adjoining landowners or state or local government authorities and other similar charges, burdens and encumbrances which do not, individually or in the aggregate, materially impair the use or development of the assets to which they relate in the ordinary course of business of the Company, Shea Corp. and the Restricted Subsidiaries,

(g) zoning restrictions, licenses, restrictions on use of real property or minor irregularities in title thereto, which do not materially impair the use of such real property in the ordinary course of business of the Company, Shea Corp. or any of the Restricted Subsidiaries;

(h) Liens securing Indebtedness incurred pursuant to Sections 6.01(b), (e) and (h); provided, however, that any such Liens rank pari-passu with the Obligations and such Indebtedness is subject to the Intercreditor Agreement;

(i) Liens securing Indebtedness incurred pursuant to Section 6.01(i); provided, however, that such Liens apply only the property acquired in connection with the incurrence of such Indebtedness and related properties acquired from the same seller;

(j) Liens securing (i) the Notes (other than Additional Notes) and Exchange Notes, the Guarantees thereof, (ii) other obligations under the Notes Documents and (iii) any obligations owing to the trustee or the Collateral Agent under the Indenture, Note Documents or Credit Documents; provided that all such Liens described in this clause (j) also secure the Obligations;

(k) Liens securing Non-Recourse Indebtedness of the Company, Shea Corp. or any Restricted Subsidiary;

(l) Liens securing Indebtedness incurred pursuant to Sections 6.01(f) and (g); provided, however, that such Liens apply only to the property acquired in connection with the incurrence of such Indebtedness within 180 days after such incurrence;

(m) Liens on property or assets of the Company, Shea Corp. or any Restricted Subsidiary securing Indebtedness of the Company, Shea Corp. or any

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Restricted Subsidiary owing to the Company, Shea Corp. or one or more Restricted Subsidiaries;

(n) leases or subleases granted to others not materially interfering with the ordinary course of business of the Company, Shea Corp. and the Restricted Subsidiaries,

(o) any right of first refusal, right of first offer option, contract or other agreement to sell an asset; provided that such sale is not otherwise prohibited under the Note Documents;

(p) any right of a lender or lenders to which the Company, Shea Corp. or a Restricted Subsidiary may be indebted to offset against, or appropriate and apply to the payment of such, Indebtedness any and all balances, credits, deposits, accounts or money of the Company, Shea Corp. or a Restricted Subsidiary with or held by such lender or lenders or its Affiliates;

(q) any pledge or deposit of cash or property in conjunction with obtaining surety, performance, completion or payment bonds and letters of credit or other similar instruments or providing earnest money obligations, escrows or similar purpose undertakings or indemnifications in the ordinary course of business of the Company, Shea Corp. and the Restricted Subsidiaries,

(r) Liens for homeowners and property owner association developments and assessments;

(s) Liens on deposits made in the ordinary course of business as security for the obligations of the Company, Shea Corp. and the Restricted Subsidiaries with respect to indemnification in respect of title insurance providers;

(t) any Lien on any Property of a person existing at the time such person is merged with or into or consolidated with the Company or any Subsidiary of the Company or becomes a Subsidiary of the Company; provided, however, that (i) such Lien was in existence prior to the contemplation of such merger or consolidation or acquisition and (ii) such Lien does not extend to any assets other than those of the person being merged into or consolidated with the Company or the Subsidiary or acquired by the Company or its Subsidiaries;

(u) Liens on specific items of inventory or other goods and proceeds of any person securing such person’s obligations in respect of bankers’ acceptances issued or created for the account of such person to facilitate the purchase, shipment or storage of such inventory or other goods;

(v) Liens incurred in the ordinary course of business to secure (i) profit and price participation arrangements and (ii) fees, taxes and carry costs on, in respect of or owing to governmental issuers (including enterprises thereof) of community facility district, mello-roos, metro-district or similar bonding obligations,

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(w) Licenses of intellectual property granted in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Company or any Restricted Subsidiary,

(x) Liens of lessor, sublessor or licensor arising under any lease, sublease or license entered into by the Company or any Restricted Subsidiary in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Company or any Restricted Subsidiary, and covering only the Property or assets so leased, subleased or licensed,

(y) any (i) interest or title of a lessor or sublessor under any lease of a Property or asset not prohibited hereunder, (ii) Lien or restriction that the interest or title of such lessor or sublessor may be subject to or (iii) subordination of the interest of the lessee or sublessee under such lease to any Lien or restriction referred to in the preceding clause (ii), so long as the holder of such Lien or restriction agrees to recognize the rights of such lessee or sublessee under such lease,

(z) pledges, deposits and other Liens existing under, or required to be made in connection with, (i) earnest money obligations, escrows or similar purpose undertakings or indemnifications in connection with any purchase and sale agreement, (ii) development agreements or other contracts entered into with governmental authorities (or an entity sponsored by a governmental authority), in connection with the entitlement of real property or (iii) agreements for the funding of infrastructure, including in respect of the issuance of community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds, and similar bonding requirements arising in the ordinary course of business of a homebuilder,

(aa) Liens, encumbrances or other restrictions contained in any joint venture agreement entered into by the Company or any Restricted Subsidiary with respect to the equity interests issued by the relevant joint venture or the assets of such joint venture,

(bb) assignments of insurance or condemnation proceeds provided to landlords (or their mortgagees) pursuant to the terms of any lease of Property leased by the Company or any Restricted Subsidiary, in each case with respect to the property so leased, and customary Liens and rights reserved in any lease for rent or for compliance with the terms of such lease,

(cc) Liens on cash pledged to secure deductibles, retentions and other obligations to insurance providers in the ordinary course of business;

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(dd) Liens securing Refinancing Indebtedness (or successive refinancings) in whole or in part of any Indebtedness secured by any Lien pursuant to Sections 6.05(i), (j), (l) and (t); provided that:

(i) such new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(ii) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under Sections 6.05(i), (j), (l) and (t) at the time the original Lien was incurred and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, and

(ee) Liens securing Indebtedness incurred pursuant to Section 6.01(s); provided, however, that to the extent such Indebtedness constitutes Indebtedness of the type described in clause (a) of the definition of Indebtedness (other than a note evidencing the deferred purchase price of property), any such Liens rank pari-passu with the Obligations and such Indebtedness is subject to the Intercreditor Agreement.

SECTION 6.06. Sale and Lease-Back Transactions. Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, whether now owned or hereafter acquired, and thereafter rent or lease such property unless (a) such transaction would be permissible pursuant to Section 6.01 (b) any Liens arising in connection therewith are permitted by Section 6.05 (without equally and ratably securing the Obligations), (c) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale and Lease-Back Transaction are at least equal to the Fair Market Value of such property (or at least 90% of the Fair Market Value in the case of a Sale and lease-Back Transaction of a model house) and (d) the Company applies the proceeds of such transaction in compliance with Section 6.04.

SECTION 6.07. Restrictions Affecting Restricted Subsidiaries. (a)Create, assume or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(i) pay dividends or make any other distributions on its Equity Interests or any other interest or participation in, or measured by, its profits, owned by the Company, Shea Corp. or any other Restricted Subsidiary, or pay interest on or principal of any Indebtedness owed to the Company or any other Restricted Subsidiary;

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(ii) make loans or advances to the Company, Shea Corp. or any other Restricted Subsidiary; or

(iii) transfer any of its property or assets to the Company, Shea Corp. or any other Restricted Subsidiary.

(b) Notwithstanding the foregoing, Section 6.07(a) shall not apply to:

(i) encumbrances or restrictions existing under or by reason of applicable law, including judicial or regulatory actions;

(ii) contractual encumbrances or restrictions in effect at or entered into on the Closing Date;

(iii) any restrictions or encumbrances arising under (A) Acquired Indebtedness or (B) appearing in any agreements acquired or assumed in connection with the acquisition of property; provided, however, that such encumbrance or restriction applies only to either the assets that were subject to the restriction or encumbrance at the time of the acquisition or the obligor on such Indebtedness and its Subsidiaries prior to such acquisition;

(iv) any Lien permitted under Section 6.05, or any other agreement restricting the sale or other disposition of property, if such permitted Lien or agreement does not expressly restrict the ability of a Subsidiary of the Company to pay dividends or make or repay loans or advances prior to default thereunder;

(v) reasonable and customary borrowing base covenants set forth in agreements evidencing Indebtedness otherwise permitted hereunder;

(vi) customary non-assignment provisions in leases, licenses, encumbrances, contracts or similar assets entered into or acquired in the ordinary course of business;

(vii) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Equity Interests or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

(viii) encumbrances or restrictions existing under or by reason of (A) the Note Documents, (B) the Credit Documents or (C) the definitive agreements governing any other Indebtedness that is pari-passu with the Obligations and the Notes that is permitted to be incurred after the Closing Date in accordance with Section 6.01; provided, however, that in the case of clause (C), (x) either (i) the encumbrance or restriction applies only in the event of and during the continuance of a payment default or a default with respect to a financial covenant contained in such definitive agreements or (ii) the Company determines at the time any such additional pari-passu Indebtedness is incurred (and at the time of any modification of the terms of any such encumbrance or restriction) that any such encumbrance

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or restriction will not materially affect the Company’s or any Restricted Subsidiary’s ability to make principal or interest payments on the Obligations and any other Indebtedness that is an obligation of the Company or any Restricted Subsidiary, as applicable, and (y) the encumbrance or restriction is not materially more disadvantageous to the holders of the Notes than is customary in comparable financings or agreements (as determined by the Company in good faith);

(ix) purchase money obligations that impose restrictions on the property so acquired of the nature described in clause (iii) of Section 6.07(a);

(x) Liens permitted under Section 6.05 securing Indebtedness that limit the right of the debtor to dispose of the assets subject to such Lien;

(xi) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, assets sale agreements, stock sale agreements and other similar agreements;

(xii) customary provisions of any franchise, distribution or similar agreements;

(xiii) restrictions on cash or other deposits or net worth imposed by contracts entered into in the ordinary course of business;

(xiv) any encumbrances or restrictions existing under (A) development agreements or other contracts entered into with municipal entities, agencies or sponsors in connection with the entitlement or development of real property or (B) agreements for funding of infrastructure, including in respect of the issuance of community facility district bonds, metro district bonds, mello-roos bonds and subdivision improvement bonds, and similar bonding requirements arising in the ordinary course of business of a homebuilder;

(xv) any encumbrances or restrictions contained in any joint venture agreement entered into by the Company or any of its Restricted Subsidiaries, to the extent binding upon the assets of the relevant joint venture, together with any encumbrances or restrictions contained in any agreement entered into by any such joint venture; and

(xvi) any encumbrance or restrictions of the type referred to in clauses (i), (ii) or (iii) of Section 6.07(a) imposed by any amendments, modifications, restatements, renewals, supplements, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (ii), (iii), (viii) and (ix) of this Section 6.07(b); provided, however, that such amendments, modifications, restatements, renewals, supplements, replacements or refinancings are, in the good faith judgment of the board of directors of the Company, no more restrictive in any material respect with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, supplement, replacement or refinancing.

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SECTION 6.08. Mergers, Consolidation and, Sales of Assets. (a) In the case of the Company, Shea Corp. and any other Guarantor, merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or sell, convey, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all its assets (including, without limitation, by way of liquidation or dissolution), or assign any of its Obligations or obligations under the Note Documents, to any person (in each case other than in a transaction in which the Company, Shea Corp. or a Guarantor is the survivor of a consolidation or merger, or the transferee in a sale, lease, conveyance or other disposition, liquidation or dissolution) unless:

(i) the person formed by or surviving such consolidation or merger (if other than the Company, Shea Corp. or the Restricted Subsidiary as the case may be), or to which such sale, lease, conveyance or other disposition or assignment will be made (collectively, the “Successor”), is a corporation or other legal entity organized and existing under the laws of the United States or any state thereof or the District of Columbia, and the Successor assumes by written agreement in a form reasonably satisfactory to the Administrative Agent all the obligations of the Company, Shea Corp. or the Restricted Subsidiary, as the case may be, under this Agreement, the Intercreditor Agreement and the Security Documents;

(ii) immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing; and

(iii) immediately after giving effect to such transaction, the Company (or its Successor) could incur at least $1.00 of Coverage Indebtedness in accordance with Section 6.01.

(b) Notwithstanding the foregoing, (i) this Section 6.08 shall not apply to any Restricted Subsidiary that is not a Guarantor and (ii) the Company, Shea Corp. and any other Guarantor may consummate the following transactions:

(i) a transaction involving the sale or disposition of Equity Interests of a Guarantor, or the consolidation or merger of a Guarantor, or the sale, lease, conveyance or other disposition of all or substantially all the assets of a Guarantor, that in any such case results in such Guarantor being released from its Guarantee as provided herein;

(ii) a transaction the purpose of which is to change the state of incorporation of the Company, Shea Corp. or any Restricted Subsidiary;

(iii) a liquidation or dissolution of any Restricted Subsidiary, other than Shea Corp.; or

(iv) a sale, lease, conveyance or other disposition of all or substantially all the assets of any Restricted Subsidiary in connection with the sale or wind-down of retail or other land sales by such Restricted Subsidiary.

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SECTION 6.09. Line of Business. Engage in any business other than homebuilding, housing construction, real estate (including masterplan) development or construction and the sale of homes and related real estate activities including the provision of mortgage financing or title insurance or any other business substantially related or reasonably incidental thereto (collectively, a “Real Estate Business”).

SECTION 6.10. Limitations on Shea Corp.. Shea Corp. may not hold any material assets (other than Indebtedness owing to Shea Corp. by the Company or any Restricted Subsidiary and non-material Cash Equivalents), become liable for any obligations or engage in any business activities (other than treasury, cash management and activities incidental thereto); provided, however, that Shea Corp. may be a co-obligor or co-guarantor with respect to the Notes or any other Indebtedness or other obligations if the Company is an obligor or guarantor of such Indebtedness or obligations. Shea Corp. shall be a wholly-owned Subsidiary of the Company at all times. At any time after the Company or any successor to the Company is a corporation, Shea Corp. may merge with or consolidate into the Company or any Subsidiary of the Company.

ARTICLE VII

Events of Default

In case of the happening of any of the following events (“Events of Default”):

(a) any representation or warranty made or deemed made in or in connection with any Credit Document or the issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Credit Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

(b) default shall be made in the reimbursement with respect to any L/C Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

(c) default shall be made in the payment of any Fee or any other amount (other than an amount referred to in (b) above) due under any Credit Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days;

(d) default shall be made in the due observance or performance by the Company, Shea Corp. or any Restricted Subsidiary of any covenant, condition or agreement contained in Section 5.01 or 5.08 or in Article VI, and such default shall continue unremedied for a period of five Business Days (i) after notice thereof from the Administrative Agent or the Required Participants to the Company or (ii) after any person at the Company has obtained knowledge thereof;

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(e) default shall be made in the due observance or performance by the Company, Shea Corp. or any Restricted Subsidiary of any covenant, condition or agreement contained in any Credit Document (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent or the Required Participants to the Company;

(f) (i) the Company, Shea Corp. or any Restricted Subsidiary shall fail to pay any principal, interest or other amount due in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable cure or grace period) or (ii) any other event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after giving effect to any applicable cure or grace period) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or that results in the termination or permits any counterparty to terminate any Interest Protection Agreement the obligations under which constitute Material Indebtedness; provided that this clause (ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(g) a court of competent jurisdiction enters an order or decree under Title 11 of the United States Code, as now constituted or hereafter amended, or any similar Federal or state law for the relief of debtors (collectively, “Bankruptcy Law”) that: (i) is for relief against the Company, Shea Corp. or any Restricted Subsidiary that is a Significant Subsidiary as debtor in an involuntary case; (ii) appoints a receiver, trustee, assignee, liquidator or similar official (a “Custodian”) of the Company, Shea Corp. or any Restricted Subsidiary that is a Significant Subsidiary or a Custodian for all or substantially all the property of the Company, Shea Corp. or any Restricted Subsidiary that is a Significant Subsidiary; or (iii) orders the liquidation of the Company, Shea Corp. or any Restricted Subsidiary that is a Significant Subsidiary and, in each case, the order or decree remains unstayed and in effect for 60 days;

(h) the Company, Shea Corp. or any Restricted Subsidiary that is a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all its property, or (iv) makes a general assignment for the benefit of its creditors;

(i) a final judgment or judgments that exceed $10,000,000 or more (net of insurance available to the Company, Shea Corp. or Restricted Subsidiary and expected (in the good faith judgment of the Company) to be available to satisfy such judgment), individually or in the aggregate, for the payment of money having been entered by a court or courts of competent jurisdiction against the

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Company, Shea Corp. or any of the Restricted Subsidiaries and such judgment or judgments is not satisfied, bonded, stayed, annulled or rescinded within 60 days of being entered;

(j) an ERISA Event shall have occurred that, in the opinion of the Required Participants, when taken together with all other such ERISA Events, could reasonably be expected to result in liability of the Company and its ERISA Affiliates in an aggregate amount exceeding $2,000,000;

(k) any Guarantee made in Article X for any reason shall cease to be in full force and effect (other than in accordance with its terms), or any Guarantor shall deny in writing that it has any further liability under such Guarantee (other than as a result of the discharge of such Guarantor in accordance with the terms of the Credit Documents);

(l) any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by the Company or any other Credit Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates representing securities pledged under the Security Agreement and except to the extent that such loss is covered by a lender’s title insurance policy and the related insurer promptly after such loss shall have acknowledged in writing that such loss is covered by such title insurance policy; or

(m) there shall have occurred a Change in Control;

then, and in every such event (other than an event with respect to Shea Corp. or the Company described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Participants shall, by notice to the Company, take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments, (ii) declare the Obligations then outstanding to be forthwith due and payable in whole or in part, whereupon the Obligations so declared to be due and payable shall become due and payable immediately, and any unpaid accrued Fees and all other liabilities of the Company accrued hereunder and under any other Credit Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company, anything contained herein or in any other Credit Document to the contrary notwithstanding and (iii) require that the Company comply with Section 2.01(j); and in any event with respect to Shea Corp. or the Company described in paragraph (g) or (h) above, the Commitments shall automatically terminate and Obligations then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Company accrued hereunder and under any other Credit Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of

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which are hereby expressly waived by the Company, anything contained herein or in any other Credit Document to the contrary notwithstanding, and the Company shall immediately comply with the requirements of Section 2.01(j).

ARTICLE VIII

The Administrative Agent

Each of the Participants and the Issuing Bank hereby irrevocably appoints the Administrative Agent (for purposes of this Article VIII, the Administrative Agent is referred to as the “Agent”) to act on its behalf as the Administrative Agent hereunder and under the other Credit Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms of the Credit Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, each of the Issuing Bank and each Participant (a) expressly authorizes and instructs the Agent to enter into the Intercreditor Agreement and (b) hereby agrees that it will be bound by the provisions of the Intercreditor Agreement. The provisions of this Article are solely for the benefit of the Agent, the Participants and the Issuing Bank, and neither the Company nor any other Credit Party shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Credit Documents (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Participant as any other Participant and may exercise the same as though it were not the Agent, and such bank and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with the Company, Shea Corp. or any Subsidiary or other Affiliate thereof as if it were not the Agent hereunder and without any duty to account therefore to the Participants.

The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, (a) the Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing, (b) the Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Credit Documents that the Agent is required to exercise as directed in writing by the Required Participants (or such other number or percentage of the Participants as shall be necessary under the circumstances as provided in Section 9.08) provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Credit Document or applicable law, including for the

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avoidance of doubt any action that may be in violation of the automatic stay under any Bankruptcy Law or that may effect a forfeiture, modification or termination of property of a Defaulting Participant in violation of any Bankruptcy Law, and (c) except as expressly set forth herein or in the other Credit Documents, the Agent shall not have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to the Company, Shea Corp. or any of the Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Participants (or such other number or percentage of the Participants as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Agent in writing by the Company, Shea Corp. or a Participant, and the Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Credit Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Credit Document, (iv) the validity, enforceability, effectiveness or genuineness of any Credit Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Credit Document, other than to confirm receipt of items expressly required to be delivered to the Agent.

The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent or otherwise authenticated by the proper person. The Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Participant or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Participant or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Participant or Issuing Bank prior to the issuance of such Letter of Credit. The Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Agent may perform any and all its duties and exercise its rights and powers under any Credit Document by or through any one or more sub-agents appointed by it. The Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the

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Related Parties of the Agent and any such sub-agent as well as activities as Agent. The Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non appealable judgment that the Agent acted with gross negligence or willful misconduct in the selection of such sub-agents

The Agent may at any time give notice of its resignation to the Participants, the Issuing Bank and the Company. Upon receipt of any such notice of resignation, the Required Participants shall have the right, in consultation with the Company, to appoint a successor. If no successor shall have been so appointed by the Required Participants and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (or such earlier date as shall be agreed by the Required Participants)( the “Resignation Effective Date”), then the retiring Agent may (but shall not be obligated to), on behalf of the Participants and the Issuing Bank, appoint a successor Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

If the person serving as Agent is a Defaulting Participant pursuant to clause (d) of the definition thereof, the Required Participants may, to the extent permitted by applicable law, by notice in writing to the Company and such Person remove such person as Agent and, in consultation with the Company, appoint a successor. If no such successor shall have been so appointed by the Required Participants and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Participants) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents and (2) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Participant and the Issuing Bank directly, until such time, if any, as the Required Participants appoint a successor Agent as provided for above. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Agent, and the retiring or removed Agent shall be discharged from its duties and obligations hereunder or under the other Credit Documents. The fees payable by the Company to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the retiring or removed Agent’s resignation or removal hereunder and under the Credit Documents, the provisions of this Article and Section 9.05 shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.

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Each Participant and Issuing Bank acknowledges that it has, independently and without reliance upon the Agent or any other Participant or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Participant and Issuing Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Participant and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Credit Document, any related agreement or any document furnished hereunder or thereunder.

Anything herein to the contrary notwithstanding, the Arranger listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the Agent, a Participant or an Issuing Bank hereunder.

In case of the pendency of any proceeding under any Bankruptcy Law, the Agent (irrespective of whether the principal of any L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Agent shall have made any demand on the Company) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Participants, the Issuing Bank and the Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Participants, the Issuing Bank and the Agent and their respective agents and counsel and all other amounts due the Participants, the Issuing Bank and the Agent under Sections 2.01, 2.02 and 9.05) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same,

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Participant and Issuing Bank to make such payments to the Agent and, in the event that the Agent shall consent to the making of such payments directly to the Participants and the Issuing Bank, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agent and its agents and counsel, and any other amounts due the Agent under Sections 2.02 and 9.05.

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. (a)Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in

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paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:

(i) if to the Company or Shea Corp., to it at 655 Brea Canyon Road, Walnut, California 91788-0487, Attention of Chief Financial Officer (Fax No. (909) 869-0849);

(ii) if to the Administrative Agent, to Credit Suisse, Eleven Madison Avenue, New York, NY 10010, Attention of Agency Group (Fax No. (212) 325-8304);

(iii) if to a Participant, to it at its address (or fax number) set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Participant shall have become a party hereto; and

(iv) if to the Issuing Bank, to it at Trade Finance/Services Department, One Madison Avenue, 2nd Floor, New York, NY 10010, Attention of Adrian Silghigian (Fax No. (212) 743-1267);.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Notices and other communications to the Participants and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Participant or Issuing Bank pursuant to Article II if such Participant or Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c) Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefore; provided that, for both clauses (i)

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and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(d) Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(e) Each Credit Party agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Issuing Bank and the other Participants by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).

(f) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Credit Parties, any Participant or any other person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the any Credit Party’s or the Administrative Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice, demand, communication, information, document or other material that any Credit Party provides to the Administrative Agent pursuant to any Credit Document or the transactions contemplated therein which is distributed to the Administrative Agent, any Participant or the Issuing Bank by means of electronic communications pursuant to this Section, including through the Platform.

SECTION 9.02. Survival of Agreement. All covenants, agreements, representations and warranties made by the Company or Shea Corp. herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Credit Document shall be considered to have been relied upon by the Participants and the Issuing Bank and shall survive the issuance of Letters of Credit by the Issuing Bank, regardless of any investigation made by the Participants or the Issuing Bank or on their behalf, and shall continue in full force and effect as long as the any Fee or any other amount payable under this Agreement or any other Credit Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.02, 2.04 and 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Credit Document, or any investigation made by or on behalf of the Administrative Agent, any Participant or the Issuing Bank.

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SECTION 9.03. Binding Effect. Except as provided in Section 4.02, this Agreement shall become effective when it shall have been executed by the Company, Shea Corp. and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.

SECTION 9.04. Successors and Assigns. (a)Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Company, Shea Corp., the Administrative Agent, the Issuing Bank or the Participants that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns, except that the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Participant and no Participant may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section or (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby, persons to whom participations are sold to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Participants) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Each Participant may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment); provided that any such assignment shall be subject to the following conditions:

(i) in the case of an assignment of the entire remaining amount of the assigning Participant’s Commitment and/or participations in L/C Disbursements at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified below in the aggregate or in the case of an assignment to another Participant, an Affiliate of a Participant or an Approved Fund, no minimum amount need be assigned;

(ii) in any case not described in paragraph (b)(i) of this Section, the aggregate amount of the Commitment or, if the applicable Commitment is not then in effect, the L/C Exposure of the assigning Participant subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $1,000,000, unless each of the Administrative Agent and, so long

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as no Default or Event of Default has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed);

(iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Participant’s rights and obligations under this Agreement with respect to the Commitment assigned;

(iv) no consent shall be required for any assignment except to the extent required by paragraph (b)(ii) of this Section and, in addition:

(a) the consent of the Company (such consent not to be unreasonably withheld or delayed) shall be required unless (x) a Default or Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Participant, an Affiliate of a Participant or an Approved Fund; provided that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof;

(b) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitments if such assignment is to a person that is not a Participant with a Commitment, an Affiliate of such Participant or an Approved Fund with respect to such Participant; and

(c) the consent of the Issuing Bank shall be required for each assignment;

(v) the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, and shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent) and the assignee, if it shall not be a Participant, shall deliver to the Administrative Agent an Administrative Questionnaire and all applicable tax forms;

(vi) no such assignment shall be made to (A) the Company or any of the Company’s Affiliates or Subsidiaries or (B) to any Defaulting Participant or any of its subsidiaries, or any person who, after becoming a Participant hereunder, would constitute any of the foregoing persons;

(vii) no assignment shall be to a natural person; and

(viii) in connection with any assignment of rights and obligations of any Defaulting Participant hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the

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consent of the Participant and the Administrative Agent, the applicable pro rata share of L/C Disbursements (or participations therein) previously requested but not funded by the Defaulting Participant, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Participant to the Administrative Agent, the Issuing Bank and each other Participant hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all participations in Letters of Credit in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Participant hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Participant for all purposes of this Agreement until such compliance occurs.

(ix) Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Participant under this Agreement, and the assigning Participant thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Participant’s rights and obligations under this Agreement, such Participant shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.05, 2.09 and 9.05 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Participant will constitute a waiver or release of any claim of any party hereunder arising from that Participant’s having been a Defaulting Participant. Any assignment or transfer by a Participant of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Participant of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

(c) The Administrative Agent, acting for this purpose as an agent of the Company, shall maintain at one of its offices in The City of New York a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Participants, and the Commitment of each Participant pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive and the Company, the Administrative Agent, the Issuing Bank and the Participants may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Participant hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Company and the Issuing Bank, at any reasonable time and from time to time upon reasonable prior notice.

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(d) Each Participant may without the consent of the Company, the Issuing Bank or the Administrative Agent sell participations to one or more banks or other persons (other than a natural person, the Company or any of the Company’s Affiliates or Subsidiaries) in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment); provided, however, that (i) such Participant’s obligations under this Agreement shall remain unchanged and (ii) such Participant shall remain solely responsible to the other parties hereto for the performance of such obligations. Any agreement or instrument pursuant to which a Participant shall sell a participation shall provide that such Participant retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or person hereunder, increasing or extending the Commitments in which such participating bank or person has an interest or releasing any Guarantor (other than in connection with the sale of such Guarantor in a transaction permitted by Section 6.08) or all or substantially all of the Collateral). Each Participant shall maintain a register (the “Participation Register”) identifying any person to whom it has sold a participation and each Participant shall provide access to such Participation Register to the Company upon the Company’s reasonable request.

(e) A person to which a Participant sells a participation shall not be entitled to receive any greater payment under Sections 2.05 and 2.09 than the applicable Participant would have been entitled to receive with respect to the participation sold to such person (except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after such person acquired the applicable participation), unless the sale of the participation to such person is made with the Company’s prior written consent. A person to which a Participant sells a participation that would be a Foreign Participant if it were a Participant shall not be entitled to the benefits of Section 2.09 unless the Company is notified of the participation sold to such participant and such participant agrees, for the benefit of the Company, to comply with Section 2.09 as though it were a Participant.

(f) Any Participant may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Participant, including any pledge or assignment to secured obligations to a Federal Reserve Rate; provided that no such pledge or assignment shall release such Participant from any of its obligations hereunder or substitute any such pledge or assignee for such Participant as a party hereto.

(g) In the event that any Participant shall become a Defaulting Participant or S&P, Moody’s and Thompson’s BankWatch (or InsuranceWatch Ratings Service, in the case of Participants that are insurance companies (or Best’s Insurance Reports, if such insurance company is not rated by Insurance Watch Ratings Service)) shall, after the date that any Participant becomes a Participant, downgrade the long-term certificate deposit ratings of such Participant, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Participant that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch Ratings Service)) (or, with respect to any Participant that is not rated by any such ratings service or provider or the Issuing Bank shall have reasonably determined that there has occurred a material adverse change

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in the financial condition of any such Participant, or a material impairment of the ability of any such Participant to perform its obligations hereunder, as compared to such condition or ability as of the date that any such Participant became a Participant) then the Issuing Bank shall have the right, but not the obligation, at its own expense, upon notice to such Participant and the Administrative Agent, to replace such Participant with an assignee (in accordance with and subject to the restrictions contained in paragraph (b) above), and such Participant hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in paragraph (b) above) all its interests, rights and obligations in respect of its Commitment to such assignee; provided, however, that (i) no such assignment shall conflict with any law, rule and regulation or order of any Governmental Authority and (ii) the Issuing Bank or such assignee, as the case may be, shall pay to such Participant in immediately available funds on the date of such assignment any amounts accrued for such Participant’s account or owed to it hereunder.

SECTION 9.05. Expenses; Indemnity. (a) The Company shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Credit Documents, or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Participant or the Issuing Bank (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Participant or the Issuing Bank), any Participant or the Issuing Bank, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Credit Documents, including its rights under this Section, or (B) in connection with the Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such extensions of credit hereunder.

(b) The Company shall indemnify the Administrative Agent (and any sub-agent thereof), each Participant and the Issuing Bank, and each Related Party of any of the foregoing persons (each such person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Company or any other Credit Party) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such

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demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property owned or operated by the Company or any of its Subsidiaries, or any Environmental Liability related in any way to the Company or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company or any other Credit Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (x) the gross negligence or willful misconduct of such Indemnitee (or any Related Party of such Indemnitee) or (y) solely in the case of a claim brought by the Borrower, a material breach of such Indemnitee’s obligations under the Credit Documents in bad faith.

(c) To the extent that the Company for any reason fails to indefeasibly pay any amount required under paragraph (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Bank or any Related Party of any of the foregoing, each Participant severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Bank or such Related Party, as the case may be, such Participant’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Participant’s share of the Total L/C Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Participant); provided that with respect to such unpaid amounts owed to the Issuing Bank solely in its capacity as such, only the Participants shall be required to pay such unpaid amounts, such payment to be made severally among them based on such Participants’ Pro Rata Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) provided, further, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or the Issuing Bank in connection with such capacity.

(d) To the fullest extent permitted by applicable law, the Company shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Letter of Credit, or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby.

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(e) All amounts due under this Section shall be payable promptly after demand therefor.

(f) Each party’s obligations under this Section shall survive the termination of the Credit Documents and payment of the obligations hereunder.

SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Participant, the Issuing Bank, and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Participant, the Issuing Bank or any such Affiliate, to or for the credit or the account of the Company or any other Credit Party against any and all of the obligations of the Company or such Credit Party now or hereafter existing under this Agreement or any other Credit Document to such Participant or the Issuing Bank or their respective Affiliates, irrespective of whether or not such Participant, Issuing Bank or Affiliate shall have made any demand under this Agreement or any other Credit Document and although such obligations of the Company or such Credit Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Participant or the Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Participant shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.12 and, pending such payment, shall be segregated by such Defaulting Participant from its other funds and deemed held in trust for the benefit of the Administrative Agent, the Issuing Bank, and the Participants, and (y) the Defaulting Participant shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Participant as to which it exercised such right of setoff. The rights of each Participant, the Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Participant, the Issuing Bank or their respective Affiliates may have. Each Participant and the Issuing Bank agree to notify the Company and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 9.07. Applicable Law. This Agreement and the other Credit Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Credit Document (except, as to any other Credit Document, as expressly set forth therein) and the transactions

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contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.

SECTION 9.08. Waivers; Amendment. (a)No failure or delay of the Administrative Agent, any Participant or the Issuing Bank in exercising any power or right hereunder or under any other Credit Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Participants hereunder and under the other Credit Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Credit Document or consent to any departure by the Company or any other Credit Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Company or Shea Corp. in any case shall entitle the Company or Shea Corp. to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any other Credit Document nor any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company, Shea Corp. and the Required Participants; provided, however, that no such agreement shall (i) decrease the principal amount of or extend the date for reimbursement of an L/C Disbursement or payment of interest thereon, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any L/C Disbursement, without the prior written consent of the Issuing Bank and each Participant directly adversely affected thereby, (ii) increase or extend the Commitment or decrease or extend the date for payment of any Fees of any Participant without the prior written consent of such Participant, (iii) amend or modify the pro rata requirements of Section 2.06, the provisions of Section 9.04(g) or the provisions of this Section or release all or substantially all the value of the Guarantees or all or substantially all of the Collateral, without the prior written consent of, the Issuing Bank and each Participant or (iv) reduce the percentage contained in the definition of the term “Required Participants” without the prior written consent of each Participant; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank hereunder or under any other Credit Document without the prior written consent of the Administrative Agent or the Issuing Bank.

SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any L/C Disbursement (or participation therein), together with all fees, charges and other amounts which are treated as interest on such L/C Disbursement (or participation therein) under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum

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Rate”) which may be contracted for, charged, taken, received or reserved by the Issuing Bank or the Participant holding such participation in accordance with applicable law, the rate of interest payable in respect of such L/C Disbursement (or participation therein) hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such L/C Disbursement (or participation therein) but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Issuing Bank or Participant in respect of other participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Issuing Bank or Participant.

SECTION 9.10. Entire Agreement. This Agreement and the other Credit Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Credit Documents. Nothing in this Agreement or in the other Credit Documents, expressed or implied, is intended to confer upon any person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder (including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Participants) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Credit Documents.

SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

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SECTION 9.12. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Credit Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 9.13. Counterparts. (a)This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03. This Agreement and the other Credit Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed signature page to this Agreement by facsimile transmission or in electronic (i.e., “pdf” or “tif”) format shall be as effective as delivery of a manually signed counterpart of this Agreement.

(b) The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

SECTION 9.14. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each of Shea Corp. and the Company hereby irrevocably and unconditionally agrees, that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Participant, the Issuing Bank, or any Related Party of the foregoing in any way relating to this Agreement or any other Credit Document or the transactions relating hereto or thereto, in any forum other than the courts of

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the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Credit Document shall affect any right that the Administrative Agent, any Participant or the Issuing Bank may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against the Company, Shea Corp. or their respective properties in the courts of any jurisdiction.

(b) Each of Shea Corp. and the Company hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Credit Documents in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.16. Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Participants agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates and to its Related Parties (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority or purporting to have jurisdiction over such person or its Related Parties (including any self-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under the other Credit Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 9.16, to (i) any assignee of or participant in, or any prospective assignee of or participant in any of its rights or obligations under this

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Agreement and the other Credit Documents or (ii) any actual or prospective counterparty (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Company and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Company or its Subsidiaries or the Facilities or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP with respect to the facility, (h) with the consent of the Company or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 9.16 or (y) becomes available to the Administrative Agent, any Participant the Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Company. For the purposes of this Section, “Information” shall mean all information received from the Company or Shea Corp. and related to the Company or Shea Corp. or their respective businesses, other than any such information that was available to the Administrative Agent, the Issuing Bank or any Participant on a nonconfidential basis prior to its disclosure by the Company or Shea Corp. Any person required to maintain the confidentiality of Information as provided in this Section 9.16 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord its own confidential information.

SECTION 9.17. USA PATRIOT Act Notice. The Issuing Bank, each Participant and the Administrative Agent (for itself and not on behalf of any Participant) hereby notifies Shea Corp. and the Company that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies Shea Corp. and the Company, which information includes the name and address of Shea Corp. and the Company and other information that will allow the Issuing Bank, such Participant or the Administrative Agent, as applicable, to identify Shea Corp. and the Company in accordance with the USA PATRIOT Act.

ARTICLE X

GUARANTEE

SECTION 10.01. The Guarantee. Each Guarantor irrevocably and unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such extension or renewal of any Obligation. Each Guarantor waives presentment to, demand of payment from and protest to the Company or any other Credit Party of

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any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

SECTION 10.02. Guarantee of Payment; Continuing Guarantee. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether (i) at the stated maturity, by acceleration or otherwise and (ii) or not any bankruptcy or similar proceeding shall have stayed the accrual of collection of any of the Obligations or operated as a discharge thereof) and not merely of collection, and waives any right to require that any resort be had by the Administrative Agent or any other Secured Party to any security held for the payment of the Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of the Company, any other party, or any other person. Each Guarantor agrees that its guarantee hereunder is continuing in nature and applies to all Obligations, whether currently existing or hereafter incurred.

SECTION 10.03. No Limitations. (a)Except for termination of a Guarantor’s obligations hereunder as expressly provided in Section 10.10 and except for the limitations set forth in Section 10.09 or, with respect to any Guarantor that becomes a party hereto pursuant to Section 10.08 or otherwise, in any Supplement to this Agreement, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations, any impossibility in the performance of the Obligations, or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by reason of:

(i) the failure of the Administrative Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Credit Document or otherwise;

(ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Credit Document or any other agreement, including with respect to any other Guarantor under this Agreement;

(iii) the failure to perfect any security interest in, or the exchange, substitution, release or any impairment of, any security held by the Administrative Agent or any other Secured Party for the Obligations or any of them;

(iv) any default, failure or delay, wilful or otherwise, in the performance of the Obligations;

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(v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the payment in full in cash or immediately available funds of all the Obligations (other than contingent or unliquidated obligations or liabilities));

(vi) any illegality, lack of validity or enforceability of any Obligation;

(vii) any change in the corporate existence, structure or ownership of any Credit Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting a Credit Party or its assets; or

(viii) any other circumstance (including without limitation, any statute of limitations but excluding, the payment in full in cash or immediately available funds of all the Obligations (other than contingent or unliquidated expense reimbursement or indemnification obligations or liabilities) or any existence of or reliance on any representation by the Administrative Agent that might otherwise constitute a defense to, or a legal or equitable discharge of, the Company or the Guarantor or any other guarantor or surety.

(ix) Each Guarantor expressly authorizes the Secured Parties to take and hold security for the payment and performance of the Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Obligations, all without affecting the obligations of any Guarantor hereunder.

(b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of the Company or any other Credit Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Company or any other Credit Party, other than the payment in full in cash of all the Obligations. The Administrative Agent and the other Secured Parties may, subject to the terms of the Security Documents, instruct the Collateral Agent to foreclose (and the Collateral Agent may foreclose) on any security held by or on behalf of one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Company or any other Credit Party or exercise any other right or remedy available to them against the Company or any other Credit Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Company or any other Loan Party, as the case may be, or any security.

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SECTION 10.04. Reinstatement. Each of the Guarantors agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Administrative Agent or any other Secured Party upon the bankruptcy or reorganization of the Company, any other Credit Party or otherwise or in the event that any contingent or unliquidated obligations or liabilities are not paid in full when due.

SECTION 10.05. Agreement To Pay; Contribution; Indemnity and Subrogation. (a)In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company or any other Credit Party to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation.

(b) Each Guarantor that makes a payment under its guarantee shall be entitled, upon payment in full of all Obligations, to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

(c) In the event that (a) a payment in respect of an obligation shall be made by any Guarantor, the Company and Shea Corp. shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payments shall have been made to the extent of such payment and (b) any assets of any Guarantor shall be sold pursuant to this Agreement or any Security Document to satisfy in whole or in part any Obligation owed to any Secured Party, the Company and Shea Corp. shall indemnify such Guarantor in an amount equal to the greater of the book value of the fair marked value of the assets so sold.

(d) Each Guarantor (a “Contributing Party”) agrees (subject to Section 10.07) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Obligation or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy any Obligation owed to any Secured Party and such other Guarantor (the “Claiming Party”) shall not have been fully indemnified by the Issuers as provided in paragraph (c) above, the Contributing Party shall indemnify the Claiming Party in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Party on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 10.08, the date of the supplement hereto executed and delivered by such Guarantor). Any

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Contributing Party making any payment to a Claiming Party pursuant to this Section 10.05 shall (subject to Section 10.07) be subrogated to the rights of such Claiming Party under paragraph (c) to the extent of such payment.

SECTION 10.06. Information. Each Guarantor (a) assumes all responsibility for being and keeping itself informed of the Company’s and each other Credit Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and (b) agrees that none of the Administrative Agent or the other Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

SECTION 10.07. Subordination. (a)Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Section 10.05 and all other rights of the Guarantors of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of the Obligations. No failure on the part of the Issuers or any Guarantor to make the payments required by Section 10.05 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder.

(b) Each Guarantor hereby agrees that all Indebtedness and other monetary obligations owed by it to, or to it by, any other Guarantor, either of the Issuers or any other Subsidiary shall be fully subordinated to the payment in full in cash of the Obligations.

SECTION 10.08. Additional Guarantors. Upon execution and delivery by the Administrative Agent and any Subsidiary that is required to become a party hereto by Section 5.05 of an instrument in the form of Exhibit F hereto (with such additions to such form as the Administrative Agent and the Company may reasonably agree in the case of any such Subsidiary) (a “Supplement”), such entity shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any such instrument shall not require the consent of any other party to this Agreement. The rights and obligations of each party to this Agreement shall remain in full force and effect notwithstanding the addition of any new party to this Agreement.

SECTION 10.09. Maximum Liability. Each Guarantor, and by its acceptance of this guarantee, the Administrative Agent and each Participant hereby confirms that it is the intention of all such Persons that this guarantee and the Obligations of each Guarantor hereunder not constitute a

103

fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state or non-U.S. law to the extent applicable to this guarantee and the Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Administrative Agent, the Participants and the Guarantors hereby irrevocably agree that the Obligations of each Guarantor under this guarantee at any time shall be limited to the maximum amount as will result in the Obligations of such Guarantor under this guarantee not constituting a fraudulent transfer or conveyance.

SECTION 10.10. Release of Guarantors. A Guarantor will be released from its obligations under this Article X (other than any obligation that may have arisen under Section 10.05):

(i) upon the sale (including any sale pursuant to any exercise of remedies by a holder of Indebtedness of the Company or of such Guarantor) or other disposition (including by way of consolidation or merger) of a Guarantor,

(ii) upon the sale or disposition of all or substantially all the assets of such Guarantor,

(iii) upon the designation of such Guarantor as an Unrestricted Subsidiary in accordance with the terms of this Agreement,

(iv) upon the full satisfaction of the Obligations;

(v) provided, however, that in the case of clauses (i) and (ii) above, (A) such sale or other disposition is made to a person other than the Company or a Subsidiary of the Company, (B) such sale or disposition is otherwise permitted by this Agreement and (C) the Company provides an Officers’ Certificate to the Administrative Agent to the effect that the Company will comply with its obligations under Section 6.04.

(vi) At the request of the Company, the Administrative Agent shall execute and deliver an appropriate instrument evidencing such release.

104

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

SHEA HOMES LIMITED PARTNERSHIP,
a California limited partnership
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Treasurer
SHEA HOMES FUNDING CORP., a Delaware corporation
By:	/s/ James G. Shontere
	Name:	James G. Shontere
	Title:	Chief Financial Officer and Secretary
By:	/s/ Robert R. O’Dell
	Name:	Robert R. O’Dell
	Title:	Vice President

[Signature Page to the Letter of Credit Facility Agreement]

GUARANTORS:

HIGHLANDS RANCH DEVELOPMENT CORPORATION,

a Colorado corporation

By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
MOUNTAINBROOK VILLAGE COMPANY, an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SAND CREEK CATTLE COMPANY, a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SERENADE AT NATOMAS, LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SEVILLE GOLF AND COUNTRY CLUB, LLC, an Arizona limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA CAPITAL II, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA COMMUNITIES MARKETING COMPANY,

a Delaware corporation

By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA FINANCIAL SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHEA HOMES, INC., a Delaware corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHEA HOMES AT MONTAGE, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA HOMES SOUTHWEST, INC., an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHEA HOMES VANTIS, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHEA INSURANCE SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA LA QUINTA LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer
SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA OTAY VILLAGE 11, LLC,
a California limited liability company
By:	Shea Homes Limited Partnership,
	a California limited partnership,
	Its Sole Member
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
		Its sole General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
			Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
				Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA PROCTOR VALLEY, LLC,
a California limited liability company
By:	Shea Homes Limited Partnership,
	a California limited partnership,
	Its Sole Member
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
		Its sole General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
			Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
				Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA PROPERTIES OF COLORADO, INC.,
a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHEA RIVERMARK VILLAGE, LLC, a California limited liability company
By:	Shea Homes Limited Partnership,
	a California limited partnership,
	Its Sole Member and Manager
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
		Its sole General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
			Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
				Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHEA TONNER HILLS, LLC,
a Delaware limited liability company
By:	Shea Homes Limited Partnership,
	a California limited partnership,
	Its sole Member and Manager
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
		Its sole General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
			Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
				Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA VICTORIA GARDENS, LLC,
a Florida limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SH JUBILEE, LLC,
a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

SHI JV HOLDINGS, LLC,
a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHLP JV HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

TOWER 104 GATHERING, LLC,
a Colorado limited liability company
By:	Shea Homes Limited Partnership,
	a California limited partnership,
	Its Sole Member and Manager
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
		Its sole General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
			Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
				Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

TOWER 104 OIL, LLC,
a Colorado limited liability company
By:	Shea Homes Limited Partnership,
	a California limited partnership,
	Its Sole Member and Manager
	By:	J.F. Shea, L.P.,
		a Delaware limited partnership,
		Its sole General Partner
		By:	JFS Management, L.P.,
			a Delaware limited partnership,
			Its sole General Partner
			By:	J.F. Shea Construction Management, Inc.,
				a California corporation,
				Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

TRILOGY ANTIOCH, LLC,
a California limited liability company
By:	SHEA CAPITAL II, LLC,
	a Delaware limited liability company,
	Its sole Member
	By:	Shea Homes Limited Partnership,
		a California limited partnership,
		Its Manager
		By:	J.F. Shea, L.P.,
			a Delaware limited partnership,
			Its sole General Partner
			By:	JFS Management, L.P.,
				a Delaware limited partnership,
				Its sole General Partner
				By:	J.F. Shea Construction Management, Inc.,
					a California corporation,
					Its sole General Partner
					By:	/s/ James G. Shontere
						Name: James G. Shontere
						Title: Secretary
					By:	/s/ Robert R. O’Dell
						Name: Robert R. O’Dell
						Title: Treasurer
UDC ADVISORY SERVICES, INC.,
an Illinois corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

UDC HOMES CONSTRUCTION, INC.,
an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
VISTANCIA CONSTRUCTION, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc.,
	an Arizona corporation,
	Its Manager
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer
VISTANCIA MARKETING, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc.,
	an Arizona corporation,
	Its Manager
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

[Signature Page to the Letter of Credit Facility Agreement]

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, individually and as Administrative Agent and Issuing Bank,
	by	/s/ BILL O’DALY
		Name:	BILL O’DALY
		Title:	DIRECTOR
	by	/s/ Sanja Gazahi
		Name:	Sanja Gazahi
		Title:	Associate

[Signature Page to the Letter of Credit Facility Agreement]

EX-10.2

Exhibit 10.2

EXECUTION COPY

SECURITY AGREEMENT

dated as of

May 10, 2011

among

SHEA HOMES LIMITED PARTNERSHIP,

SHEA HOMES FUNDING CORP.,

THE GUARANTORS IDENTIFIED HEREIN,

CREDIT SUISSE AG,

as Administrative Agent

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Agent

Reference is made to the Intercreditor Agreement (as defined in this Agreement). Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the terms of the Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of this Agreement and the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control.

TABLE OF CONTENTS

ARTICLE I
Definitions
SECTION 1.01. Defined Terms	1
SECTION 1.02. Other Defined Terms	1
ARTICLE II
Reserved.
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge	8
SECTION 3.02. Delivery of the Pledged Collateral	10
SECTION 3.03. Representations, Warranties and Covenants	10
SECTION 3.04. Certification of Limited Liability Company and Limited Partnership Interests	11
SECTION 3.05. Registration in Nominee Name; Denominations	12
SECTION 3.06. Voting Rights; Dividends and Interest	12
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest	14
SECTION 4.02. Representations and Warranties	17
SECTION 4.03. Covenants	19
SECTION 4.04. Other Actions	22
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral	25
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default	26
SECTION 5.02. Application of Proceeds	28
SECTION 5.03. Grant of License to Use Intellectual Property	29
SECTION 5.04. Securities Act	30

ii

ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation	30
SECTION 6.02. Contribution and Subrogation	31
SECTION 6.03. Subordination	31
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices	31
SECTION 7.02. Waivers; Amendment	32
SECTION 7.03. Collateral Agent’s Fees and Expenses; Indemnification	32
SECTION 7.04. Successors and Assigns	33
SECTION 7.05. Survival of Agreement	33
SECTION 7.06. Counterparts; Effectiveness; Several Agreement	33
SECTION 7.07. Severability	34
SECTION 7.08. Reserved.	34
SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of Process	34
SECTION 7.10. WAIVER OF JURY TRIAL	35
SECTION 7.11. Headings	35
SECTION 7.12. Security Interest Absolute	35
SECTION 7.13. Termination or Release	35
SECTION 7.14. Additional Guarantor	36
SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact	36
SECTION 7.16. Intercreditor Agreement Govern	37

iii

Schedules
Schedule I	Guarantors
Schedule II	Pledged Equity Interests; Pledged Debt Securities
Schedule III	Intellectual Property
Schedule IV	Commercial Tort Claims
Exhibits
Exhibit I	Form of Supplement
Exhibit II	Form of Perfection Certificate

iv

SECURITY AGREEMENT dated as of May 10, 2011 (this “Agreement”), among Shea Homes Limited Partnership, Shea Homes Funding Corp., the Guarantors from time to time party hereto, Credit Suisse AG, as Administrative Agent under the LC Facility Agreement and Wells Fargo Bank, National Association, as Collateral Agent.

Reference is made to (i) the Indenture dated as of May 10, 2011 (as amended, supplemented or otherwise modified from time to time, the “Indenture”), among Shea Homes Limited Partnership, a California limited partnership (the “Company”), Shea Homes Funding Corp., a Delaware corporation (the “Corporate Issuer” and, together with the Company, the “Issuers”), the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, (ii) the Letter of Credit Facility Agreement dated as of May 10, 2011 (as amended, supplemented or otherwise modified from time to time, the “LC Facility Agreement”) among the Company, the Corporate Issuer, the guarantors party thereto, Credit Suisse AG, as administrative agent (in such capacity, the “Administrative Agent”) and issuing bank and the participants from time to time party thereto and (iii) the Intercreditor Agreement dated as of May 10, 2011 (as amended, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among the Administrative Agent, the Collateral Agent, the Company, the Corporate Issuer, the Trustee and the other parties party thereto. As an inducement to the Holders to purchase Notes from the Issuers, and the Issuing Bank and Participants to extend credit to the Issuers, the Restricted Subsidiaries and their respective joint ventures, the Issuers and the Guarantors have agreed to enter into this Agreement to grant the Collateral Agent (for the benefit of the Secured Parties) a lien on the Collateral (as defined below). Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. (a) Each capitalized term used but not defined herein shall have the meaning specified in the Intercreditor Agreement and, if not defined therein, then in the Indenture or the LC Facility Agreement, as applicable, as in effect on the date hereof. Terms defined here by reference to the Intercreditor Agreement, the Indenture or the LC Facility Agreement have the meanings set forth in such documents, as in effect on the date hereof. Each term defined in the New York UCC and not defined in this Agreement shall have the meaning specified therein. The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.

(b) The rules of construction specified in Section 1.02 of the Indenture and Section 1.02 of the LC Facility Agreement also apply to this Agreement.

SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“Account Debtor” means any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.

“Administrative Agent” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Applicable Authorized Representative” shall have the meaning assigned to such term in the Intercreditor.

“Article 9 Collateral” has the meaning assigned to such term in Section 4.01.

“Business Day” shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required to close by law.

“Claiming Party” has the meaning assigned to such term in Section 6.02.

“Collateral” means Article 9 Collateral and Pledged Collateral and, where the context requires, any assets of any Credit Party upon which a Lien is granted pursuant to any other Security Document to secure any Obligations.

“Collateral Accounts” shall mean the Controlled Deposit Accounts and the Controlled Securities Accounts.

“Collateral Agent” shall mean Wells Fargo Bank, National Association, in its capacity as collateral agent as appointed hereunder and under the Intercreditor Agreement, and its successors and permitted assigns in such capacity.

“Commercial Tort Action” shall mean any action, other than an action primarily seeking declaratory or injunctive relief with respect to claims asserted or expected to be asserted by Persons other than the Grantors, that is commenced by a Grantor in which such Grantor seeks damages arising out of commercial torts committed against it that would reasonably be expected to result in a damage award to it exceeding $500,000.

“Company” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Contributing Party” has the meaning assigned to such term in Section 6.02.

“Control” has the following meanings:

(a) when used with respect to any Security or Security Entitlement, the meaning specified in New York UCC Section 8-106; and

2

(b) when used with respect to any Deposit Account, that the Collateral Agent shall have met one of the requirements for control specified in New York UCC Section 9-104.

“Controlled Deposit Account” means a Deposit Account of a Grantor (i) that is subject to a Deposit Account Control Agreement or (ii) as to which the Collateral Agent is the Depositary Bank’s “customer” (as defined in New York UCC Section 4-104).

“Controlled Securities Account” means a Securities Account of a Grantor that is maintained in the name of such Grantor at an office of a Securities Intermediary located in the United States and, together with all Financial Assets credited thereto and all related Security Entitlements, is subject to a Securities Account Control Agreement among such Grantor, the Collateral Agent and such securities intermediary.

“Copyright License” means any written agreement, now or hereafter in effect, granting to any third party any right now or hereafter under any Copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any Copyright now or hereafter owned by any third party, or that a third party now or hereafter otherwise has the right to license and all rights of such Grantor under any such agreement.

“Copyrights” means, with respect to any Person, all the following now owned or hereafter acquired by such Person: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office (or any similar office in any other country), including, in the case of clauses (a) and (b), those listed on Schedule III.

“Corporate Issuer” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Credit Party” means, the Company, the Corporate Issuer and the Guarantors.

“Deposit Account Control Agreement” means, with respect to any Deposit Account of any Grantor, an agreement in form and substance reasonably satisfactory to the Administrative Agent and the Applicable Authorized Representative and such Grantor among such Grantor, the Collateral Agent and the relevant Depositary Bank establishing the Collateral Agent’s Control with respect to such Deposit Account.

“Depositary Bank” shall mean a bank at which a Controlled Deposit Account is maintained.

“Event of Default” shall mean an “Event of Default” as defined in the Intercreditor Agreement which is continuing.

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“Excluded Accounts” has the meaning assigned to such term in Section 4.01(a).

“Excluded Collateral” has the meaning assigned to such term in Section 3.01(b).

“Excluded Property” has the meaning assigned to such term in Section 4.01(a).

“Federal Securities Laws” has the meaning assigned to such term in Section 5.04.

“General Intangibles” shall mean “General Intangibles” as defined in the New York UCC and shall include Intellectual Property.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national body exercising such powers or functions, such as the European Union or the European Central Bank).

“Grantors” means the Company, the Corporate Issuer and the Guarantors.

“Guarantors” means the Persons set forth on Schedule I hereto and each other Person that becomes a Guarantor pursuant to the Indenture or the LC Facility Agreement after the Issue Date.

“Indenture” has the meaning assigned to such term in the introductory paragraph of this Agreement.

“Intellectual Property” means all intellectual and similar property of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, domain names, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

“Intercompany Note” has the meaning assigned to such term in Section 3.02(b).

“Intercreditor Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Issue Date” has the meaning assigned to such term in the Indenture.

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“Issuers” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“LC Facility Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“LC Facility Documents” means (a) the LC Facility Agreement, this Agreement, the Security Documents (as defined in the LC Facility Agreement), the Intercreditor Agreement, the Real Property Collateral Management Agreement and any other document designated by the Administrative Agent as an LC Facility Document and (b) any other related document or instrument executed and delivered pursuant to any LC Facility Document described in clause (a) evidencing or governing any LC Facility Obligations thereunder.

“LC Facility Obligations” means (a)(i) the due and punctual payment by the Credit Parties of (1) each payment required to be made by the Credit Parties or joint ventures under the LC Facility Agreement in respect of any Letter of Credit, when and as due (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (2) all other monetary obligations of the Credit Parties to any of the Secured Parties under the LC Facility Documents, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (ii) the due and punctual performance of all other obligations of the Credit Parties under or pursuant to the LC Facility Documents, and (iii) the due and punctual payment and performance of all the obligations of each other Credit Party under or pursuant to the LC Facility Documents (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) or (b) any one or more refinancings of the then outstanding LC Facility Obligations, provided that all commitments under the predecessor letter of credit facility have been terminated, the Participants have no further obligation to issue or extend letters of credit and all outstanding letters of credit have been cash collateralized or other arrangements reasonably satisfactory to the issuing bank or applicable Participant shall have been made with respect thereto.

“Letter of Credit” shall mean a “Letter of Credit” issued under, and as defined in, the LC Facility Agreement.

“License” means any Patent License, Trademark License, Copyright License or other license or sublicense agreement to which any Grantor is a party, including those listed on Schedule III.

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“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

“Note Documents” means (a) the Notes, the Indenture, this Agreement, the Security Documents (as defined in the Indenture), the Intercreditor Agreement, the Real Property Collateral Management Agreement and (b) any other related document or instrument executed and delivered pursuant to any Note Document described in clause (a) evidencing or governing any Notes Obligations thereunder.

“Notes Obligations” means (a) the due and punctual payment by the Issuers of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Notes, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of either Issuer to any of the Secured Parties under the Indenture and each of the other Note Documents, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Issuers to any of the Secured Parties under or pursuant to the Indenture and each of the other Note Documents, and (c) the due and punctual payment and performance of all the obligations of each other Grantor to any of the Secured Parties under or pursuant to this Agreement and each of the other Note Documents (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).

“Obligations” means, collectively, the LC Facility Obligations and the Notes Obligations.

“Parallel Obligations” means the independent obligations of any of the Credit Parties arising pursuant to the Intercreditor Agreement to pay to the Collateral Agent sums equal to the sums owed by such Credit Party to the Secured Parties (or any of them) under the Note Documents or the LC Facility Documents.

“Patent License” means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or that any Grantor now or hereafter otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

“Patents” means with respect to any Person all the following now owned or hereafter acquired by such Person: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other

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country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in any other country, including those listed on Schedule III, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

“Perfection Certificate” means a certificate substantially in the form of Exhibit II, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by the chief financial officer and the chief legal officer of the Issuers.

“Pledged Collateral” has the meaning assigned to such term in Section 3.01(a).

“Pledged Debt Securities” has the meaning assigned to such term in Section 3.01(a).

“Pledged Equity Interests” has the meaning assigned to such term in Section 3.01(a).

“Pledged Securities” means any promissory notes, stock certificates, unit certificates, or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

“Real Property Collateral Management Agreement” means the Real Property Collateral Management Agreement dated as of May 10, 2011, among the Issuers and the Collateral Agent.

“Secured Parties” means (a) the Holders, (b) the Participants, (c) the Administrative Agent, (d) the Issuing Bank, (e) the Collateral Agent, (f) the Trustee, (g) the beneficiaries of each indemnification obligation undertaken by any Grantor under any Note Document or LC Facility Document and (h) the successors and assigns of each of the foregoing.

“Securities Account Control Agreement” means, when used with respect to a Securities Account of a Grantor, an agreement in form and substance reasonably satisfactory to the Administrative Agent and the Applicable Authorized Representative and such Grantor among the relevant securities intermediary, such Grantor and the Collateral Agent establishing the Collateral Agent’s Control with respect to such Securities Account.

“Security Documents” shall mean, this Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or otherwise executed and delivered to secure the Obligations.

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“Security Interest” has the meaning assigned to such term in Section 4.01(a).

“Trademark License” means any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party or that a third party now or hereafter otherwise has the right to license, and all rights of any Grantor under any such agreement.

“Trademarks” means, with respect to any Person, all the following now owned or hereafter acquired by such Person: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule III, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.

ARTICLE II

Reserved.

ARTICLE III

Pledge of Securities

SECTION 3.01. Pledge. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in, all such Grantor’s right, title and interest in, to and under (i)(x) the shares of capital stock and other Equity Interests owned by it including those listed on Schedule II, (y) any other Equity Interests obtained in the future by such Grantor and (z) the certificates representing all such Equity Interests (collectively, the “Pledged Equity Interests”); (ii)(x) the debt securities owned by it, including those listed opposite the name of such Grantor on Schedule II, (y) any debt securities in the future issued to such Grantor and (z) the promissory notes and any other instruments evidencing all such debt securities (the “Pledged Debt Securities”); (iii) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 3.01(a); (iv) subject to Section 3.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other

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Proceeds received in respect of, the securities referred to in clauses (i) and (ii) above; (v) subject to Section 3.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (i), (ii), (iii) and (iv) above; and (vi) all Proceeds of any of the foregoing (the items referred to in clauses (i) through (vi) above being collectively referred to as the “Pledged Collateral”)

(b) Notwithstanding the foregoing, the capital stock and securities of any Guarantor will constitute Pledged Collateral (or Article 9 Collateral, as the case may be) with respect to the Notes only to the extent that the securing of the Notes Obligations with such capital stock and securities would not require such Guarantor to file separate financial statements with the SEC under Rule 3-16 of Regulation S-X under the Securities Act. Subject to 3.01(d), in the event that Rule 3-16 of Regulation S-X under the Securities Act requires or is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation that would require) the filing with the SEC of separate financial statements of any Guarantor due to the fact that such Guarantor’s capital stock and securities secure the Notes Obligations, then the capital stock and securities of such Guarantor shall automatically be deemed not to be part of the Pledged Collateral and, to the extent previously delivered to the Collateral Agent, the certificates evidencing all such capital stock and securities shall be returned to such Guarantor (but only to the extent necessary for such Guarantor to not be subject to such requirement to provide separate financial statements) and such excluded portion of the capital stock and securities is referred to as the “Excluded Stock Collateral”. In such event, the Security Documents may be amended, modified or supplemented, without the consent of any Secured Party, to the extent necessary to release the security interests on the Excluded Stock Collateral. In the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to permit (or is replaced with another rule or regulation that would permit) any Guarantor’s Excluded Stock Collateral to secure the Notes Obligations in excess of the amount then pledged without the filing with the SEC of separate financial statements of such Guarantor, then the capital stock and securities of such Guarantor shall automatically be deemed to be a part of the Pledged Collateral (but only to the extent possible without such Guarantor becoming subject to any such filing requirement). In such event, the Security Documents may be amended or modified, without the consent of any Secured Party, to the extent necessary to subject to the Liens under the Security Documents such additional capital stock and securities.

(c) In addition, Pledged Collateral shall not include (and no security interest shall be granted in) (1) the Equity Interests in Partners Insurance Company, a Hawaii corporation and (2) any right, title or interest in or under any capital stock or other Equity Interests in any Persons that are bona fide joint ventures with third parties to the extent, but only to the extent, that such a grant is expressly prohibited by the organizational documents governing such Person.

(d) Notwithstanding the foregoing, unless and until the Discharge of LC Facility Obligations has occurred, any Pledged Collateral (or Article 9 Collateral, as the case may be) that would otherwise become Excluded Stock Collateral pursuant to Section 3.01(b) shall remain Pledged Collateral (or Article 9 Collateral, as the case may be) granted hereunder to secure the LC Facility Obligations.

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SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities.

(b) Each Grantor will (i) cause any Indebtedness that is owing to any Credit Party by another Credit Party to be evidenced by an intercompany note (the “Intercompany Note”) and (ii) in respect of any Indebtedness for borrowed money owed to such Grantor by any Person that is evidenced by a promissory note, pledge and deliver such promissory note to the Collateral Agent pursuant to the terms hereof.

(c) Upon delivery to the Collateral Agent, (i) any certificated Pledged Securities shall be accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities, which schedule shall be attached hereto as Schedule II and made a part hereof, provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

SECTION 3.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant to and with the Collateral Agent, for the benefit of the Secured Parties, that:

(a) Schedule II correctly sets forth, as of the date hereof, the percentage of the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Equity Interests and includes all Equity Interests, debt securities and promissory notes required to be pledged hereunder on the date hereof;

(b) the Pledged Equity Interests and Pledged Debt Securities have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Equity Interests, are fully paid and nonassessable (except for such assessments and capital contributions as are required in connection with the organizational documents of any Person that is not a wholly owned Subsidiary and whose Equity Interests constitute Pledged Equity Interests) and (ii) in the case of Pledged Debt Securities, are legal, valid and binding obligations of the issuers thereof; provided that, with respect to bona fide joint ventures with third parties, the representations made in this paragraph (b) must only be true and correct to the extent the Grantors have knowledge thereof;

(c) except for the security interests granted hereunder, each of the Grantors (i) is and will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule II as owned by such Grantor

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except to the extent such Grantor ceases to own such Pledged Securities as a result of disposition or other transfer made in compliance with the Indenture and the LC Facility Agreement, (ii) holds the same free and clear of all Liens, other than Liens created by this Agreement, Permitted Liens and transfers made in compliance with the Indenture and the LC Facility Agreement, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens created by this Agreement, Permitted Liens and transfers made in compliance with the Indenture and the LC Facility Agreement and (iv) will defend its title or interest thereto or therein against any and all Liens (other than the Liens created by this Agreement and Permitted Liens), however arising, of all Persons whomsoever;

(d) except for restrictions and limitations imposed by the Note Documents and the LC Facility Documents or securities laws generally, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter, by-law or other organizational document provisions or contractual restriction of any nature that might reasonably be expected to prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;

(e) each of the Grantors has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;

(f) no consent or approval of any Governmental Authority, any securities exchange or any other Person was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

(g) by virtue of the execution and delivery by the Grantors of this Agreement, when any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement, the Collateral Agent will obtain a legal, valid and perfected lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations, prior to all other liens and security interests created and perfected by a method other than by control under Article 9 of the New York UCC; and

(h) the pledge effected hereby is effective to vest in the Collateral Agent, for the benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein.

SECTION 3.04. Certification of Limited Liability Company and Limited Partnership Interests. Each Grantor agrees that interests in any wholly owned limited liability company or limited partnership owned by such Grantor and pledged hereunder shall be represented by a certificate, shall be a “security” within the meaning of Article 8

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of the New York UCC and shall be governed by Article 8 of the New York UCC. Each Grantor acknowledges and agrees that (i) to the extent each interest in any non-wholly owned limited liability company or limited partnership controlled now or in the future by such Grantor and pledged hereunder is a “security” within the meaning of Article 8 of the New York UCC and is governed by Article 8 of the New York UCC, such interest shall be certificated and (ii) each such interest shall at all times hereafter continue to be such a security and represented by such certificate. Each Grantor further acknowledges and agrees that with respect to any interest in any non-wholly owned limited liability company or limited partnership controlled now or in the future by such Grantor and pledged hereunder that is not a “security” within the meaning of Article 8 of the New York UCC, such Grantor shall at no time elect to treat any such interest as a “security” within the meaning of Article 8 of the New York UCC, nor shall such interest be represented by a certificate, unless such Grantor provides prior written notification to the Collateral Agent of such election and such interest is thereafter represented by a certificate that is promptly delivered to the Collateral Agent pursuant to the terms hereof.

SECTION 3.05. Registration in Nominee Name; Denominations. The Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities (i) in its own name as pledgee, (ii) the name of its nominee (as pledgee or as sub-agent) or (iii) the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent; provided that, in the case of clause (ii), an Event of Default has occurred and is continuing. Each Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor. The Collateral Agent shall at all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

SECTION 3.06. Voting Rights; Dividends and Interest. (a) Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent shall have notified the Grantors that their rights under this Section 3.06 are being suspended:

(i) each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Collateral or any part thereof for any purpose consistent with the terms of this Agreement, the Note Documents and the LC Facility Documents, provided that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Collateral or the rights and remedies of any of the Collateral Agent or the other Secured Parties under this Agreement or the Note Documents and the LC Facility Documents or the ability of the Secured Parties to exercise the same;

(ii) the Collateral Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above;

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(iii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Collateral to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Note Documents and the LC Facility Documents and applicable laws, provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity Interests or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement).

(b) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified the Grantors of the suspension of their rights under paragraph (a)(iii) of this Section 3.06, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02. After all Events of Default have been cured or waived and the Issuers have delivered to the Collateral Agent a certificate to that effect, the Collateral Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified the Grantors of the suspension of their rights under paragraph (a)(i) of this Section 3.06, then all rights of any Grantor to

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exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers, provided that, unless otherwise directed by requisite party pursuant to the Intercreditor Agreement, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights.

(d) Any notice given by the Collateral Agent to the Grantors suspending their rights under paragraph (a) of this Section 3.06 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s right to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

ARTICLE IV

Security Interests in Personal Property

SECTION 4.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in, all right, title and interest in and to any and all the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Article 9 Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all cash and Deposit Accounts;

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles;

(vii) all Instruments;

(viii) all Inventory;

(ix) all Investment Property;

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(x) Letter-of-Credit rights;

(xi) Commercial Tort Claims (as described in the Perfection Certificate or a document provided pursuant to Section 4.04(f));

(xii) all books and records pertaining to the Article 9 Collateral; and

(xiii) to the extent not otherwise included, all Proceeds and products of any and all the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

provided, however, that the Article 9 Collateral shall not include the following (collectively, the “Excluded Property”):

(A) personal property where the cost of obtaining a security interest or perfection thereof exceeds its benefits (as reasonably determined by the Company’s Governing Body in a resolution delivered to the Collateral Agent);

(B) assets, with respect to which any applicable law or the terms of any applicable contract prohibits the creation or perfection of security interests therein or that otherwise results in a default, waiver or termination of rights or privileges arising under such law or contract (other than to the extent that any such law or contract term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the New York UCC or any other applicable law or principles of equity); provided, however, that such security interest shall attach immediately at such time as the condition causing such prohibition shall be remedied and, to the extent severable, shall attach immediately to any portion of any such contract that does not result in any such prohibition, including any Proceeds of any such contract;

(C) all Trademarks and other Intellectual Property bearing the name “Shea” or a variant thereof; provided that (x) the Collateral Agent, the Administrative Agent and the Applicable Authorized Representative (for the benefit of the Secured Parties) shall have a non-exclusive License to use such Intellectual Property in connection with the exercise of remedies upon a Default or Event of Default and (y) the Grantors hereby grant to the Collateral Agent, the Administrative Agent and the Applicable Authorized Representative (for the benefit of the Secured Parties) such a License for such use in any such event;

(D) any trademark applications filed in the United States Patent and Trademark Office on the basis of such Grantor’s “intent-to-use” such trademark to the extent that granting a Security Interest in such trademark application prior to such filing would adversely affect the enforceability or validity or result in the voiding of such trademark application, unless and until acceptable evidence of use of the trademark has been filed with and accepted by the United States Patent and Trademark Office pursuant to Section 1(c) or Section 1(d) of the Lanham Act (15 U.S.C. 1051, et seq.), whereupon such trademark application will, without any further action taken on the part of such Grantor or the Collateral Agent, be deemed to constitute Collateral;

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(E) cash collateral supporting (i) deductible, retention and other obligations to insurance carriers, (ii) reimbursement claims in respect of letters of credit and surety providers, (iii) contingent claims arising in respect of community facility district, metro-district, mello-roos, subdivision improvement and similar obligations arising in the ordinary course of business of a homebuilder and (iv) cash management services;

(F) equity interests in joint ventures with respect to which the agreements governing such joint ventures prohibit the creation or perfection of security interests in such equity interests;

(G) any leasehold interests in real property;

(H) any real property in a community under development with a dollar amount of investment as of the most recent quarter end (as determined in accordance with GAAP) of less than $2,000,000 or with less than 10 lots remaining unsold;

(I) vehicles covered by a certificate of title; and

(J) (i) any Deposit Account or Securities Account that is established solely for the purpose of funding payroll, benefits, trust or other compensation benefits to employees and (ii) any other Deposit Account and Securities Account the aggregate balance in which does not exceed $2,000,000 for all such excluded accounts at any one time outstanding (the accounts described in clauses (i) and (ii), collectively the “Excluded Accounts”).

(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) indicate the Collateral as all assets of such Grantor or words of similar effect as being of an equal or lesser scope or with greater detail, and (ii) contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing or covering Article 9 Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Article 9 Collateral relates. Each Grantor agrees to promptly provide such information to the Collateral Agent.

Each Grantor also ratifies its authorization for the Collateral Agent to file in any relevant jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

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The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country) such documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.

(c) The Security Interest and the security interest granted pursuant to Article III are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.

SECTION 4.02. Representations and Warranties. The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:

(a) Each Grantor has good and valid rights in and title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained.

(b)(i) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name of each Grantor, is correct and complete as of the Issue Date; (ii) the Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations prepared by the Collateral Agent based upon the information provided to the Collateral Agent in the Perfection Certificate for filing in each governmental, municipal or other office specified in Schedule 6 to the Perfection Certificate (or specified by notice from the Issuers to the Collateral Agent after the Issue Date in the case of filings, recordings or registrations required by Section 4.22 of the Indenture and Section 5.05 of the LC Facility Agreement), are all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in Article 9 Collateral consisting of United States Patents, Trademarks and Copyrights) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of amended financing statements or continuation statements; (iii) each Grantor represents and warrants that a fully executed agreement in the form hereof (or a fully executed short form agreement (A) in the case of Trademarks and Copyrights, in form and substance substantially similar to the short form agreements delivered on the Issue Date or (B) in the case of Patents, in form and substance reasonably satisfactory to

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the Collateral Agent), and containing a description of all Article 9 Collateral consisting of Intellectual Property shall have been received and recorded within three months after the execution of this Agreement with respect to United States Patents and United States registered Trademarks (and Trademarks for which United States registration applications are pending) and within one month after the execution of this Agreement with respect to United States registered Copyrights has been delivered to the Collateral Agent for recording by the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable, and otherwise as may be required pursuant to the laws of any other necessary jurisdiction, to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Article 9 Collateral consisting of Patents, Trademarks and Copyrights in which a security interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or registration or application for registration thereof) acquired or developed after the date hereof).

(c) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Obligations, (ii) subject to the filings described in Section 4.02(b), a perfected first-priority security interest in all Article 9 Collateral (subject only to Permitted Liens) in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and (iii) a first-priority security interest that shall be perfected in all Article 9 Collateral (subject only to Permitted Liens) in which a security interest may be perfected upon the receipt and recording of this Agreement or the Short Form Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, within the three-month period (commencing as of the date hereof) pursuant to 35 U.S.C. § 261 or 15 U.S.C. § 1060 or the one month period (commencing as of the date hereof) pursuant to 17 U.S.C. § 205 and otherwise as may be required pursuant to the laws of any other necessary jurisdiction. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Permitted Liens that have priority as a matter of law and Permitted Liens expressly permitted to be prior to the Security Interest pursuant to the Indenture, the LC Facility Agreement and the other Security Documents.

(d) The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Permitted Liens. None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office or (iii) any assignment in which

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any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Permitted Liens.

SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify the Collateral Agent in writing of any change in (i) corporate name, (ii) the location of its chief executive office, its principal place of business or its principal accounting office, (iii) its identity or type of organization or corporate structure, (iv) its Federal Taxpayer Identification Number or organizational identification number or (v) its jurisdiction of organization. Each Grantor agrees to promptly provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the first sentence of this paragraph. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made (or provisions reasonably satisfactory to the Administrative Agent or Applicable Authorized Representative to make such filings prior to the lapse of the perfected security interest granted herein shall have been made) under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest, having the priority required by this Agreement, in all the Article 9 Collateral. Each Grantor agrees promptly to notify the Collateral Agent if (i) any material portion of the Article 9 Collateral owned or held by such Grantor is damaged, destroyed, or subject to condemnation and (ii) such Article 9 Collateral is material to the business of the Company and the Subsidiary Guarantors as a whole.

(b) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to Section 4.19(a) of the Indenture and Section 5.01 of the LC Facility Agreement, the Issuers shall deliver to the Collateral Agent a certificate executed by the chief financial officer and the chief legal officer of the Issuers (i) setting forth the information required pursuant to the Perfection Certificate or confirming that there has been no change in such information since the date of such certificate or the date of the most recent certificate delivered pursuant to this Section 4.03(c) and (ii) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings recordings or registrations, including all refilings, rerecordings and registrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (a) of this Section 4.03 to the extent necessary to protect and perfect the Security Interest for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). Each certificate delivered pursuant to this Section 4.03(c) shall identify in the format of Schedule III all registered Intellectual Property and applications for registration (other than any Intellectual Property that is Excluded Property) of any Grantor in existence on the date thereof and not then listed on such Schedules or previously so identified to the Collateral Agent.

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(c) Each Grantor shall, at its own expense, take any and all actions necessary to defend title to the Article 9 Collateral against all Persons and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien not permitted pursuant to Section 4.08 of the Indenture and Section 6.05 of the LC Facility Agreement.

(d) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be promptly pledged and delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral Agent.

Without limiting the generality of the foregoing, each Grantor hereby authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule III or adding additional schedules hereto to identify specifically any asset or item that may constitute Copyrights, exclusive Licenses, Patents or Trademarks, provided that any Grantor shall have the right, exercisable within 10 days after it has been notified by the Collateral Agent of the specific identification of such Collateral, to advise the Collateral Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Collateral. Each Grantor agrees that it will use commercially reasonable efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Collateral within 30 days after the date it has been notified by the Collateral Agent of the specific identification of such Collateral.

(e) Upon the occurrence of an Event of Default, the Collateral Agent and such Persons as the Collateral Agent may reasonably designate shall have the right, at the Grantors’ own cost and expense, to inspect the Article 9 Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the Article 9 Collateral is located, to discuss the Grantors’ affairs with the officers of the Grantors and their independent accountants and to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Article 9 Collateral, including, in the case of Accounts or Article 9 Collateral in the possession of any third party, by contacting Account Debtors or the third party possessing such Article 9 Collateral for the purpose of making such a verification; provided that, in the event such Event of Default has been cured in accordance with the LC Facility Agreement or the Indenture, as applicable, (i) the Company shall notify the Collateral Agent of the date of such cure and (ii) the Collateral Agent may only exercise the rights provided in this paragraph (e) for a period of 90 days following such cure. The Collateral Agent shall have the absolute right to share any information it gains from such inspection or verification with any Secured Party.

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(f) At its option following the occurrence and during the continuance of an Event of Default, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not permitted pursuant to Section 4.08 of the Indenture and Section 6.05 of the LC Facility Agreement, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Indenture, the LC Facility Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization, provided that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein, in the Note Documents or in the LC Facility Documents.

(g) If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Collateral Agent. Such assignment need not be documented or filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.

(h) Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance.

(i) None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9 Collateral, except as permitted by the Indenture and the LC Facility Agreement. None of the Grantors shall make or permit to be made any transfer of the Article 9 Collateral and each Grantor shall remain at all times in possession of the Article 9 Collateral owned by it, except that unless and until the Collateral Agent shall notify the Grantors that an Event of Default shall have occurred and be continuing and that during the continuance thereof the Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Article 9 Collateral (which notice may be given by telephone if promptly confirmed in writing), the Grantors may use and dispose of the Article 9 Collateral in any lawful manner not inconsistent with the provisions of this Agreement, the Note Documents or the LC Facility Documents.

(j) Upon the occurrence and continuance of an Event of Default, none of the Grantors will, without the Collateral Agent’s prior written consent, grant any

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extension of the time of payment of any Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, compromises, settlements, releases, credits or discounts granted or made in the ordinary course of business and consistent with its current practices and in accordance with such prudent and standard practice used in industries that are the same as or similar to those in which such Grantor is engaged.

(k) The Grantors, at their own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Inventory and Equipment. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent and shall be additional Obligations secured hereby.

(l) Each Grantor shall maintain, in a manner consistent with the practices of similarly situated companies engaged in the same or similar line of business, records of its Chattel Paper and its books, records and documents evidencing or pertaining thereto.

(m) As promptly as practicable, and in any event within 30 days, after the Issue Date, the Company and each other Credit Party will deliver all Securities Account Control Agreements that would otherwise have been required to be delivered on the Issue Date.

SECTION 4.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a) Instruments and Tangible Chattel Paper. If any Grantor shall at any time hold or acquire any Instruments or Tangible Chattel Paper, such Grantor shall promptly endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.

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(b) Deposit Accounts. For each Deposit Account that any Grantor at any time opens or maintains, such Grantor shall, either (i) cause the depositary bank to agree to comply with instructions from the Collateral Agent to such depositary bank directing the disposition of funds from time to time credited to such deposit account, without further consent of such Grantor or any other Person, pursuant to an agreement reasonably satisfactory to the Collateral Agent, or (ii) arrange for the Collateral Agent to become the customer of the depositary bank with respect to such Deposit Account, with the Grantor being permitted, only with the consent of the Collateral Agent, to exercise rights to withdraw funds from such deposit account. The Collateral Agent agrees with each Grantor that the Collateral Agent shall not give any such instructions or withhold any withdrawal rights from any Grantor unless an Event of Default has occurred and is continuing or, after giving effect to any withdrawal would occur. The provisions of this paragraph shall not apply to (A) any Deposit Account for which any Grantor, the depositary bank and the Collateral Agent have entered into a cash collateral agreement specially negotiated among such Grantor, the depositary bank and the Collateral Agent for the specific purpose set forth therein, (B) Deposit Accounts for which the Collateral Agent is the depositary, (C) segregated Deposit Accounts holding exclusively cash collateral constituting Excluded Property and (D) Excluded Accounts.

(c) Investment Property. Except to the extent otherwise provided in Article III, if any Grantor shall at any time hold or acquire any certificated securities, such Grantor shall promptly endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time specify. If any securities now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall promptly notify the Collateral Agent thereof and, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (i) cause the issuer to agree to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Collateral Agent to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Grantor are held by such Grantor or its nominee through a securities intermediary or commodity intermediary in a Securities Account that is not an Excluded Account, such Grantor shall immediately notify the Collateral Agent thereof and, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (i) cause such securities intermediary or commodity intermediary, as the case may be, to agree to comply with entitlement orders or other instructions from the Collateral Agent to such securities intermediary as to such security entitlements or to apply any value distributed on account of any commodity contract as directed by the Collateral Agent to such commodity intermediary, as the case may be, in each case without further consent of any Grantor, such nominee, or any other Person, or (ii) in the case of Financial Assets or other Investment Property held through a securities intermediary, arrange for the

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Collateral Agent to become the entitlement holder with respect to such Investment Property, with the Grantor being permitted, only with the consent of the Collateral Agent, to exercise rights to withdraw or otherwise deal with such Investment Property. The Collateral Agent agrees with each of the Grantors that the Collateral Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights, would occur. The provisions of this paragraph shall not apply to any Financial Assets credited to a securities account for which the Collateral Agent is the securities intermediary.

(d) Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any Electronic Chattel Paper or any “transferable record,” as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent thereof and shall take such action necessary to vest in the Collateral Agent control under New York UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record.

(e) Letter-of-Credit Rights. If any Grantor is at any time a beneficiary under a letter of credit now or hereafter issued in favor of such Grantor, such Grantor shall promptly notify the Collateral Agent thereof and such Grantor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under the letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of the letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be paid to the applicable Grantor unless an Event of Default has occurred or is continuing.

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(f) Commercial Tort Claims. If any Grantor shall at any time undertake a Commercial Tort Action, the Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor, including a summary description of such claim, and grant to the Collateral Agent in such writing a first-priority security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance as necessary to perfect the security interest in such Commercial Tort Action.

SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Each Grantor agrees that it will not do any act or omit do to any act (and will exercise commercially reasonable efforts to prevent its licensees from doing any act omitting to do any act) whereby any Patent material to the conduct of the businesses of a Grantor may become invalidated or dedicated to the public, and agrees that it shall continue to mark any products covered by a Patent that is material to the conduct of such Grantor’s business with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws.

(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor’s business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.

(c) Each Grantor (either itself or through its licensees or sublicensees) will, for each work covered by a Copyright material to the conduct of such Grantor’s business, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws.

(d) Each Grantor shall notify the Collateral Agent promptly if it knows or has reason to know that any Patent, Trademark or Copyright that is material to the conduct of a Grantor’s business may become abandoned, lost or dedicated to the public, or of any materially adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor’s ownership of any Patent, Trademark or Copyright material to the conduct of its business, its right to register the same, or its right to keep and maintain the same.

(e) Contemporaneously with the delivery of quarterly financial statements to the Trustee pursuant to Section 4.19(a) of the Indenture and to the Administrative Agent pursuant to Section 5.01 of the LC Facility Agreement, each Grantor shall (i) notify the Collateral Agent of any application for any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) with the United States Patent and

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Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof since the last such notification (or, in the case of the first quarter following the Issue Date, since the Issue Date), (ii) execute and deliver any and all agreements, instruments, documents and papers necessary to evidence the Collateral Agent’s first-priority security interest in such Patent, Trademark or Copyright and (iii) each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable.

(f) Each Grantor will take all necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancelation proceedings against third parties.

(g) In the event that any Grantor has reason to believe that any Article 9 Collateral consisting of a Patent, Trademark or Copyright material to the conduct of any Grantor’s business has been or is about to be infringed, misappropriated or diluted by a third party, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Article 9 Collateral.

(h) Upon and during the continuance of an Event of Default, each Grantor shall use commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License under which such Grantor is a licensee to effect the assignment of all such Grantor’s right, title and interest thereunder to the Collateral Agent or its designee.

ARTICLE V

Remedies

SECTION 5.01. Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of tangible Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall, upon the occurrence and during the continuance of an Event of Default, have the right to take any of or all the following actions at the same or different times: (a) with respect to any Article 9 Collateral consisting of Intellectual Property, on

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demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantors to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and without liability for trespass to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any sale of Collateral shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Collateral Agent shall give the applicable Grantors 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for

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future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free (if such agreement cannot be reasonably rescinded) to consummate such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.

SECTION 5.02. Application of Proceeds. The Collateral Agent shall apply the proceeds of any collection or sale of Collateral in accordance with the terms specified in Section 2.01(b) of the Intercreditor Agreement. In the event no Intercreditor Agreement is in effect at any time, the Collateral Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, as follows:

FIRST, to the payment of all agent’s fees and collateral management fees of the Collateral Agent and all fees, costs and expenses incurred by the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Note Document, any other LC Facility Document or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, all amounts payable in respect of Indemnified Liabilities (as defined in the Real Estate Collateral Management Agreement) to the extent such Indemnified Liabilities are matured, payable and owing to the Collateral Agent and its related Indemnified Parties (as defined in the Real Estate Collateral Management Agreement), the repayment of all advances made by the Collateral Agent hereunder, under any other Note Document or under any other LC Facility Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder, under any other Note Document or under any other LC Facility Document;

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SECOND, to the payment in full of the LC Facility Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the LC Facility Obligations owed to them on the date of any such distribution);

THIRD, to the payment in full of the Notes Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Notes Obligations owed to them on the date of any such distribution); and

FOURTH, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent is hereby authorized to establish and maintain as a blocked account under the sole dominion and control of the Collateral Agent, a restricted deposit account designated as “Shea Homes Collateral Account” into which the Collateral Agent may deposit proceeds of Collateral. All amounts at any time held in the Collateral Account shall be beneficially owned by Grantors but shall be held in the name of the Collateral Agent hereunder, as collateral security for the Obligations upon the terms and conditions set forth herein. Grantors shall have no right to withdraw, transfer or, except as expressly set forth herein or in the Intercreditor Agreement, otherwise receive any funds deposited into the Collateral Account. Cash held by the Collateral Agent in the Collateral Account shall not be invested by the Collateral Agent but instead shall be maintained as a cash deposit in the Collateral Account pending application thereof as elsewhere provided in this Agreement or in the Intercreditor Agreement. Subject to the Collateral Agent’s rights hereunder, any interest, if any, earned on deposits of cash in the Collateral Account shall be deposited directly in, and held in, the Collateral Account.

The Collateral Agent is hereby authorized to establish and maintain accounts at such banking institutions necessary or appropriate to receive and distribute proceeds in accordance with this Section 5.02, the Security Documents, the LC Facility Documents and the Notes Documents.

SECTION 5.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sublicense any of the Article 9 Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent may be exercised, at the option of the Collateral Agent, upon the occurrence and during the continuation of an Event of Default, provided that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.

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SECTION 5.04. Securities Act. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Each Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 5.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.

ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 6.03), the Issuers agree that (a) in the event a payment in respect of any obligation shall be made by any Guarantor under the Indenture or the LC Facility Agreement, the Issuers shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the Person to whom such

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payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part any Obligation owed to any Secured Party, the Issuers shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

SECTION 6.02. Contribution and Subrogation. Each Guarantor (a “Contributing Party”) agrees (subject to Section 6.03) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Obligation or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy any Obligation owed to any Secured Party and such other Guarantor (the “Claiming Party”) shall not have been fully indemnified by the Issuers as provided in Section 6.01, the Contributing Party shall indemnify the Claiming Party in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Party on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 7.14, the date of the supplement hereto executed and delivered by such Guarantor). Any Contributing Party making any payment to a Claiming Party pursuant to this Section 6.02 shall (subject to Section 6.03) be subrogated to the rights of such Claiming Party under Section 6.01 to the extent of such payment.

SECTION 6.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and 6.02 and all other rights of the Guarantors of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of the Obligations. No failure on the part of the Issuers or any Guarantor to make the payments required by Sections 6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder.

(b) Each Guarantor hereby agrees that all Indebtedness and other monetary obligations owed by it to, or to it by, any other Guarantor, either of the Issuers or any other Subsidiary shall be fully subordinated to the payment in full in cash of the Obligations.

ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 13.03 of the Indenture and Section 9.01 of the LC Facility Agreement, as applicable. All communications and notices hereunder to any Guarantor shall be given to it in care of the Issuers as provided in Section 9.01 of the LC Facility Agreement or, if the LC Facility is no longer in effect, as provided in Section 13.03 of the Indenture.

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SECTION 7.02. Waivers; Amendment. (a) No failure or delay by the Collateral Agent or Holder in exercising any right or power hereunder or under any other Note Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, the Holders and the Participants hereunder, under the other Note Documents and under the other LC Facility Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Grantor in any case shall entitle any Grantor to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Sections 9.01 and 9.02 of the Indenture and Section 9.08 of the LC Facility Agreement.

SECTION 7.03. Collateral Agent’s Fees and Expenses; Indemnification. (a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of its fees, expenses and other amounts owed to it under this Agreement, Sections 7 and 8 of the Real Property Collateral Management Agreement and Section 2.01(b) of the Intercreditor Agreement.

(b) Without limitation of its indemnification obligations under the other Note Documents and the other LC Facility Documents, each Grantor jointly and severally agrees to indemnify the Secured Parties against, and hold each Secured Party harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Secured Party, incurred by or asserted against any Secured Party by any third party or by any Grantor arising out of, in connection with, or as a result of, the execution, delivery or performance of this Agreement or any claim, litigation, investigation or proceeding relating to any of the foregoing agreement or instrument contemplated hereby, or to the Collateral, whether or not any Secured Party is a party thereto, provided that such indemnity shall not, as to any Secured Party, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final judgment to have resulted from the gross negligence or willful misconduct of such Secured Party.

(c) Any such amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this

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Section 7.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Note Document, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Note Document or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 7.03 shall be payable on written demand therefor.

SECTION 7.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

SECTION 7.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Grantors in the Note Documents, the LC Facility Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement, any other Note Document of any other LC Facility Document shall be considered to have been relied upon by the Holders’ and Participants and shall survive the execution and delivery of the Note Documents, the LC Facility Documents and the issuance of the Notes and Letters of Credit, regardless of any investigation made by any Holder of Participant or on their behalf and notwithstanding that the Collateral Agent or any Holder may have had notice or knowledge of any Default or incorrect representation or warranty at the time any Notes are issued under the Indenture or any Letters of Credit are issued under the LC Facility Agreement, and shall continue in full force and effect as long as any Obligation is outstanding and unpaid. This Agreement shall survive and continue in full force and effect in any Insolvency or Liquidation Proceeding.

SECTION 7.06. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement, the Indenture or the LC Facility Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

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SECTION 7.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7.08. Reserved.

SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Each of the Grantors hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, any other Note Document, any other LC Facility Document or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the Grantors hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement, any other Note Document or any other LC Facility Document shall affect any right that the Collateral Agent or any Holder or Participant may otherwise have to bring any action or proceeding relating to this Agreement, any other Note Document or any other LC Facility Document against any Grantor or their respective properties in the courts of any jurisdiction.

(c) Each of the Grantors hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, any other Note Document or any other LC Facility Document in any court referred to in paragraph (b) of this Section 7.09. Each of the Grantors hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.01. Nothing in this Agreement, any other Note Document or any other LC Facility Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

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SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER NOTE DOCUMENT, ANY OTHER LC FACILITY DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

SECTION 7.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 7.12. Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Indenture, any other Note Document, the LC Facility Agreement, any other LC Facility Document, any agreement with respect to any of the Obligations, or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Indenture, any other Note Document, the LC Facility Agreement, any other LC Facility Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or this Agreement.

SECTION 7.13. Termination or Release. (a) This Agreement, the Security Interest and all other security interests granted hereby shall terminate when (i) all the Obligations have been paid in full or (ii) upon discharge of the Indenture or defeasance of the Notes as set forth in Article VIII of the Indenture and the LC Facility Obligations have been paid in full in cash or immediately available funds and the Participants have no further commitment to extend credit under the LC Facility Agreement and the LC Exposure has been reduced to zero (or cash-collateralized or

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supported by back-to-back letters of credit in form and substance and from an issuing bank reasonably satisfactory to the Issuing Bank and the Administrative Agent) and each Issuing Bank has no further obligations to issue Letters of Credit under the LC Facility Agreement.

(b) A Guarantor shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Guarantor shall be automatically released when such Guarantor’s Guarantee is released in accordance with the terms of the Indenture and the LC Facility Agreement, which terms shall include, if applicable, the obtaining of the consent of the requisite Secured Parties as provided for in the Indenture and the LC Facility agreement.

(c) In connection with any disposition of Collateral to any Person other than the Company, the Corporate Issuer or any of the Restricted Subsidiaries (but excluding any transaction subject to Section 4.10 of the Indenture and Section 6.04 of the LC Facility Agreement where the recipient is required to become the obligor on the Notes or a Guarantee) that is permitted by the Indenture and the LC Facility Agreement, the security interest in such Collateral shall be automatically released.

(d) With the consent of the requisite Secured Parties in accordance with Section 9.02 of the Indenture and Section 9.08 of the LC Facility Agreement including consents obtained in connection with a tender offer or exchange offer for, or purchase of, Notes, the Security Interest in any Collateral, the release of which is the subject of such consents, shall be automatically released.

(e) In connection with any termination or release pursuant to paragraph (a), (b), (c) or (d) of this Section 7.13, the Collateral Agent shall execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 7.13 shall be without recourse to or warranty by the Collateral Agent.

SECTION 7.14. Additional Guarantor. Pursuant to Section 4.22 of the Indenture and Section 5.05 of the LC Facility Agreement, each Person that becomes a Guarantor under the Indenture or LC Facility Agreement after the Issue Date is required to enter into this Agreement as a Grantor upon becoming such a Guarantor. Upon execution and delivery by the Collateral Agent and such a Guarantor of an instrument in the form of Exhibit I hereto, such Guarantor shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.

SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and

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executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest; provided that, unless otherwise provided for herein, such power of attorney may only be exercised upon the occurrence of an Event of Default. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of Accounts to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes, provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property.

SECTION 7.16. Intercreditor Agreement Govern. Reference is made to the Intercreditor Agreement. Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the terms of the Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of this Agreement and the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership
By:	/s/ James G. Shontere
	Name:  James G. Shontere
	Title:    Secretary
By:	/s/ Robert R. O’Dell
	Name:  Robert R. O’Dell
	Title:    Treasurer
SHEA HOMES FUNDING CORP., a Delaware corporation
By:	/s/ James G. Shontere
	Name:  James G. Shontere
	Title:    Chief Financial Officer and Secretary
By:	/s/ Robert R. O’Dell
	Name:  Robert R. O’Dell
	Title:    Vice President

[Signature Page to the Security Agreement]

GUARANTORS:
HIGHLANDS RANCH DEVELOPMENT CORPORATION, a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name:  Robert R. O’Dell
	Title: Treasurer
MONTY GREEN HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
MOUNTAINBROOK VILLAGE COMPANY, an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Security Agreement]

SAND CREEK CATTLE COMPANY, a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

SERENADE AT NATOMAS, LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

[Signature Page to the Security Agreement]

SEVILLE GOLF AND COUNTRY CLUB, LLC, an Arizona limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

SHEA BREA DEVELOPMENT, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

SHEA CAPITAL II, LLC, a Delaware limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA COMMUNITIES MARKETING COMPANY, a Delaware corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Security Agreement]

SHEA FINANCIAL SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

SHEA HOMES, INC., a Delaware corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

SHEA HOMES AT MONTAGE, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Security Agreement]

SHEA HOMES SOUTHWEST, INC., an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

SHEA HOMES VANTIS, LLC, a California limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

SHEA INSURANCE SERVICES, INC., a California corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Security Agreement]

SHEA LA QUINTA LLC, a California limited liability company
By:	Shea Homes, Inc., a Delaware corporation, Its sole Member
	By:	/s/ James G. Shontere
		Name: James G. Shontere Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell Title: Treasurer

SHEA NINTH AND COLORADO, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

SHEA OTAY VILLAGE 11, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

SHEA PROCTOR VALLEY, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

SHEA PROPERTIES OF COLORADO, INC., a Colorado corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell Title: Treasurer

SHEA RIVERMARK VILLAGE, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

SHEA TONNER HILLS, LLC, a California limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management Inc.,
				a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

SHEA VICTORIA GARDENS, LLC, a Florida limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell Title: Treasurer

[Signature Page to the Security Agreement]

SH JUBILEE, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SH JUBILEE MANAGEMENT, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Security Agreement]

SHI JV HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
SHLP JV HOLDINGS, LLC, a Delaware limited liability company
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Security Agreement]

TOWER 104 GATHERING, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

TOWER 104 OIL, LLC, a Colorado limited liability company
By:	Shea Homes Limited Partnership, a California limited partnership, Its Sole Member and Manager
	By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
		By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
			By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
				By:	/s/ James G. Shontere
					Name: James G. Shontere
					Title: Secretary
				By:	/s/ Robert R. O’Dell
					Name: Robert R. O’Dell
					Title: Treasurer

[Signature Page to the Security Agreement]

TRILOGY ANTIOCH, LLC, a California limited liability company
By:	SHEA CAPITAL II, LLC, a Delaware limited liability company, Its sole Member
	By:	Shea Homes Limited Partnership, a California limited partnership, Its Manager
		By:	J.F. Shea, L.P., a Delaware limited partnership, Its sole General Partner
			By:	JFS Management, L.P., a Delaware limited partnership, Its sole General Partner
				By:	J.F. Shea Construction Management, Inc., a California corporation, Its sole General Partner
					By:	/s/ James G. Shontere
						Name: James G. Shontere
						Title: Secretary
					By:	/s/ Robert R. O’Dell
						Name: Robert R. O’Dell
						Title: Treasurer

UDC ADVISORY SERVICES, INC., an Illinois corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer

[Signature Page to the Security Agreement]

UDC HOMES CONSTRUCTION, INC., an Arizona corporation
By:	/s/ James G. Shontere
	Name: James G. Shontere
	Title: Secretary
By:	/s/ Robert R. O’Dell
	Name: Robert R. O’Dell
	Title: Treasurer
VISTANCIA CONSTRUCTION, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc., an Arizona corporation, Its Manager
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

VISTANCIA MARKETING, LLC, a Delaware limited liability company
By:	Shea Homes Southwest, Inc., an Arizona corporation, Its Manager
	By:	/s/ James G. Shontere
		Name: James G. Shontere
		Title: Secretary
	By:	/s/ Robert R. O’Dell
		Name: Robert R. O’Dell
		Title: Treasurer

[Signature Page to the Security Agreement]

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent,
by	/s/ Julius R. Zamora
	Name:	Julius R. Zamora
	Title:	Vice President

[Signature Page to Security Agreement]

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Administrative Agent,
by	/s/ BILL O’DALY
	Name:	BILL O’DALY
	Title:	DIRECTOR
by	/s/ Sanja Gazahi
	Name:	Sanja Gazahi
	Title:	Associate

[Signature Page to the Security Agreement]

Schedule I

GUARANTORS

Schedule II

EQUITY INTERESTS

Issuer Number of Certificate Registered Owner Number and Class of Equity Interest Percentage of Equity Interests

DEBT SECURITIES

Issuer Principal Amount Date of Note Maturity Date

Schedule III

U.S. COPYRIGHTS OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule III for each Grantor and state if no copyrights are owned. List in numerical order by Registration No.]

U.S. Copyright Registrations

Title Reg. No. Author

Pending U.S. Copyright Applications for Registration

Title Author Class Date Filed

Non-U.S. Copyright Registrations

[List in alphabetical order by country/numerical order by Registration No. within each country]

Country Title Reg. No. Author

Non-U.S. Pending Copyright Applications for Registration

[List in alphabetical order by country.]

Country Title Author Class Date Filed

EXCLUSIVE LICENSES

[Make a separate page of Schedule III for each Grantor, and state if any Grantor is not a party to a license/sublicense.]

I. Exclusive Licenses/Sublicensees of [Name of Grantor] as Licensor on Date Hereof

A. Copyrights

[List U.S. copyrights in numerical order by Registration No. List non-U.S. copyrights by country in alphabetical order with Registration Nos. within each country in numerical order.]

U.S. Copyrights

Licensee Name and Address Date of License/ Sublicense Title of U.S. Copyright Author Reg. No.

Non-U.S. Copyrights

Country Licensee Name and Address Date of License/ Sublicensee Title of Non-U.S. Copyrights Author Reg. No.

B. Patents

[List U.S. patent nos. and U.S. patent application nos. in numerical order. List non-U.S. patent nos. and non-U.S. application in alphabetical order by country, with numbers within each country in numerical order.]

U.S. Patents

Licensee Name and Address Date of License/ Sublicense Issue Date Patent No.

2

U.S. Patent Applications

Licensee Name and address Date of License/ Sublicense Date Filed Application No.

Non-U.S. Patents

Country Licensee Name and Address Date of License/ Sublicense Issue Date Non-U.S. Patent No.

Non-U.S. Patent Applications

Country Licensee Name and Address Date of License/ Sublicense Date Filed Application No.

C. Trademarks

[List U.S. trademark nos. and U.S. trademark application nos. in numerical order. List non-U.S. trademark nos. and non-U.S. application nos. with trademark nos. within each country in numerical order.]

U.S. Trademarks

Licensee Name and Address Date of License/ Sublicense U.S. Mark Reg. Date Reg. No.

3

U.S. Trademark Applications

Licensee Name and Address Date of License/ Sublicense U.S. Mark Date Filed Application No.

Non-U.S. Trademarks

Country Licensee Name and Address Date of License/ Sublicense Non-U.S. Mark Reg. Date Reg. No.

Non-U.S. Trademark Applications

Country Licensee Name and Address Date of License/ Sublicense Non-U.S. Mark Date Filed Application No.

D. Others

Licensee Name and Address Date of License/ Sublicense Subject Matter

4

II. Licensees/Sublicenses of [Name of Grantor] as Exclusive Licensee on Date Hereof

A. Copyrights

[List U.S. copyrights in numerical order by Registration No. List non-U.S. copyrights by country in alphabetical order, with Registration Nos. within each country in numerical order.]

U.S. Copyrights

Licensor Name and Address Date of License/ Sublicense Title of U.S. Copyright Author Reg. No.

Non-U.S. Copyrights

Country Licensor Name and Address Date of License/ Sublicensee Title of Non-U.S. Copyrights Author Reg. No.

B. Patents

[List U.S. patent nos. and U.S. patent application nos. in numerical order. List non-U.S. patent nos. and non-U.S. application nos. in alphabetical order by country with patent nos. within each country in numerical order.]

U.S. Patents

Licensor Name and Address Date of License/ Sublicense Issue Date Patent No.

5

U.S. Patent Applications

Licensor Name and Address Date of License/ Sublicense Date Filed Application No.

Non-U.S. Patents

Country Licensor Name and Address Date of License/ Sublicense Issue Date Non-U.S. Patent No.

Non-U.S. Patent Applications

Country Licensor Name and Address Date of License/ Sublicense Date Filed Application No.

C. Trademarks

[List U.S. trademark nos. and U.S. trademark application nos. in numerical order. List non-U.S. trademark nos. and non-U.S. application nos. with trademark nos. within each country in numerical order.]

U.S. Trademarks

Licensor Name and Address Date of License/ Sublicense U.S. Mark Reg. Date Reg. No.

6

U.S. Trademark Applications

Licensor Name and Address Date of License/ Sublicense U.S. Mark Date Filed Application No.

Non-U.S. Trademarks

Country Licensor Name and Address Date of License/ Sublicense Non-U.S. Mark Reg. Date Reg. No.

Non-U.S. Trademark Applications

Country Licensor Name and Address Date of License/ Sublicense Non-U.S. Mark Date Filed Application No.

D. Others

Licensor Name and Address Date of License/ Sublicense Subject Matter

7

PATENTS OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule III for each Grantor and state if no patents are owned. List in numerical order by Patent No./Patent Application No.]

U.S. Patent Registrations

Patent Numbers Issue Date

U.S. Patent Applications

Patent Application No. Filing Date

Non-U.S. Patent Registrations

[List in alphabetical order by country/numerical order by Patent No. within each country]

Country Issue Date Patent No.

Non-U.S. Patent Registrations

[List in alphabetical order by country/numerical order by Application No. within each country]

Country Filing Date Patent Application No.

8

TRADEMARK/TRADE NAMES OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule III for each Grantor and state if no trademarks/trade names are owned. List in numerical order by trademark registration/application no.]

U.S. Trademark Registrations

Mark Reg. Date Reg. No.

U.S. Trademark Applications

Mark Filing Date Application No.

State Trademark Registrations

[List in alphabetical order by state/numerical order by trademark no. within each state]

State Mark Filing Date Application No.

Non-U.S. Trademark Registrations

[List in alphabetical order by country/numerical order by trademark no. within each country]

Country Mark Reg. Date Reg. No.

9

Non-U.S. Trademark Applications

[List in alphabetical order by country/numerical order by application no.]

Country Mark Application Date Application No.

Trade Names

Country(s) Where Used Trade Names

10

SCHEDULE IV

COMMERCIAL TORT CLAIMS

Exhibit I

SUPPLEMENT NO.      dated as of [    ] (this “Supplement”), to the Security Agreement dated as of May 10, 2011 (the “Security Agreement”), among Shea Homes Limited Partnership, a California limited partnership (the “Company”), Shea Homes Funding Corp., a Delaware corporation (the “Corporate Issuer”, and together with the Company, the “Issuers”), each Guarantor listed on Schedule I thereto (each such Guarantor individually a “Guarantor” and, collectively, the “Guarantors”; the Guarantors, the Company and the Corporate Issuer are referred to collectively herein as the “Grantors”), Credit Suisse AG as administrative agent under the LC Facility Agreement and Wells Fargo Bank, National Association, as Collateral Agent (in such capacity, the “Collateral Agent”).

A. Reference is made to (i) the Indenture dated as of May 10, 2011 (as amended, supplemented or otherwise modified from time to time, the “Indenture”), among the Issuers, the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, (ii) the Letter of Credit Facility Agreement dated as of May 10, 2011 (as amended, supplemented or otherwise modified from time to time, the “LC Facility Agreement”) among the Company, the Corporate Issuer, the guarantors party thereto, Credit Suisse AG, as administrative agent (in such capacity, the “Administrative Agent”) and issuing bank and the participants from time to time party thereto and (iii) the Intercreditor Agreement dated as of May 10, 2011 (as amended, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among the Administrative Agent, the Collateral Agent, the Company, the Corporate Issuer, the Trustee and the other parties party thereto.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement, the Indenture, the LC Facility Agreement and the Security Agreement, as applicable.

C. The Grantors have entered into the Security Agreement in order to induce the Holders to purchase Notes from the Issuers and the Issuing Banks and Participants to extend credit to the Issuers, the Restricted Subsidiaries and their respective joint ventures. Section 4.22 of the Indenture and Section 5.05 of the LC Facility Agreement provide that additional Subsidiaries of the Company may become Guarantors under the Indenture and the LC Facility Agreement and may become party to the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “New Guarantor”) is executing this Supplement in accordance with the requirements of the Indenture and LC Facility Agreement to become a party to the Security Agreement as consideration for Notes previously purchased by the Issuers or extensions of credit to be granted pursuant the LC Facility Agreement.

Accordingly, the Collateral Agent and the New Guarantor agree as follows:

SECTION 1. In accordance with Section 7.14 of the Security Agreement, the New Guarantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and Guarantor and the New Guarantor hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Grantor and Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor and Guarantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Guarantor, as security for the payment and performance in full of the Obligations, does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all the New Guarantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Guarantor. Each reference to a “Guarantor” or “Grantor” in the Security Agreement shall be deemed to include the New Guarantor. The Security Agreement is hereby incorporated herein by reference.

SECTION 2. The New Guarantor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received a counterpart of this Supplement that bears the signature of the New Guarantor and the Collateral Agent has executed a counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Guarantor hereby represents and warrants that (a) set forth on Schedule I attached hereto is a schedule with the true and correct legal name of the New Guarantor, its jurisdiction of formation and the location of its chief executive office, (b) set forth on Schedule II attached hereto is a true and correct schedule of all the Pledged Securities of the New Guarantor and (c) set forth on Schedule III attached hereto is a true and correct schedule of Intellectual Property consisting of Copyrights, Patents and Trademarks of the New Guarantor.

SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity,

2

legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 7.01 of the Security Agreement.

SECTION 9. The New Guarantor agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent.

IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

[NAME OF NEW GUARANTOR],
	by
		Name:
		Title:
		Legal Name:
		Jurisdiction of Formation:
		Location of Chief Executive office:
[—], as Collateral Agent
	by
		Name:
		Title:

3

Schedule I

to Supplement No.      to the

Security Agreement

NEW GUARANTOR INFORMATION

Name Jurisdiction of Formation Chief Executive Office

Schedule II

to Supplement No.      to the

Security Agreement

PLEDGED SECURITIES

Equity Interests

Issuer Number of Certificate Registered Owner Number and Class of Equity Interests Percentage of Equity Interests

Debt Securities

Issuer Principal Amount Date of Note Maturity Date

Schedule III

to Supplement No.      to the

Security Agreement

INTELLECTUAL PROPERTY

EXHIBIT II

PERFECTION CERTIFICATE

[Delivered separately.]

EX-10.3

Exhibit 10.3

TAX DISTRIBUTION AGREEMENT

TAX DISTRIBUTION AGREEMENT dated as of May 10, 2011 (the “Agreement”) among the SHLP Taxpayers (as defined herein) party hereto, Shea Homes Limited Partnership, a California limited partnership (the “Company”), and each of the Persons party to the Sixth Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership, dated as of April 1, 2005 (as amended, restated, supplemented or otherwise modified from time to time, the “SHLP Limited Partnership Agreement”) as a general or limited partner thereof (the “SHLP Partners”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in Section 1 of this Agreement.

W I T N E S S E T H

WHEREAS, the Parties wish to provide for the payment of Income Taxes arising from Income Tax Liability, and provide for certain other matters relating to Income Taxes.

NOW, THEREFORE, in consideration of the premises and the representations, covenants and agreements herein contained and intending to be legally bound hereby, the Parties agree as follows:

1. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:

“Adjusted Income Tax Liability” shall mean the sum of the following amounts, with respect to each SHLP Taxpayer resulting from any adjustments to items of income, gain, loss or deduction of the Company (or any entity treated as a pass-through entity for U.S. federal income tax purposes in which the Company has an ownership interest) pursuant to the Determination of the CCM Proceeding or any other Proceeding in respect of a taxable year ended before the Effective Date:

(a) the increase in net taxable income attributable to “net capital gains” (as reduced under the Code (or comparable provision of state tax law) by the total increase in net ordinary loss, if any) or the reduction of net loss attributable to “net capital losses,” in each case allocated to such SHLP Taxpayer in respect of a taxable year ended before the Effective Date on account of such SHLP Taxpayer’s direct or indirect ownership interests in the Company, multiplied by the Applicable Rate on such net capital gains, plus

(b) the increase in net taxable income attributable to “ordinary income” or the reduction of net loss attributable to “ordinary losses”, in each case allocated to such SHLP Taxpayer in respect of a taxable year ended before the Effective Date on account of such SHLP Taxpayer’s direct or indirect ownership interests in the Company, multiplied by the Applicable Rate on such ordinary income, minus

(c) the increase in tax credits that is allocated to any SHLP Taxpayer on account of its direct or indirect ownership interest in SHLP.

“Applicable Rate” shall mean, with respect to each SHLP Taxpayer and the determination of Income Tax Liability and Adjusted Income Tax Liability for each taxable year, the highest aggregate marginal combined federal, state and local income tax rates (including applicable surcharges, alternative minimum taxes, self-employment taxes or other taxes payable as a result of the allocation of income contemplated hereby, if any) applicable to any SHLP Taxpayer after (a) giving effect to the deductibility, if any, for federal and state tax purposes of state or local income taxes on the applicable income at the time of its recognition, (b) taking into account any limitations on such deductibility including, without limitation, those imposed pursuant to Section 68 of the Code, and (c) taking into account the character (e.g., long-term or short-term capital gain, or ordinary or exempt income) of such applicable income and any preferential tax rates, including for “qualified dividend income” (as defined in Section 1(h)(11) of the Code).

“Business Day” shall mean any day, other than a Saturday, a Sunday, or day on which banking institutions located in the State of California are authorized or obligated by law or executive order to close.

“CCM Proceeding” shall mean the U.S. federal income tax proceeding regarding the completed contract method of accounting (as defined in U.S. Treasury Regulation Section 1.460-4(d)) for taxable years prior to 2011.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Determination” shall mean the final resolution of liability for any Income Tax as a result of (a) a “determination” as defined in Section 1313(a) of the Code, (b) a final determination made by a competent Tax Authority or (c) the payment of Income Tax if the SHLP Taxpayers and the Company agree that the payment should be made.

“Effective Date” shall mean January 1, 2011.

“Income Taxes” shall mean, with respect to each SHLP Taxpayer, all taxes giving rise to any Income Tax Liability or Adjusted Income Tax Liability.

“Income Tax Liability” shall mean, with respect to each SHLP Taxpayer and each taxable year, an amount equal to:

(a) the aggregate net taxable income attributable to “net capital gains” (as reduced under the Code (or comparable provision of state tax law) by the total amount of net ordinary loss, if any) allocated to such SHLP Taxpayer in the current and all preceding taxable years beginning on or after the Effective Date on account of its direct or indirect ownership interests in the Company (taking into account any allocations to such SHLP Taxpayer pursuant to the Determination of any Proceeding in respect of a

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taxable year beginning on or after the Effective Date), multiplied by the Applicable Rate on such net capital gains, plus

(b) the aggregate net taxable income attributable to “ordinary income” allocated to such SHLP Taxpayer in the current and all preceding taxable years beginning on or after the Effective Date on account of its direct or indirect ownership interests in the Company (taking into account any allocations to such SHLP Taxpayer pursuant to the Determination of any Proceeding in respect of a taxable year beginning on or after the Effective Date), multiplied by the Applicable Rate on such net capital gains, minus

(c) the amount of tax credits that is allocated to any SHLP Taxpayer on account of its direct or indirect ownership interest in SHLP for such taxable year.

For purposes of calculating the Income Tax Liability of each SHLP Taxpayer under this Agreement, the aggregate net taxable income (or loss) of each SHLP Taxpayer shall be assumed to consist solely of items of income or loss allocated to such SHLP Taxpayer by the Company. For the sake of clarity, in each case set forth in clauses (a) and (b) above, all or any portion of any net operating losses or capital losses of an SHLP Taxpayer that arises in any taxable year beginning on or after the Effective Date and may be carried forward and used to offset income allocated to such SHLP Taxpayer by the Company for a subsequent taxable year under the Code (or comparable provision of state tax law) shall be taken into account for purposes of calculating the aggregate net taxable income attributable to “net capital gains” and the aggregate net taxable income attributable to “ordinary income” for such subsequent taxable year.

“Indenture” shall mean the Indenture dated as of May 10, 2011 (as amended, restated, supplemented or otherwise modified from time to time) pursuant to which the Company and Shea Homes Funding Corp., a Delaware corporation, issued and sold, on a joint and several basis, $750.0 million aggregate principal amount of their 8.625% Senior Secured Notes due 2019.

“Party” or “Parties” shall mean each of the Persons party to this Agreement.

“Person” shall mean any individual, partnership, joint venture, limited liability company, corporation, association, joint stock company, trust, unincorporated organization or similar entity or a governmental authority or any department or agency or other unit thereof.

“Proceeding” shall mean any audit or other examination, or judicial or administrative proceeding relating to liability for, or refunds or adjustments with respect to, Income Taxes of the Company (or any entity treated as a pass-through entity for U.S. federal income tax purposes in which the Company has an ownership interest), whether arising before or after the Effective Date.

“SHLP Partners” shall have the meaning set forth in the Preamble hereto.

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“SHLP Taxpayers” shall mean the direct and indirect holders of ownership interests in the Company.

“Tax Authority” shall mean a governmental authority (foreign or domestic) or any subdivision, agency, commission or authority thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Income Taxes.

2. Tax Distribution.

(a) Anything in the governing documents of SHLP to the contrary notwithstanding, if the Income Tax Liability of a SHLP Taxpayer with respect to its respective interests in the Company at any time exceeds amounts previously distributed to the SHLP Partners after the Effective Date (excluding any distributions pursuant to (i) Section 4.07(a) and Section 4.07(b)(xi) of the Indenture and (ii) Section 2(b) of this Agreement), the Company shall distribute to the SHLP Partners for further distribution to the SHLP Taxpayers an amount of cash equal to such excess. The Company may distribute such amount after the end of each taxable year, or may make quarterly distributions during such taxable year (subject to adjustment after the end of such taxable year) to reflect estimated tax obligations of the SHLP Taxpayers; provided, however, that such quarterly distributions shall not, when taken together, exceed the amounts to which such SHLP Taxpayer is entitled under the preceding sentence for a particular taxable year.

(b) During the taxable year of any Determination of the CCM Proceeding or any other Proceeding in respect of a taxable year prior to the Effective Date, as applicable, the Company shall pay to the SHLP Partners for further distribution to each SHLP Taxpayer an amount of cash equal to the Adjusted Income Tax Liability of each SHLP Taxpayer.

(c) All distributions made pursuant to this Section 2 shall be made by the Company not less than five (5) Business Days prior to the date on which any Income Taxes giving rise to such Income Tax Liability or Adjusted Income Tax Liability are due to be paid by the SHLP Taxpayers, and shall include all interest, penalties, and other amounts required to be paid to any Tax Authority on account of such Income Tax Liability or Adjusted Income Tax Liability.

(d) All distributions made pursuant to this Section 2 shall reduce on a dollar-for-dollar basis until fully recovered any distribution to which the SHLP Taxpayers are otherwise entitled under the governing documents of the Company.

3. Determination of Income Tax Liability.

For purposes of this Agreement, the Company shall be responsible for determining each SHLP Taxpayer’s Income Tax Liability and Adjusted Income Tax Liability based upon the information reported to such SHLP Taxpayer by the Company. The Company shall be responsible for and shall deliver such information to the SHLP Partners with respect to

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each SHLP Taxpayer as is necessary for the appropriate calculation of the Income Tax Liability and Adjusted Income Tax Liability of each SHLP Taxpayer.

4. Proceedings.

The SHLP Taxpayers shall notify the Company of any material written communication from any Tax Authority with respect to the CCM Proceeding or any other Proceeding within 30 days following the receipt thereof, except to the extent any such communication would vitiate any applicable legal privilege, would otherwise violate any applicable law, or relates to the settlement of the CCM Proceeding or any such other Proceeding.

5. Payments.

All payments required by this Agreement shall be made by (a) wire transfer to the appropriate bank account as may from time to time be designated by the Parties for such purpose; provided that, on the date of such wire transfer, notice of the transfer is given to the recipient thereof in accordance with Section 8, or (b) any other method agreed to by the Parties. All payments due under this Agreement shall be deemed to be paid when available funds are actually received by the payee.

6. Joinder of SHLP Partners and SHLP Taxpayers.

The Company shall cause each SHLP Partner and SHLP Taxpayer that is not a party to this Agreement on the Effective Date to become a Party. Each such joinder shall be effective upon the execution and delivery of a Joinder Agreement in the form of Annex I hereto.

7. Amendments to, and the Termination of, this Agreement.

This Agreement shall supersede the Tax Distribution and Refund Agreement dated November 5, 2010 in all respects. No amendment, modification, or waiver of any of the provisions of this Agreement shall be effective unless the same shall be in writing signed on behalf of each Party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the Parties making such waiver or the obligations of the other Parties to such Party in any other respect or at any other time.

8. Notices.

Notices, requests, permissions, waivers, and other communications hereunder shall be in writing and shall be deemed to have been duly given upon (a) a transmitter’s confirmation of a receipt of a facsimile transmission (but only if followed by confirmed delivery of a standard overnight courier the following Business Day or if delivered by hand the following Business Day), or (b) confirmed delivery of a standard overnight courier or delivered

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by hand, to the parties at the following addresses (or at such other addresses for a party as shall be specified by like notice):

If to the Company, to:

Shea Homes Limited Partnership

P.O. Box 489

655 Brea Canyon Road

Walnut, California 91788-0489

Facsimile: (        )         -            

If to a SHLP Taxpayer:

At the address set forth below the executed signature page of such SHLP Taxpayer.

Such names and addresses may be changed by notice given in accordance with this Section 8.

9. Counterparts; Integration; Headings.

This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement constitutes the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or by email in pdf format shall be effective as delivery of a manually executed counterpart of this Agreement. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

10. Severability.

Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this Agreement shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement, or the validity or effectiveness of such provision in any other jurisdiction.

11. Third Parties Benefited.

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This Agreement is made and entered into for the protection and legal benefit of the Parties and their respective successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement.

12. Governing Law; Jurisdiction, Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

(b) SUBMISSION TO JURISDICTION. EACH PARTY HERETO UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA SITTING IN LOS ANGELES COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

(c) WAIVER OF VENUE. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

[Signature Pages Follow]

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J.F. SHEA CO., INC.		J.F. SHEA, L.P.
By:	/s/ James G. Shontere	By:	JFS Management, L.P., its sole General Partner
Name:	James G. Shontere	By:	J.F. Shea Construction Management, Inc.,
Title:	Secretary		its sole General Partner
By:	/s/ Robert O’Dell	By:	/s/ James G. Shontere
Name:	Robert O’Dell	Name:	James G. Shontere
Title:	Treasurer	Title:	Secretary
SHEA HOMES LIMITED PARTNERSHIP
		By:	/s/ Robert O’Dell
By:	J.F. Shea L.P., its sole General Partner	Name:	Robert O’Dell
By:	JFS Management, L.P., its sole General Partner	Title:	Treasurer
By:	J.F. Shea Construction Management, Inc., its sole General Partner	SHEA HOMES AT MONTAGE, LLC
		By:	/s/ James G. Shontere
By:	/s/ James G. Shontere	Name:	James G. Shontere
Name:	James G. Shontere	Title:	Secretary
Title:	Secretary
		By:	/s/ Robert O’Dell
By:	/s/ Robert O’Dell	Name:	Robert O’Dell
Name:	Robert O’Dell	Title:	Treasurer
Title:	Treasurer

[Signature page to Tax Distribution Agreement]

/s/ John F. Shea	/s/ Peter O. Shea
John F. Shea	Peter O. Shea
/s/ Dorothy B. Shea	/s/ Carolyn H. Shea
Dorothy B. Shea	Carolyn H. Shea
/s/ Mary Shea	/s/ Matthew Gilbert Shea
Mary Shea	Matthew Gilbert Shea
/s/ Claire Shea	/s/ Colleen Shea Morrissey
Claire Shea	Colleen Shea Morrissey
/s/ John F. Shea, Jr.	/s/ Edmund H. Shea, III
John F. Shea, Jr.	Edmund H. Shea, III
/s/ Anne T. Shea	/s/ Mary Shea McConnell
Anne T. Shea	Mary Shea McConnell
/s/ James W. Shea	/s/ Kathleen Shea
James W. Shea	Kathleen Shea
/s/ Dorothy Shea Hobin	/s/ Timothy Shea
Dorothy Shea Hobin	Timothy Shea
/s/ Carrie Shea Tilton	/s/ Ellen M. Shea
Carrie Shea Tilton	Ellen M. Shea
/s/ Alison Shea Knoll	/s/ Catherine Shea Johnson
Alison Shea Knoll	Catherine Shea Johnson
/s/ Maura Shea Flanagan	/s/ Peter O. Shea, Jr.
Maura Shea Flanagan	Peter O. Shea, Jr.
/s/ John C. Morrissey	/s/ Sarah H. Shea
John C. Morrissey	Sarah H. Shea
THE E & M SHEA REVOCABLE TRUST
/s/ Mary Shea
Mary Shea, Grantor and Trustee U/D/T Dated April 7, 2009 (The E & M Shea Revocable Trust)
/s/ John C. Morrissey
John C. Morrissey, Trustee U/D/T Dated April 7, 2009 (The E & M Shea Revocable Trust)

[Signature page to Tax Distribution Agreement]

ANNEX I – [FORM OF] JOINDER AGREEMENT.

Date:             , 20    

Number     

To: Shea Homes Limited Partnership

Ladies and Gentlemen:

This Joinder Agreement is made and delivered pursuant to Section 6 of the Tax Distribution Agreement dated as of             , 20     among Shea Homes Limited Partnership, a California limited partnership, and the SHLP Partners and SHLP Taxpayers referred to therein (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Tax Distribution Agreement”). Terms defined in the Tax Distribution Agreement and not otherwise defined herein are used herein as therein defined.

The undersigned,                             , hereby designates [himself][herself][itself] a [SHLP Partner/SHLP Taxpayer] in accordance with Section 6 of the Tax Distribution Agreement, and hereby confirms, with effect from the date of this Joinder Agreement, [his][her][its] acceptance of, and consents to, all covenants and other terms and provisions of the Tax Distribution Agreement.

Address for notice purposes:

EX-12.1

Exhibit 12.1

Shea Homes Limited Partnership and Subsidiaries

Statement Re: Computation of Earnings to Fixed Charges

The following table sets forth information regarding our ratio of earnings to fixed charges for the periods shown. In calculating the ratio of earnings to fixed charges, earnings consist of (a) (loss) income before income taxes, excluding equity in income (loss) from joint ventures, plus (b) fixed charges, plus (c) capitalized interest included in cost of sales, plus (d) distributions of earnings from Unconsolidated Joint Ventures, less (e) interest capitalized. Fixed charges consist of (a) interest incurred and (b) the portion of rental expense deemed to be representative of an interest factor. For the years ended December 31, 2010, 2009 and 2008 earnings were insufficient to cover fixed charges for each such year by $9.7 million, $350.8 million and $553.9 million, respectively. For the six months ended June 30, 2011, earnings were insufficient to cover fixed charges for the period by $87.0 million.

	Six Months Ended June 30,						Fiscal Year Ended December 31,
	2011			2010			2010			2009			2008			2007			2006
	(In millions, except ratios)
Earnings:
(Loss) / income before income taxes, excluding equity in income (loss) from joint ventures	$	(109,478	)	$	(10,085	)	$	(67,395	)	$	(433,189	)	$	(600,907	)	$	(476,268	)	$	454,806
Plus:
Fixed charges		37,244			30,718			62,111			59,339			57,718			79,448			85,334
Capitalized interest included in cost of sales		14,150			20,878			48782			81,729			46,064			46,632			60,913
Distribution of earnings from Unconsolidated Joint Ventures		—			—			400			630			937			28,198			7,066
Less:
Interest capitalized		(28,918	)		(27,197	)		(53,553	)		(59,339	)		(57,718	)		(79,488	)		(85,334	)
Total earnings as calculated		(87,002	)		14,314			(9,655	)		(350,830	)		(553,906	)		(401,438	)		522,785
Fixed charges:
Interest incurred		37,244			30,718			62,111			59,339			57,718			79,488			85,334
Portion of rental expense deemed to be representative of an interest factor		—			—			—
Total fixed charges	$	37,244		$	30,718		$	62,111		$	59,339		$	57,718		$	79,488		$	85,334
Ratio of earnings to fixed charges		—			0.5x			—			—			—			—			6.1x

EX-23.5

Exhibit 23.5

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated March 28, 2011 (except Notes 18, 20, 21, and 22, as to which the date is October 10, 2011) with respect to the consolidated financial statements of Shea Homes Limited Partnership for the year ended December 31, 2010, in the Registration Statement (Form S-4 Dated October 14, 2011) and related Prospectus of Shea Homes Limited Partnership for the registration of $750,000,000 of 8.625% Senior Secured Notes due 2019 and $750,000,000 of Guarantees of 8.625% Senior Secured Notes due 2019 and to the inclusion therein.

/s/ Ernst & Young LLP

Los Angeles, California

October 14, 2011

EX-25.1

Exhibit 25.1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY

UNDER THE TRUST INDENTURE ACT OF 1939 OF A

CORPORATION DESIGNATED TO ACT AS TRUSTEE

¨ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b) (2)

WELLS FARGO BANK, NATIONAL ASSOCIATION

(Exact name of trustee as specified in its charter)

A National Banking Association	94-1347393
(Jurisdiction of incorporation or organization if not a U.S. national bank)	(I.R.S. Employer Identification No.)
101 North Phillips Avenue Sioux Falls, South Dakota	57104
(Address of principal executive offices)	(Zip code)

Wells Fargo & Company

Law Department, Trust Section

MAC N9305-175

Sixth Street and Marquette Avenue, 17^th Floor

Minneapolis, Minnesota 55479

(612) 667-4608

(Name, address and telephone number of agent for service)

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

(Exact name of obligor as specified in its charter)

California Delaware	95-4240219 37-1635024
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
655 Brea Canyon Road Walnut, CA	91789
(Address of principal executive offices)	(Zip code)

8.625% Senior Secured Notes Due 2019

(Title of the indenture securities)

Item 1. General Information. Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to which it is subject.

Comptroller of the Currency

Treasury Department

Washington, D.C.

Federal Deposit Insurance Corporation

Washington, D.C.

Federal Reserve Bank of San Francisco

San Francisco, California 94120

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation.

None with respect to the trustee.

No responses are included for Items 3-14 of this Form T-1 because the obligor is not in default as provided under Item 13.

Item 15. Foreign Trustee. Not applicable.

Item 16. List of Exhibits. List below all exhibits filed as a part of this Statement of Eligibility.

Exhibit 1.	A copy of the Articles of Association of the trustee now in effect.*
Exhibit 2.	A copy of the Comptroller of the Currency Certificate of Corporate Existence and Fiduciary Powers for Wells Fargo Bank, National Association, dated February 4, 2004.**
Exhibit 3.	See Exhibit 2
Exhibit 4.	Copy of By-laws of the trustee as now in effect.***
Exhibit 5.	Not applicable.
Exhibit 6.	The consent of the trustee required by Section 321(b) of the Act.
Exhibit 7.	A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority.
Exhibit 8.	Not applicable.
Exhibit 9.	Not applicable.

* Incorporated by reference to the exhibit of the same number to the trustee’s Form T-1 filed as exhibit 25 to the Form S-4 dated December 30, 2005 of file number 333-130784-06.

** Incorporated by reference to the exhibit of the same number to the trustee’s Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of file number 022-28721.

*** Incorporated by reference to the exhibit of the same number to the trustee’s Form T-1 filed as exhibit 25 to the Form S-4 dated May 26, 2005 of file number 333-125274.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wells Fargo Bank, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Los Angeles and State of California on the 16th day of September, 2011.

WELLS FARGO BANK, NATIONAL ASSOCIATION

  /s/ Maddy Hall

Maddy Hall

Vice President

EXHIBIT 6

September 16, 2011

Securities and Exchange Commission

Washington, D.C. 20549

Gentlemen:

In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Very truly yours,

WELLS FARGO BANK, NATIONAL ASSOCIATION

  /s/ Maddy Hall

Maddy Hall

Vice President

EXHIBIT 7

Consolidated Report of Condition of

Wells Fargo Bank National Association

of 101 North Phillips Avenue, Sioux Falls, SD 57104

And Foreign and Domestic Subsidiaries,

at the close of business June 30, 2011, filed in accordance with 12 U.S.C. §161 for National Banks.

		Dollar Amounts In Millions
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin		$	24,433
Interest-bearing balances			66,533
Securities:
Held-to-maturity securities			0
Available-for-sale securities			154,068
Federal funds sold and securities purchased under agreements to resell:
Federal funds sold in domestic offices			4,142
Securities purchased under agreements to resell			15,186
Loans and lease financing receivables:
Loans and leases held for sale			21,688
Loans and leases, net of unearned income	689,075
LESS: Allowance for loan and lease losses	17,922
Loans and leases, net of unearned income and allowance			671,153
Trading Assets			33,481
Premises and fixed assets (including capitalized leases)			8,103
Other real estate owned			4,705
Investments in unconsolidated subsidiaries and associated companies			566
Direct and indirect investments in real estate ventures			107
Intangible assets
Goodwill			20,936
Other intangible assets			25,816
Other assets			53,916
Total assets		$	1,104,833
LIABILITIES
Deposits:
In domestic offices		$	761,154
Noninterest-bearing	181,676
Interest-bearing	579,478
In foreign offices, Edge and Agreement subsidiaries, and IBFs			93,814
Noninterest-bearing	1,901
Interest-bearing	91,913
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices			3,170
Securities sold under agreements to repurchase			13,304

	Dollar Amounts In Millions
Trading liabilities		20,222
Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases)		39,048
Subordinated notes and debentures		17,392
Other liabilities		31,532
Total liabilities	$	979,636
EQUITY CAPITAL
Perpetual preferred stock and related surplus		0
Common stock		519
Surplus (exclude all surplus related to preferred stock)		99,145
Retained earnings		18,601
Accumulated other comprehensive income		5,614
Other equity capital components		0
Total bank equity capital		123,879
Noncontrolling (minority) interests in consolidated subsidiaries		1,318
Total equity capital		125,197
Total liabilities, and equity capital	$	1,104,833

I, Timothy J. Sloan, EVP & CFO of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief.

Timothy J. Sloan

EVP & CFO

We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct.

John Stumpf	Directors
Carrie Tolstedt
Michael Loughlin

EX-99.1

Exhibit 99.1

LETTER OF TRANSMITTAL

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

Exchange Offer for All Outstanding

8.625% Senior Secured Notes due 2019

(CUSIP Nos. 82088K AA6 and U82091 AA4)

for new 8.625% Senior Secured Notes due 2019

that have been registered under the Securities Act of 1933

Pursuant to the Prospectus dated                     , 2011

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     , 2011, OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE OFFER MAY BE EXTENDED (THE “EXPIRATION TIME”). TENDERS MAY BE WITHDRAWN AT ANY TIME AT OR PRIOR TO THE EXPIRATION TIME.

The exchange agent is:

Wells Fargo Bank, National Association

By hand delivery, mail or overnight courier at:

Wells Fargo Bank, National Association

Corporate Trust Operations 608 2nd Ave South

Northstar East Building-12th Floor

Minneapolis, MN 55402

By registered and certified mail at:

Wells Fargo Bank, National Association

Corporate Trust Operations

MAC N9303-121

P.O. Box 1517

Minneapolis, MN 55480

By regular mail or overnight courier:

Wells Fargo Bank, National Association

Corporate Trust Operations

MAC N9303-121

Sixth & Marquette Avenue

Minneapolis, MN 55479

or

By facsimile transmission

(for eligible institutions only):

(612) 667-6282

Confirm by telephone:

1-800-344-5128

TO TENDER OUTSTANDING NOTES, YOU MUST CAUSE AN AGENT’S MESSAGE TO BE DELIVERED TO THE EXCHANGE AGENT IN ACCORDANCE WITH THE DEPOSITORY TRUST COMPANYS (“DTC”) APPLICABLE PROCEDURES, AT OR PRIOR TO THE EXPIRATION TIME.

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This Letter of Transmittal accompanies the prospectus, dated             , 2011 (the “Prospectus”), of Shea Homes Limited Partnership, a California limited partnership and Shea Homes Funding Corp., a Delaware corporation (the “Companies”), which together constitute the offer of the Companies (the “Exchange Offer”) to exchange up to $750,000,000 in aggregate principal amount of new 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”), subject to the terms and conditions set forth therein. Recipients of the Prospectus should carefully read the Prospectus, including the requirements described in the Prospectus with respect to eligibility to participate in the Exchange Offer.

Capitalized terms used but not defined herein have the meaning given to them in the Prospectus.

PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY

Tenders of Outstanding Notes must be made by book-entry transfer to the Exchange Agent’s account at DTC through DTC’s Automated Tender Offer Program (“ATOP”) pursuant to the procedures set forth in “The Exchange Offer—How to Tender Outstanding Notes for Exchange” in the Prospectus, and an Agent’s Message (as defined below) must be delivered to the Exchange Agent in accordance with DTC’s applicable procedures.

The term “Agent’s Message” means a message, electronically transmitted by DTC to the Exchange Agent, forming part of a book-entry transfer, which states that DTC has received an express acknowledgement from the tendering holder of the Outstanding Notes that such holder has received and agrees to be bound by, and makes each of the representations and warranties contained in, this Letter of Transmittal, and, further, that such holder agrees that the Companies may enforce this Letter of Transmittal against such holder.

Only registered holders are entitled to tender their Outstanding Notes for exchange in the Exchange Offer. In order for any holder of Outstanding Notes to tender in the Exchange Offer all or any portion of such holder’s Outstanding Notes, the Exchange Agent must receive, at or prior to the Expiration Time, an Agent’s Message and a confirmation of the book-entry transfer of the Outstanding Notes being tendered into the Exchange Agent’s account at DTC, or a notice of guaranteed delivery.

Any participant in DTC’s system whose name appears on a security position listing as the registered owner of Outstanding Notes and who wishes to make book-entry delivery of Outstanding Notes to the Exchange Agent’s account at DTC can execute the tender through ATOP, for which the Exchange Offer will be eligible, by following the applicable procedures thereof. Upon such tender of Outstanding Notes:

• DTC will verify the acceptance of the tender and execute a book-entry delivery of the tendered Outstanding Notes to the Exchange Agent’s account at DTC;

• DTC will send to the Exchange Agent for its acceptance an Agent’s Message forming part of such book-entry transfer; and

• transmission of the Agent’s Message by DTC will satisfy the terms of the Exchange Offer as to execution and delivery of a Letter of Transmittal by the participant identified in the Agent’s Message.

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If a holder of Outstanding Notes desires to tender Outstanding Notes for exchange and, at or prior to the Expiration Time, such holder cannot complete the procedures for book-entry transfer, then such holder must tender the Outstanding Notes pursuant to the guaranteed delivery procedures set forth in the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures.” See Instruction 2 of this Letter of Transmittal.

The Exchange Offer may be extended, terminated, or amended as provided in the Prospectus. During any such extension of the Exchange Offer, all Outstanding Notes previously tendered and not withdrawn pursuant to the Exchange Offer will remain subject to the Exchange Offer. The Exchange Offer is scheduled to expire at 5:00 p.m., New York City time, on                     , 2011, unless extended by the Companies.

Persons who are beneficial owners of Outstanding Notes but are not registered holders and who desire to tender Outstanding Notes should contact the registered holder of such Outstanding Notes and instruct such registered holder to tender on such beneficial owner’s behalf.

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Ladies and Gentlemen:

Upon the terms and subject to the conditions of the Exchange Offer, by tendering Outstanding Notes to the Exchange Agent’s account at DTC through ATOP, you hereby tender to the Companies for exchange such Outstanding Notes. Subject to, and effective upon, acceptance for exchange of such Outstanding Notes, you hereby sell, assign and transfer to the Companies all right, title and interest in and to all such Outstanding Notes tendered for exchange. You hereby irrevocably constitute and appoint the Exchange Agent as your true and lawful agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as agent of the Companies) with respect to such Outstanding Notes, with full power of substitution and resubstitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to:

• transfer ownership of such Outstanding Notes on the account books maintained by DTC, together, in each such case, with all accompanying evidences of transfer and authenticity to the Companies;

• present and deliver such Outstanding Notes for transfer on the books of the Companies; and

• receive all benefits or otherwise exercise all rights and incidents of beneficial ownership of such Outstanding Notes, all in accordance with the terms of the Exchange Offer.

By tendering Outstanding Notes to the Exchange Agent’s account at DTC through ATOP, you represent and warrant that you have full power and authority to tender, exchange, assign and transfer the Outstanding Notes and to acquire the Exchange Notes issuable upon the exchange of such tendered Outstanding Notes, and that, when the Outstanding Notes are accepted for exchange, the Companies will acquire good and unencumbered title to the tendered Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. You also warrant that you will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Companies to be necessary or desirable to complete the exchange, assignment and transfer of tendered Outstanding Notes or transfer ownership of such Outstanding Notes on the account books maintained by DTC.

By tendering Outstanding Notes to the Exchange Agent’s account at DTC through ATOP, you further agree that acceptance of any and all validly tendered Outstanding Notes by the Companies and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Companies of certain of its obligations under the registration rights agreement that was filed as an exhibit to the registration statement of which the Prospectus is a part.

By tendering Outstanding Notes to the Exchange Agent’s account at DTC through ATOP, you also acknowledge that the Exchange Offer is being made by the Companies in reliance on interpretations by the staff of the Securities and Exchange Commission (the “SEC”), as set forth in no-action letters issued to third parties. The Companies believe that Exchange Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an “affiliate” of the Companies within the meaning of Rule 405 under the Securities Act or that tenders Outstanding Notes for the purpose of participating in a distribution of the Exchange Notes), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder’s business, and such holders have no arrangement or understanding with any person to participate in the distribution of the Exchange Notes. However, the Companies do not intend to request that the SEC consider, and the SEC has not considered, the Exchange Offer in the context of a no-action letter and therefore the Companies cannot guarantee that the staff of the SEC would make a similar determination with respect to the Exchange Offer. You acknowledge that if the interpretation of the Companies of the above mentioned no-action letters is incorrect, such holder may be held liable for any offers, resales or transfers by the undersigned of the Exchange Notes that are in violation of the Securities Act. You further acknowledge that neither the Companies nor the Exchange Agent will indemnify any holder for any such liability under the Securities Act.

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By tendering Outstanding Notes to the Exchange Agent’s account at DTC through ATOP, you represent and warrant that:

• You are not an “affiliate” of the Companies within the meaning of Rule 405 under the Securities Act;

• the Exchange Notes acquired in the Exchange Offer will be obtained in the ordinary course of your business;

• neither you nor, to your actual knowledge, any other person receiving Exchange Notes from you, have any arrangement or understanding with any person to participate in the distribution of such Exchange Notes;

• if you are not a broker-dealer, you are not engaged in, and do not intend to engage in, a distribution of the Exchange Notes and you have no arrangements or understandings with any person or participate in a distribution of the Exchange Notes; and

• if you are a broker-dealer that will receive Exchange Notes for your own account in exchange for Outstanding Notes, the Outstanding Notes being tendered for exchange were acquired by you as a result of market-making activities or other trading activities (and not directly from the Companies), and you will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the Exchange Notes received in respect of such Outstanding Notes pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus in connection with the resale of the Exchange Notes, you will not be deemed to admit that you are an “underwriter” within the meaning of the Securities Act, and you will comply with the applicable provisions of the Securities Act with respect to resale of any Exchange Notes.

Any holder of Outstanding Notes who is an affiliate of the Companies who tenders Outstanding Notes in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes:

• may not rely on the position of the staff of the SEC enunciated in its series of interpretive no-action letters with respect to exchange offers; and

• must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction.

All authority conferred or agreed to be conferred pursuant to this Letter of Transmittal and every obligation of tendering holders hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy, and personal and legal representatives of tendering holders and shall not be affected by, and shall survive, the death or incapacity of tendering holders.

Outstanding Notes properly tendered may be withdrawn at any time at or prior to the Expiration Time in accordance with the terms of the Prospectus and this Letter of Transmittal.

The Exchange Offer is subject to certain conditions, some of which may be waived or modified by the Companies, in whole or in part, at any time and from time to time, as described in the Prospectus under the caption “The Exchange Offer—Conditions to the Exchange Offer.” You recognize that as a result of such conditions the Companies may not be required to accept for exchange, or to issue Exchange Notes in exchange for, any of the Outstanding Notes validly tendered hereby. All tendering holders waive any right to receive any notice of the acceptance or rejection of their Outstanding Notes for exchange.

The Companies are not aware of any jurisdiction in which the making of the Exchange Offer or the tender of Outstanding Notes in connection therewith would not be in compliance with the laws of such jurisdiction. If the making of the Exchange Offer would not be in compliance with the laws of any jurisdiction, the Exchange Offer will not be made to the registered holders residing in such jurisdiction.

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INSTRUCTIONS

Forming Part of the Terms and Conditions of the Exchange Offer

1. Book-Entry Confirmations; Guaranteed Delivery Procedures. In order for a holder of Outstanding Notes to tender all or any portion of such holder’s Outstanding Notes, the Exchange Agent must receive an Agent’s Message with respect to such holder, and a confirmation of the book-entry transfer of the Outstanding Notes being tendered into the Exchange Agent’s account at DTC at or prior to the Expiration Time, or the tendering holder must comply with the guaranteed delivery procedures set forth below.

If holders desire to tender Outstanding Notes for exchange pursuant to the Exchange Offer and, if at or prior to the Expiration Time, the procedures for book-entry transfer cannot be completed; such holder may effect a tender of Outstanding Notes for exchange in accordance with the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer—Guaranteed Delivery Procedures.”

Pursuant to the guaranteed delivery procedures:

• at or prior to the Expiration Time, the Exchange Agent must have received from an Eligible Institution, at one of the addresses of the Exchange Agent set forth above, a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile, mail or hand delivery) substantially in the form provided by the Companies setting forth the name and address of the registered holder of such Outstanding Notes the principal amount of Outstanding Notes being tendered for exchange and stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery, confirmation of book-entry transfer of such Outstanding Notes into the Exchange Agent’s account with DTC and an Agent’s Message will be deposited by such Eligible Institution with the Exchange Agent; and

• confirmation of book-entry transfer of such Outstanding Notes into the Exchange Agent’s account with DTC and an Agent’s Message must be received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery.

All tendering holders waive any right to receive any notice of the acceptance or rejection of their Outstanding Notes for exchange.

2. Withdrawal of Tenders. A tender of Outstanding Notes may be withdrawn at any time at or prior to the Expiration Time by delivery of a written or facsimile notice of withdrawal to the Exchange Agent at the address set forth on the cover of this Letter of Transmittal. To be effective, a notice of withdrawal must:

• be received by the Exchange Agent at or prior to the Expiration Time;

• specify the name of the person having tendered the Outstanding Notes to be withdrawn;

• identify the Outstanding Notes to be withdrawn;

• specify the principal amount of Outstanding Notes to be withdrawn;

• specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Outstanding Notes and otherwise comply with the procedures of DTC;

• include a statement that such holder is withdrawing his, her or its election to have such Outstanding Notes exchanged;

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• be signed by the holder with such signature guaranteed by an Eligible Institution (unless such withdrawing holder is an Eligible Institution) or be accompanied by documents of transfer (including a signature guarantee by an Eligible Institution) sufficient to permit the trustee under the Indenture to register the transfer of such Outstanding Notes into the name of the person withdrawing the tender; and

• specify the name in which any such Outstanding Notes are to be registered, if different from that of the person tendering the Outstanding Notes.

The Exchange Agent will return the properly withdrawn Outstanding Notes promptly following receipt of the notice of withdrawal. All questions as to the validity of notices of withdrawal, including time of receipt, will be determined by the Companies in their sole discretion and such determination will be final and binding on all parties.

Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Outstanding Notes that have been tendered for exchange but that are not exchanged for any reason will be credited to an account with DTC specified by the holder promptly after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by following the procedures described under the caption “The Exchange Offer—How to Tender Outstanding Notes for Exchange” in the Prospectus at any time at or prior to the Expiration Time.

3. Minimum Tenders. Tenders of Outstanding Notes will be accepted only in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

4. Transfer Taxes. Except as set forth in this Instruction 7, the Companies will pay or cause to be paid any transfer taxes applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the exchange of Outstanding Notes pursuant to the Exchange Offer, then the amount of any transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of the payment of such taxes or exemptions therefrom is not submitted, the amount of such transfer taxes will be billed directly to such tendering holder.

5. Special Issuance and Delivery Instructions. Holders of Outstanding Notes tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not accepted for exchange be credited to such other account maintained at DTC as such holder may designate.

6. Irregularities. All questions as to the forms of all documents and the validity of (including time of receipt) and acceptance of the tenders and withdrawals of Outstanding Notes will be determined by the Companies, in their sole discretion, which determination shall be final and binding. Alternative, conditional or contingent tenders will not be considered valid. The Companies reserve the absolute right to reject any or all tenders of Outstanding Notes that are not in proper form or the acceptance of which would, in the Companies’ opinion, be unlawful. The Companies also reserve the right to waive any defects or irregularities as to the tender of any particular Outstanding Notes. The Companies’ interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding. Any defect or irregularity in connection with tenders of Outstanding Notes must be cured within such time as the Companies determine, unless waived by the Companies. Tenders of Outstanding Notes shall not be deemed to have been made until all defects or irregularities have been waived by the Companies or cured. Neither the Companies nor the Exchange Agent, nor any other person will be under any duty to give notice of any defects or irregularities in tenders of Outstanding Notes, or will incur any liability to registered holders or beneficial owners of Outstanding Notes for failure to give such notice.

7. Waiver of Conditions. To the extent permitted by applicable law, the Companies reserve the right to waive any and all conditions to the Exchange Offer as described under “The Exchange Offer—Conditions to the Exchange Offer” in the Prospectus, and accept for exchange any Outstanding Notes tendered. To the extent that the Companies waive any condition to the Exchange Offer, they will waive such condition as to all Outstanding Notes.

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8. Tax Identification Number and Backup Withholding. Federal income tax law generally requires that a holder of Outstanding Notes whose tendered Outstanding Notes are accepted for exchange or such holder’s assignee (in either case, the “Payee”), provide the Exchange Agent (the “Payor”) with such Payee’s correct Taxpayer Identification Number (“TIN”), which, in the case of a Payee who is an individual, is usually such Payee’s social security number. If the Payor is not provided with the correct TIN or an adequate basis for an exemption, such Payee may be subject to a $50 penalty imposed by the Internal Revenue Service and backup withholding at the applicable withholding rate (which is currently 28%) on all reportable payments (such as interest), that are made to the Payee with respect to the Exchange Notes. If withholding results in an overpayment of taxes, a refund may be obtained, provided the required information is timely furnished to the Internal Revenue Service.

To prevent backup withholding, each Payee that is a “United States person” for U.S. federal income tax purposes must provide the Exchange Agent such Payee’s correct TIN by completing the Subsitute Form W-9 accompanying this Letter of Transmittal, certifying that the TIN provided is correct (or that such Payee is awaiting a TIN) and that:

• the Payee is exempt from backup withholding;

• the Payee has not been notified by the Internal Revenue Service that such Payee is subject to backup withholding as a result of a failure to report all interest or dividends; or

• the Internal Revenue Service has notified the Payee that such Payee is no longer subject to backup withholding.

If the Payee does not have a TIN, such Payee should consult the instructions accompanying the enclosed Subsitute Form W-9 (the “W-9 Instructions”) for instructions on applying for a TIN. A Payee who has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future should complete the Subsitute Form W-9 as indicated in the W-9 Instructions. If such a Payee does not provide his, her or its TIN to the Exchange Agent within 60 days, backup withholding on all reportable payments will begin and continue until such Payee furnishes such Payee’s TIN to the Exchange Agent.

If the Outstanding Notes are held in more than one name or are not in the name of the actual owner, consult the W-9 Instructions for information on which TIN to report.

Exempt Payees are not subject to these backup withholding and reporting requirements. To prevent possible erroneous backup withholding, an exempt Payee must enter its correct TIN in Part 1 of the Subsitute Form W-9, check the “Exempt payee” box in such form and sign and date the form. See the W-9 Instructions for additional instructions. In order for a Payee that is not a “United States person” for U.S. federal income tax purposes to qualify as exempt from these backup withholding and information reporting requirements, such person must complete and submit an appropriate IRS Form W-8, signed under penalty of perjury attesting to such exempt status. Such form may be obtained from the Exchange Agent.

Holders should refer to the Prospectus for a summary of material U.S. federal income tax consequences of the exchange of the Outstanding Notes for the Exchange Notes, and the acquisition, ownership, and disposition of the Exchange Notes. Holders are urged to consult their own tax advisors with respect to the particular U.S. federal income tax consequences to them of the acquisition, ownership and disposition of the Exchange Notes and the tax consequences under federal, state, local, and non-U.S. tax laws and the possible effects of changes in tax laws.

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9. Requests for Assistance or Additional Copies. Requests for assistance with respect to the procedures for the Exchange Offer or for additional copies of the Prospectus, this Letter of Transmittal, the Notice of Guaranteed Delivery, or the W-9 Instructions may be directed to the Exchange Agent at its address set forth on the cover of this Letter of Transmittal.

10. Incorporation of this Letter of Transmittal. This Letter of Transmittal shall be deemed to be incorporated in, and acknowledged and accepted by, a tender through DTC’s ATOP procedures by any participant on behalf of itself and the beneficial owners of any Outstanding Notes so tendered by such participant.

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EX-99.2

Exhibit 99.2

What Number to Give the Payer:

The holder is required to give the Payer his or her TIN (e.g., Social Security Number or Employer Identification Number). If the Outstanding Notes are held in more than one name or are held not in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional guidance on which number to report.

PAYER’S NAME: WELLS FARGO BANK, NATIONAL ASSOCIATION
SUBSTITUTE FORM W-9 Payer’s Request for Taxpayer Identification Number (TIN) Please fill in your name and address below. _____________________________ Name _____________________________ Business Name _____________________________ Address (number and street) _____________________________ City, State and Zip Code	Part 1 — PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT OR, IF YOU DO NOT HAVE A TIN, CHECK THE BOX IN PART 3. THEN SIGN THE CERTIFICATION BELOW.	____________________________ Social Security Number OR ______________________________ Taxpayer Identification Number
	Check appropriate box: ¨  Individual/Sole Proprietor                                            ¨ C Corporation  ¨ S Corporation  ¨  Partnership  ¨  Trust/Estate ¨  Limited Liability Company. Enter the appropriate tax classification (C = C corporation, S = S corporation P = partnership)                     ¨  Other
	Part 2 — Certification—Under penalties of perjury, I certify that: (1)    The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and (2)    I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3)    I am a U.S. person (as defined in the instructions).
	Part 3 — Awaiting TIN [    ]
	Part 4 — Exempt from backup withholding [    ]
	Certification Instructions — You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of under reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). If you are exempt from backup withholding, check the box in Part 4 and see the enclosed instructions. Signature: ____________________________________        Date: ____________________

YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer
identification number by the time of payment, all reportable payments made to me thereafter will be subject to backup withholding at the
applicable withholding rate (which is currently 28%) until I provide such a number.

Signature: _____________________________________            Date: _________________________________________

NOTE: Failure to complete and return this form may result in backup withholding at the applicable withholding rate (which is currently 28%) on any reportable payments made to you. Please review the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional details.

THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.

SUBSTITUTE FORM W-9 INSTRUCTIONS

General Instructions

All section references are to the Internal Revenue Code unless otherwise stated.

U.S. person. Use Substitute Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN to the person requesting it (the requester), and to:

1. Certify that the TIN you are giving is correct (or you are waiting for a number to be issued),

2. Certify that you are not subject to backup withholding, or

3. Claim exemption from backup withholding if you are a U.S. exempt payee.

For federal tax purposes, you are considered a U.S. person if you are:

1. An individual who is a citizen or resident alien of the United States,

2. A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States, or

3. Any estate (other than a foreign estate) or domestic trust. See Treasury regulations section 301.7701-7 for additional information.

Partners and partnerships must consult their own tax advisors regarding the application of these rules to them.

Foreign person. If you are a foreign person, do not use Substitute Form W-9. Instead, use the appropriate IRS Form W-8 (see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).

Nonresident alien who becomes a resident alien.

Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a “saving clause.” Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the recipient has otherwise become a U.S. resident alien for tax purposes.

If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Substitute Form W-9 that specifies the following five items:

1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien.

2. The treaty article addressing the income.

3. The article number (or location) in the tax treaty that contains the saving clause and its exceptions.

4. The type and amount of income that qualifies for the exemption from tax.

5. Sufficient facts to justify the exemption from tax under the terms of the treaty article.

Example. Article 20 of the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her stay in the United States exceeds 5 calendar years. However, paragraph 2 of the first Protocol to the U.S.-China treaty (dated April 30, 1984) allows the provisions of Article 20 to continue to apply even after the Chinese student becomes a resident alien of the United States. A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would attach to Substitute Form W-9 a statement that includes the information described above to support that exemption.

If you are a nonresident alien or a foreign entity not subject to backup withholding, give the requester the appropriate completed IRS Form W-8.

What is backup withholding? Persons making certain payments to you must under certain conditions withhold and pay to the IRS 28% of such payments. This is called “backup withholding.” Payments that may be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding.

You will not be subject to backup withholding on payments you receive if you give the requester your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return.

Payments you receive will be subject to backup withholding if:

1. You do not furnish your TIN to the requester, or

2. You do not certify your TIN when required (see the Part II instructions below for details), or

3. The IRS tells the requester that you furnished an incorrect TIN, or

4. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or

5. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only).

Certain payees and payments are exempt from backup withholding. See the instructions below and the separate Instructions for the Requester of Form W-9.

Penalties

Failure to furnish TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

Civil penalty for false information with respect to withholding. If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

Criminal penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

Misuse of TINs. If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties.

Specific Instructions

Name

If you are an individual, you must generally enter the name shown on your income tax return. However, if you have changed your last name, for instance, due to marriage without informing the Social Security Administration of the name change, enter your first name, the last name shown on your social security card, and your new last name. If the account is in joint names, list first, and then circle, the name of the person or entity whose number you entered on the form.

Sole proprietor. Enter your individual name as shown on your income tax return on the “Name” line. You may enter your business, trade, or “doing business as (DBA)” name on the “Business name” line.

Limited liability company (LLC). If the person identified on the “Name” line is an LLC, check the “Limited liability company” box only and enter the appropriate code for the tax classification in the space provided. If you are an LLC that is treated as a partnership for federal tax purposes, enter “P” for partnership. If you are an LLC that has filed a Form 8832 or a Form 2553 to be taxed as a corporation, enter “C” for C corporation or “S” for S corporation. If you are an LLC that is disregarded as an entity separate from its owner under Regulation section 301.7701-3 (except for employment and excise tax), do not check the LLC box unless the owner of the LLC (required to be identified on the “Name” line) is another LLC that is not disregarded for federal tax purposes. If the LLC is disregarded as an entity separate from its owner, enter the appropriate tax classification of the owner identified on the “Name” line.

Other entities. Enter your business name as shown on required Federal tax documents on the “Name” line. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on the “Business name” line. If you are an entity that is disregarded as an entity separate from its owner under Treasury regulations section 301.7701-3, enter the owner’s name on the “Name” line. The name on the “Name” line must be the name shown on the income tax return on which the income will be reported.

Note: Check the appropriate box for your status (individual/sole proprietor, corporation, etc.).

Exempt From Backup Withholding

If you are exempt, enter your name as described above and check the appropriate box for your status, then check the “Exempt from backup withholding” box in Part 4 of the Substitute Form W-9, and sign and date the form.

Generally, individuals (including sole proprietors) are not exempt from backup withholding. Corporations are exempt from backup withholding for certain payments, such as interest and dividends.

Note: If you are exempt from backup withholding, you should still complete this form to avoid possible erroneous backup withholding.

Exempt payees. Backup withholding is not required on any payments made to the following payees:

1. An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2),

2. The United States or any of its agencies or instrumentalities,

3. A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities,

4. A foreign government or any of its political subdivisions, agencies, or instrumentalities, or

5. An international organization or any of its agencies or instrumentalities.

Other payees that may be exempt from backup withholding include:

6. A corporation (prior to 2012),

7. A foreign central bank of issue,

8. A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States,

9. A futures commission merchant registered with the Commodity Futures Trading Commission,

10. A real estate investment trust,

11. An entity registered at all times during the tax year under the Investment Company Act of 1940,

12. A common trust fund operated by a bank under section 584(a),

13. A financial institution,

14. A middleman known in the investment community as a nominee or custodian, or

15. A trust exempt from tax under section 664 or described in section 4947.

The chart below shows types of payments that may be exempt from backup withholding. The chart applies to the exempt recipients listed above, 1 through 15.

IF the payment is for…	THEN the payment is exempt for…
Interest and dividend payments	All exempt recipients except for 9
Broker transactions	Exempt recipients 1 through 5 and 7 though 13. Also, C corporations (prior to 2012).
Barter exchange transactions and patronage dividends	Exempt recipients 1 through 5
Payments over $600 required to be reported and direct sales over $5,000 (1)	Generally, exempt recipients 1 through 7 (2)

(1) See Form 1099-MISC, Miscellaneous Income, and its instructions.

(2) However, the following payments made to a corporation and reportable on Form 1099-MISC are not exempt from backup withholding: medical and health care payments, attorneys’ fees, gross proceeds paid to an atorney and payments for services paid by a Federal executive agency.

Exempt payees described above should file a Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, CHECK THE BOX IN PART 4, AND RETURN IT TO THE PAYER.

Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Sections 6041, 6041A(a), 6042, 6044, 6045, 6050A, and 6050N.

Part I. Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see How to get a TIN below. If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN. However, the IRS prefers that you use your SSN. If you are a single-owner LLC that is disregarded as an entity separate from its owner, enter the owner’s SSN (or EIN, if the owner has one). If the LLC is a corporation, partnership, etc., enter the entity’s EIN.

Note. See the chart below for further clarification of name and TIN combinations.

How to get a TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get IRS Form SS-5, Application for a Social Security Card, from your local Social Security Administration office or get this form online at www.socialsecurity.gov/online/ss-5.pdf. You may also get this form by calling 1-800-772-1213. Use IRS Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or IRS Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can apply for an EIN online by accessing the IRS website at www.irs.gov/businesses/ and clicking on Employer Identification Numbers (EIN) under Starting a Business. You can get IRS Forms W-7 and SS-4 from the IRS by visiting www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

If you are asked to complete Substitute Form W-9 but do not have a TIN, check the box in Part 3, fill out the box entitled, “CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER,” and give the Form to the requester. Generally, you will then have 60 days to obtain a TIN and furnish it to the requester. If the requester does not receive your TIN within 60 days, backup withholding, if applicable, will begin and will continue until you furnish your TIN to the requester.

Caution: A disregarded domestic entity that has a foreign owner must use the appropriate IRS Form W-8.

Part II. Certification

To establish to the withholding agent that you are a U.S. person, or resident alien, sign Substitute Form W-9. For a joint account, only the person whose TIN is shown in Part I should sign (when required). Exempt recipients, see Exempt From Backup Withholding above.

Signature requirements. Complete the certification as indicated in 1 through 5 below.

1. Interest, dividend, and barter exchange accounts opened before 1984 and broker accounts considered active during 1983. You must give your correct TIN, but you do not have to sign the certification.

2. Interest, dividend, broker, and barter exchange accounts opened after 1983 and broker accounts considered inactive during 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form.

3. Real estate transactions. You must sign the certification. You may cross out item 2 of the certification.

4. Other payments. You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. “Other payments” include payments made in the course of the requester’s trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations).

5. Mortgage interest paid by you, acquisition or abandonment of secured property, cancellation of debt, qualified tuition program payments (under section 529), IRA, Coverdell ESA, Archer MSA or HSA contributions or distributions, and pension distributions. You must give your correct TIN, but you do not have to sign the certification.

What Name and Number To Give the Requester

For this type of account:	Give name and SSN of:
1. Individual	The individual
2. Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account (1)
3. Custodian account of a minor (Uniform Gift to Minors Act)	The minor (2)
4. a. The usual revocable savings trust (grantor is also trustee)	The grantor-trustee (1)
b. So-called trust account that is not a legal or valid trust under state law	The actual owner (1)
5. Sole proprietorship or disregarded entity owned by an individual	The owner (3)
For this type of account:	Give name and EIN of:
6. Disregarded entity not owned by an individual	The owner
7. A valid trust, estate, or pension trust	Legal entity (4)
8. Corporation or LLC electing corporate status on Form 8832 or Form 2553	The corporation
9. Association, club, religious, charitable, educational, or other tax-exempt organization	The organization
10. Partnership or multi-member LLC	The partnership
11. A broker or registered nominee	The broker or nominee
12. Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person’s number must be furnished.

(2) Circle the minor’s name and furnish the minor’s SSN.

(3) You must show your individual name and you may also enter your business or “DBA” name on the second name line. You may use either your SSN or EIN (if you have one). If you are a sole proprietor, the IRS encourages you to use your SSN.

(4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

Note. If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

Privacy Act Notice

Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you; mortgage interest you paid; the acquisition or abandonment of secured property; cancellation of debt; or contributions you made to an IRA, or Archer MSA or HSA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information to the Department of Justice for civil and criminal litigation, and to cities, states, and the District of Columbia, and U.S. possessions to carry out their tax laws. The IRS may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 28% from taxable interest, dividends, and certain other payments to a payee who does not give a TIN to a payer. Certain penalties may apply for providing false or fraudulent information.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX ADVISOR OR THE INTERNAL REVENUE SERVICE.

EX-99.3

Exhibit 99.3

NOTICE OF GUARANTEED DELIVERY

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

Exchange Offer for All Outstanding

8.625% Senior Secured Notes due 2019

(CUSIP Nos. 82088K AA6 and U82091 AA4)

for new 8.625% Senior Secured Notes due 2019

that have been registered under the Securities Act of 1933

Pursuant to the Prospectus dated                     , 2011

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     ,
2011, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED FROM
TIME TO TIME, THE “EXPIRATION TIME”). TENDERS MAY BE WITHDRAWN AT ANY TIME
AT OR PRIOR TO THE EXPIRATION TIME.

The exchange agent is:

Wells Fargo Bank, National Association

By hand delivery, mail or overnight courier at:

Wells Fargo Bank, National Association

Corporate Trust Operations 608 2nd Ave South

Northstar East Building-12th Floor

Minneapolis, MN 55402

By registered and certified mail at:

Wells Fargo Bank, National Association

Corporate Trust Operations

MAC N9303-121

P.O. Box 1517

Minneapolis, MN 55480

By regular mail or overnight courier:

Wells Fargo Bank, National Association

Corporate Trust Operations

MAC N9303-121

Sixth & Marquette Avenue

Minneapolis, MN 55479

or

By facsimile transmission

(for eligible institutions only):

(612) 667-6282

Confirm by telephone:

1-800-344-5128

TO TENDER OUTSTANDING NOTES, THIS NOTICE OF GUARANTEED DELIVERY MUST BE DELIVERED TO THE EXCHANGE AGENT AT ONE OF ITS ADDRESSES SET FORTH ABOVE AT OR PRIOR TO THE EXPIRATION TIME. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE VALID DELIVERY TO THE EXCHANGE AGENT.

As set forth in the prospectus dated                     , 2011 (the “Prospectus”), of Shea Homes Limited Partnership, a California limited partnership and Shea Homes Funding Corp., a Delaware corporation (the “Companies”), and in the accompanying Letter of Transmittal (the “Letter of Transmittal”), this Notice of Guaranteed Delivery must be used to accept the offer (the “Exchange Offer”) to exchange up to $750,000,000 in aggregate principal amount of new 8.625% Senior Notes due 2019 (the “Exchange Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”), if at or prior to the Expiration Time (1) the Letter of Transmittal or any other documents required thereby cannot be delivered to the Exchange Agent, (2) Outstanding Notes cannot be delivered to the Exchange Agent, or (3) the procedures for book-entry transfer cannot be completed. This form must be delivered by an eligible institution (as described in the Prospectus) by mail or hand delivery or transmitted via facsimile to the Exchange Agent at one of its addresses set forth above at or prior to the Expiration Time. Capitalized terms used but not defined herein shall have the meaning given to them in the Prospectus.

This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an eligible institution under the instructions thereto, such signature guarantee must appear in the applicable space provided on the Letter of Transmittal.

Ladies and Gentlemen:

The undersigned hereby tenders to the Companies, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal (receipt of which are hereby acknowledged), the principal amount of Outstanding Notes specified below pursuant to the guaranteed delivery procedures set forth in the Prospectus and in Instruction 2 of the Letter of Transmittal. By so tendering, the undersigned does hereby make as of the date hereof, the representations and warranties of a tendering holder of Outstanding Notes set forth in the Letter of Transmittal.

The undersigned understands that exchange of the Outstanding Notes for Exchange Notes will be made only after valid receipt by the Exchange Agent of (1) such Outstanding Notes, or a book-entry confirmation of the transfer of such Outstanding Notes into the Exchange Agent’s account at The Depository Trust Company (“DTC”), and (2) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any signature guarantees and any other documents required by the Letter of Transmittal, or a properly transmitted Agent’s Message, within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery. The term “Agent’s Message” means a message, transmitted by DTC and received by the Exchange Agent and forming a part of a book-entry transfer, that states that DTC has received an express acknowledgement that the undersigned agrees to be bound by, and makes each of the representations and warranties contained in, the Prospectus and Letter of Transmittal and that the Companies may enforce the Letter of Transmittal against the undersigned. The undersigned agrees that the Outstanding Notes surrendered for exchange will be accepted only in minimum denominations of $1,000 principal amount and integral multiples thereof.

The undersigned understands that tenders of Outstanding Notes may be withdrawn if the Exchange Agent receives at one of its addresses specified on the cover of this Notice of Guaranteed Delivery, at or prior to the Expiration Time, a Notice of Withdrawal, including the name of the holder having tendered the Outstanding Notes to be withdrawn, the aggregate principal amount of Outstanding Notes the holder delivered for exchange, the certificate number(s) (if any) of the Outstanding Notes and a statement that such holder is withdrawing his, her or its election to have such Outstanding Notes or any specified portion thereof exchanged, in accordance with the procedures set forth in the Prospectus and the Letter of Transmittal.

All authority conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall not be affected by, and shall survive, the death or incapacity of the undersigned, and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, executors, administrators, trustees in bankruptcy, personal and legal representatives, successors and assigns of the undersigned.

2

PLEASE SIGN AND COMPLETE

Signature of registered holder or Authorized Signatory:                                                                                                                 

Name of registered holder:                                                                                                                                                                          

Address:                                                                                                                                                                                                             

This Notice of Guaranteed Delivery must be signed by the registered holder of the Outstanding Notes exactly as his, her, or its name appears on the certificate(s) for the Outstanding Notes or, if tendered by a DTC participant, exactly as such participant’s name appears on a security position listing as the owner of the Outstanding Notes, or by a person authorized to become a registered holder by endorsements and documents transmitted with this Notice of Guaranteed Delivery.

Date:                     , 2011

Area Code and Telephone No.:                                                                                                                                                                 

Principal Amount of Outstanding 8.625% Senior Secured Notes due 2019 Tendered:                                                         

Certificate No.(s) of Outstanding Note(s) (if available):                                                                                                                 

¨ If Outstanding Notes will be delivered by book-entry transfer to the Exchange Agent’s account at The Depository Trust Company, check box, and provide account number:

DTC Account No.:                                                                                                                                                                                         

DO NOT SEND OUTSTANDING NOTES WITH THIS FORM. OUTSTANDING NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL OR AN AGENT’S MESSAGE IN LIEU THEREOF.

If the signature above is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information:

Name:                                                                                                                                                                                                                

Capacity:                                                                                                                                                                                                          

PLEASE PRINT NAME AND ADDRESS

GUARANTEE ON REVERSE MUST BE COMPLETED

3

GUARANTEE

(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a member firm of a registered national securities exchange, or of the Financial Industry Regulatory Authority, Inc. or a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program, or certain other eligible guarantor institutions as that term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934 (each, an “Eligible Institution”), hereby guarantees that the certificates for Outstanding Notes tendered hereby in proper form for transfer or confirmation of book-entry transfer of such Outstanding Notes into the Exchange Agent’s account at the book-entry transfer facility, in each case together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees, or an Agent’s Message, and any other documents required by the Letter of Transmittal, will be received by the Exchange Agent at its address set forth above within three New York Stock Exchange trading days after the date of execution hereof.

The Eligible Institution that completes this form must communicate the guarantee to the Exchange Agent and must deliver the Letter of Transmittal and certificates representing the Outstanding Notes to the Exchange Agent, or in the case of a book-entry transfer, an Agent’s Message and confirmation of the book-entry transfer of such Outstanding Notes into the Exchange Agent’s account at DTC, within the time periods shown herein. The undersigned acknowledges that failure to do so could result in a financial loss to such Eligible Institution.

PLEASE PRINT NAME AND ADDRESS

Name of Firm:                                                                                                                                                                                                

Authorized Signature:                                                                                                                                                                                  

Name:                                                                                                                                                                                                                 

Title:                                                                                                                                                                                                                   

Date:                     , 2011

Address:                                                                                                                                                                                                             

(Zip Code)    

Area Code and Telephone Number:                                                                                                                                                        

4

EX-99.4

Exhibit 99.4

LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS,

TRUST COMPANIES AND OTHER NOMINEES

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

Exchange Offer for All Outstanding

8.625% Senior Secured Notes due 2019

(CUSIP Nos. 82088K AA6 and U82091 AA4)

for new 8.625% Senior Secured Notes due 2019

that have been registered under the Securities Act of 1933

Pursuant to the Prospectus dated                     , 2011

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     , 2011, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED FROM TIME TO TIME, THE “EXPIRATION TIME”). TENDERS MAY BE WITHDRAWN AT ANY TIME AT OR PRIOR TO THE EXPIRATION TIME.

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

Shea Homes Limited Partnership, a California limited partnership and Shea Homes Funding Corp., a Delaware corporation (the “Companies”), are offering to exchange, upon the terms and subject to the conditions set forth in the prospectus dated                     , 2011 (the “Prospectus”), and the accompanying Letter of Transmittal (the “Letter of Transmittal”), up to $750,000,000 in aggregate principal amount of new 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”), upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal (the “Exchange Offer”). The Exchange Offer is being made pursuant to the registration rights agreement that the Companies entered into with the initial purchasers in connection with the issuance of the Outstanding Notes. As set forth in the Prospectus, the terms of the Exchange Notes are substantially identical to the Outstanding Notes, except that the transfer restrictions, registration rights and additional interest provisions relating to the Outstanding Notes will not apply to the Exchange Notes. The Prospectus and the Letter of Transmittal more fully describe the Exchange Offer. Capitalized terms used but not defined herein have the respective meanings given to them in the Prospectus.

We are requesting that you contact your clients for whom you hold Outstanding Notes regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Outstanding Notes registered in your name or in the name of your nominee, we are enclosing the following documents:

1. Prospectus dated                     , 2011;

2. The Letter of Transmittal for your use and for the information of your clients;

3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if, at or prior to the Expiration Time, certificates for Outstanding Notes are not available, if time will not permit all required documents to reach the Exchange Agent or if the procedure for book-entry transfer cannot be completed;

4. A form of letter that may be sent to your clients for whose account you hold Outstanding Notes registered in your name or the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the Exchange Offer; and

5. IRS Form W-9 – Request for Taxpayer Identification Number and Certification.

Your prompt action is required. The Exchange Offer will expire at 5:00 p.m., New York City time, on                     , 2011, unless extended. Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn at any time at or prior to the Expiration Time.

To participate in the Exchange Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof or Agent’s Message in lieu thereof), with any required signature guarantees and any other required documents, must be sent to the Exchange Agent, and certificates representing the Outstanding Notes must be delivered to the Exchange Agent (or book-entry transfer of the Outstanding Notes must be made into the Exchange Agent’s account at DTC), all in accordance with the instructions set forth in the Letter of Transmittal and the Prospectus.

The Companies will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and the related documents to the beneficial owners of Outstanding Notes held by such brokers, dealers, commercial banks and trust companies as nominee or in a fiduciary capacity. The Companies will pay or cause to be paid all transfer taxes applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer, except as set forth in Instruction 7 of the Letter of Transmittal.

Any inquiries you may have with respect to the procedure for tendering Outstanding Notes pursuant to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to Wells Fargo Bank, National Association, the Exchange Agent for the Exchange Offer, at its address and telephone number set forth on the front of the Letter of Transmittal.

Very truly yours,

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE COMPANIES OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.

2

EX-99.5

Exhibit 99.5

LETTER TO CLIENTS

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

Exchange Offer for All Outstanding

8.625% Senior Secured Notes due 2019

(CUSIP Nos. 82088K AA6 and U82091 AA4)

for new 8.625% Senior Secured Notes due 2019

that have been registered under the Securities Act of 1933

Pursuant to the Prospectus dated                     , 2011

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     , 2011, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED FROM TIME TO TIME, THE “EXPIRATION TIME”). TENDERS MAY BE WITHDRAWN AT ANY TIME AT OR PRIOR TO THE EXPIRATION TIME.

To our Clients:

Enclosed for your consideration is the prospectus dated                     , 2011 (the “Prospectus”) and the accompanying Letter of Transmittal (the “Letter of Transmittal”) that together constitute the offer (the “Exchange Offer”) by Shea Homes Limited Partnership, a California limited partnership and Shea Homes Funding Corp., a Delaware corporation (the “Companies”), to exchange up to $750,000,000 in aggregate principal amount of new 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”), upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal. The Exchange Offer is being made pursuant to the registration rights agreement that the Companies entered into with the initial purchasers in connection with the issuance of the Outstanding Notes. As set forth in the Prospectus, the terms of the Exchange Notes are substantially identical to the Outstanding Notes, except that the transfer restrictions, registration rights and additional interest provisions relating to the Outstanding Notes will not apply to the Exchange Notes. The Prospectus and the Letter of Transmittal more fully describe the Exchange Offer. Capitalized terms used but not defined herein have the meanings given to them in the Prospectus.

This material is being forwarded to you as the beneficial owner of the Outstanding Notes carried by us in your account, but not registered in your name. A tender of such Outstanding Notes can be made only by us as the registered holder for your account and pursuant to your instructions. The enclosed Letter of Transmittal is furnished to you for your information only and cannot be used to tender Outstanding Notes.

Accordingly, we request instructions as to whether you wish us to tender on your behalf the Outstanding Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal.

The Exchange Offer will expire at 5:00 p.m., New York City time, on                     , 2011, unless extended by the Companies. If you desire to exchange your Outstanding Notes in the Exchange Offer, your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Outstanding Notes on your behalf at or prior to the Expiration Time in accordance with the provisions of the Exchange Offer. Any Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn at any time at or prior to the Expiration Time.

Your attention is directed to the following:

1. The Exchange Offer is described in and subject to the terms and conditions set forth in the Prospectus and the Letter of Transmittal.

2. The Exchange Offer is for any and all Outstanding Notes.

3. Subject to the terms and conditions of the Exchange Offer, the Companies will accept for exchange promptly following the Expiration Time all Outstanding Notes validly tendered and will issue Exchange Notes promptly after such acceptance.

4. Any transfer taxes incident to the transfer of Outstanding Notes from the holder to the Companies will be paid by the Companies, except as otherwise provided in Instruction 7 of the Letter of Transmittal.

5. The Exchange Offer expires at 5:00 p.m., New York City time, on                     , 2011, unless extended by the Companies. If you desire to tender any Outstanding Notes pursuant to the Exchange Offer, we must receive your instructions in ample time to permit us to effect a tender of the Outstanding Notes on your behalf at or prior to the Expiration Time.

Pursuant to the Letter of Transmittal, each holder of Outstanding Notes must represent to the Companies that:

• the holder is not an “affiliate,” as defined under Rule 405 of the Securities Act, of the Companies;

• the Exchange Notes issued in the Exchange Offer are being acquired in the ordinary course of business of the holder;

• neither the holder nor, to the actual knowledge of such holder, any other person receiving Exchange Notes from such holder, has any arrangement or understanding with any person to participate in the distribution of the Exchange Notes issued in the Exchange Offer;

• if the holder is not a broker-dealer, the holder is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes;

• if the holder is a broker-dealer, the holder will receive Exchange Notes for its own account in exchange for Outstanding Notes, the Outstanding Notes to be exchanged by the holder for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, and the holder will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the holder will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act, and such holder will comply with the applicable provisions of the Securities Act with respect to resale of any Exchange Notes.

Any person who is an affiliate of the Companies, or is participating in the Exchange Offer for the purpose of distributing the Exchange Notes, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a resale transaction of the Exchange Notes acquired by such person and such person cannot rely on the position of the staff of the Securities and Exchange Commission enunciated in its series of interpretative no-action letters with respect to exchange offers.

The enclosed “Instructions to Registered Holder from Beneficial Owner” form contains an authorization by you, as the beneficial owner of Outstanding Notes, for us to make, among other things, the foregoing representations on your behalf.

We urge you to read the enclosed Prospectus and Letter of Transmittal in conjunction with the Exchange Offer carefully before instructing us to tender your Outstanding Notes. If you wish to tender any or all of the Outstanding Notes held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form attached hereto.

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None of the Outstanding Notes held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given, your signature on the attached “Instructions to Registered Holder from Beneficial Holder” shall constitute an instruction to us to tender ALL of the Outstanding Notes held by us for your account.

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Exhibit 99.5

SHEA HOMES LIMITED PARTNERSHIP

SHEA HOMES FUNDING CORP.

Instructions to Registered Holder

from Beneficial Owner

of

8.625% Senior Secured Notes due 2019

(CUSIP Nos. 82088K AA6 and U82091 AA4)

for new 8.625% Senior Secured Notes due 2019

that have been registered under the Securities Act of 1933

The undersigned hereby acknowledges receipt of the prospectus dated                     , 2011 (the “Prospectus”) of Shea Homes Limited Partnership, a California limited partnership and Shea Homes Funding Corp., a Delaware corporation (the “Companies”), and the accompanying Letter of Transmittal (the “Letter of Transmittal”), that together constitute the offer (the “Exchange Offer”) to exchange up to $750,000,000 in aggregate principal amount of new 8.625% Senior Secured Notes due 2019 (the “Exchange Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of outstanding 8.625% Senior Secured Notes due 2019 (the “Outstanding Notes”), upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal.

This will instruct you, the registered holder, as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned, on the terms and subject to the conditions in the Prospectus and Letter of Transmittal.

The aggregate face amount of the Outstanding Notes held by you for the account of the undersigned is (fill in the amount):

$                     of the 8.625% Senior Secured Notes due 2019

With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box):

¨ To TENDER the following Outstanding Notes held by you for the account of the undersigned (insert principal amount of Outstanding Notes to be tendered, if less than all):

$                     of the 8.625% Senior Secured Notes due 2019

¨ NOT to tender any Outstanding Notes held by you for the account of the undersigned.

If the undersigned is instructing you to tender the Outstanding Notes held by you for the account of the undersigned, the undersigned agrees and acknowledges that you are authorized:

• to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner of the Outstanding Notes, including but not limited to the representations that:

• the undersigned is not an “affiliate,” as defined under Rule 405 of the Securities Act, as amended (the “Securities Act”), of the Companies;

• the undersigned is acquiring the Exchange Notes to be issued in the Exchange Offer in the ordinary course of business of the undersigned;

• neither the undersigned nor, to the actual knowledge of the undersigned, any other persons receiving Exchange Notes from the undersigned, have any arrangement or understanding with any person to participate in the distribution of the Exchange Notes issued in the Exchange Offer;

• if the undersigned is not a broker-dealer, the undersigned is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes;

• if the undersigned is a broker-dealer, the undersigned will receive Exchange Notes for its own account in exchange for Outstanding Notes, the Outstanding Notes to be exchanged by the undersigned for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, and the undersigned will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act, and such holder will comply with the applicable provisions of the Securities Act with respect to resale of any Exchange Notes; and

• the undersigned acknowledges that any person who is an affiliate of the Companies or is participating in the Exchange Offer for the purpose of distributing the Exchange Notes must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a resale transaction of the Exchange Notes acquired by such person and such person cannot rely on the position of the staff of the Securities and Exchange Commission enunciated in its series of interpretative no-action letters with respect to exchange offers;

• to agree, on behalf of the undersigned, as set forth in the Letter of Transmittal; and

• to take such other action as necessary under the Prospectus or the Letter of Transmittal to effect the valid tender of Outstanding Notes.

SIGN HERE

Name of Beneficial Owner:                                                                                                                                                                        

Signature:                                                                                                                                                                                                          

Capacity (full title) ⁽¹⁾:                                                                                                                                                                                  

Address:                                                                                                                                                                                                             

Telephone Number:                                                                                                                                                                                      

Taxpayer Identification Number or Social Security Number:                                                                                                       

¨ CHECK HERE IF YOU ARE A BROKER DEALER

Date:                     , 2011

⁽¹⁾  Please provide if signature is by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or other person acting in a fiduciary or representative capacity.

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