10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

SQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

£TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 1-36001

UCP, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 90-0978085 (IRS Employer Identification No.)

99 Almaden Blvd., Suite 400, San Jose, CA 95113

(Address of principal executive offices, including Zip Code)

(408) 207-9499

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes S  No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes S  No £

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	£	Accelerated filer	£
Non-accelerated filer	S	Smaller reporting company	£
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £ No S

On August 26, 2013, the registrant had 7,750,000 shares of Class A common stock, par value $0.01 per share outstanding and 100 shares of Class B common stock, par value $0.01 per share outstanding.

UCP, Inc.

FORM 10-Q

For the Three and Six Months Ended June 30, 2013

TABLE OF CONTENTS

Page No.

Part I - Financial Information
	Introductory Note	3
Item 1.	Financial Statements (Unaudited)	5
	UCP, Inc.
	Balance Sheet as of June 30, 2013	5
	Notes to the Balance Sheet	6
	UCP, LLC AND SUBSIDIARIES
	Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	7
	Condensed Consolidated Statements of Operations and Comprehensive Income or Loss for the Three and Six Months Ended June 30, 2013 and 2012	8
	Condensed Consolidated Statements of Member’s Equity for the Six Months Ended June 30, 2013 and 2012	9
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	30
Item 4.	Controls and Procedures	30
Part II - Other Information		31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
Signatures		33

2

Introductory Note

As used in this report, unless the context otherwise requires or indicates, references to “the Company,” “our Company,” “we,” “our” and “us” refer (1) prior to the July 23, 2013 initial public offering of Class A common stock, par value $0.01 per share ( “Class A common stock”) of UCP, Inc. (the “IPO”) and related transactions, to UCP, LLC and its consolidated subsidiaries and (2) after the IPO and related transactions, to UCP, Inc. and its consolidated subsidiaries. UCP, Inc. was incorporated on May 7, 2013 for the purpose of facilitating the IPO, and at June 30, 2013 had no material assets and engaged only in activities in contemplation of the IPO. UCP, LLC is a holding company for the entities that directly or indirectly own and operate the Company's business. The Company is a homebuilder and land developer, with significant land acquisition and entitlement expertise, in growth markets in Northern California and with a growing presence in attractive markets in the Puget Sound area of Washington State. References to “PICO” refer to PICO Holdings, Inc., which, prior to completion of the IPO, was the sole stockholder of UCP, Inc. and the sole member of UCP, LLC. Upon completion of the IPO, UCP, Inc. issued 7,750,000 shares of Class A common stock at a public offering price of $15.00 per share and received net proceeds of $108.1 million after deducting the underwriting discount, but before other offering expenses. UCP, Inc. purchased UCP, LLC Series B Units (as defined below) from UCP, LLC with the net proceeds from the IPO, which represented a 42.3% economic interest in UCP, LLC; PICO, through its ownership of UCP, LLC Series A Units (as defined below), holds the remaining 57.7% economic interest in UCP, LLC.

In connection with the IPO, UCP, LLC's Amended and Restated Limited Liability Company Operating Agreement was amended and restated to, among other things, designate UCP, Inc. as the sole managing member of UCP, LLC and establish a new series of units (“UCP, LLC Series B Units”), which will be held solely by UCP, Inc., and reclassify PICO's units into 10,593,000 UCP, LLC Series A Units (the “UCP, LLC Series A Units”), which will be held solely by PICO (and its permitted transferees). UCP, Inc. purchased 7,750,000 UCP, LLC Series B Units with the net proceeds from the IPO. The UCP, LLC Series B Units rank on a parity with the UCP, LLC Series A Units as to distribution rights and rights upon liquidation, winding up or dissolution. Subsequent to the IPO and related transactions, as the sole managing member of UCP, LLC, UCP, Inc. will operate and control all of the business and affairs and will consolidate the financial results of UCP, LLC and its subsidiaries.

The amended and restated certificate of incorporation of UCP, Inc. authorizes two classes of common stock: Class A common stock, and Class B common stock, par value $0.01 per share (“Class B common stock”). Shares of Class A common stock represent 100% of the economic rights of the holders of all classes of UCP, Inc.'s common stock. Shares of Class B common stock, which are held exclusively by PICO, are not entitled to any dividends paid by, or rights upon liquidation of, UCP, Inc. PICO holds 100 shares of Class B common stock of UCP, Inc., providing PICO with no economic rights but entitling PICO, without regard to the number of shares of Class B common stock held by PICO, to one vote on matters presented to stockholders of UCP, Inc. for each UCP, LLC Series A Unit held by PICO. Holders of our Class A common stock and Class B common stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law. As of July 23, 2013, PICO held 10,593,000 UCP, LLC Series A Units and 100 shares of Class B common stock, which provide PICO with 57.7% of the aggregate voting power of UCP, Inc.'s outstanding Class A common stock and Class B common stock, effectively providing PICO with control over the outcome of votes on all matters requiring approval by our stockholders.

In connection with the IPO, UCP, Inc. entered into an Exchange Agreement, pursuant to which PICO (and its permitted transferees) have the right to cause UCP, Inc. to exchange PICO's UCP, LLC Series A Units for shares of UCP, Inc. Class A common stock on a one-for-one basis, subject to equitable adjustments for stock splits, stock dividends and reclassifications. As of June 30, 2013, giving effect to the Class A common stock that we would issue if PICO were to elect to exchange all of its UCP, LLC Series A Units for shares of Class A common stock, we would have 18,343,000 shares of Class A common stock outstanding. In addition, in connection with the IPO, we issued an aggregate of 430,333 Class A restricted stock units to the members of our management team, other officers and employees and directors. These Class A restricted stock units vest at various points in time through 2015, and we will issue Class A common stock on a one-for-one basis in connection with the vesting of each Class A restricted stock unit.Any UCP, LLC Series A Units being exchanged will be reclassified as UCP, LLC Series B Units in connection with such exchange. Exchanges by PICO of its UCP, LLC Series A Units for shares of UCP, Inc. Class A common stock are expected to result, with respect to UCP, Inc., in increases in the tax basis of the assets of UCP, LLC that otherwise would not have been available. These increases in tax basis may reduce the amount of tax that UCP, Inc. would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets.

3

In connection with the IPO, UCP, Inc. entered into a Tax Receivable Agreement with PICO (and certain permitted assignees thereof) that provides for the payment from time to time by UCP, Inc. to such persons of 85% of the amount of the tax benefits, if any, that UCP, Inc. realizes as a result of (i) these increases in tax basis and (ii) certain other tax benefits related to UCP, Inc.'s entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. In connection with the IPO, UCP, Inc. also entered into a Transition Services Agreement with PICO, pursuant to which PICO provides certain services to UCP, Inc. for a limited period of time, including, among other things, accounting, human resources and information technology services.

UCP, Inc. expects that the amounts it will pay PICO pursuant to the Transition Services Agreement will be similar to the amount of costs that PICO historically allocated to UCP, LLC for similar services. The initial term of the Transition Services Agreement is one year, after which UCP, Inc. has the right to renew for up to two ninety day periods.

Additionally, pursuant to an Investor Rights Agreement that UCP, Inc. entered into with PICO in connection with the IPO, PICO has the right to nominate two individuals for election to UCP, Inc.'s board of directors for as long as PICO owns 25% or more of the combined voting power of UCP, Inc.'s outstanding Class A and Class B common stock and one individual for as long as it owns at least 10% (in each case, excluding shares of any of UCP, Inc.'s common stock that are subject to issuance upon the exercise or exchange of rights of conversion or any options, warrants or other rights to acquire shares). However, the Investor Rights Agreement does not entitle PICO to nominate individuals for election to UCP, Inc.'s board of directors if their election would result in PICO nominees comprising more than two of UCP, Inc.'s directors (for as long as PICO owns 25% or more of the combined voting power of UCP, Inc.'s outstanding Class A and Class B common stock) or one of UCP, Inc.'s directors (for as long as PICO owns at least 10% of the combined voting power of UCP, Inc.'s outstanding Class A and Class B common stock).

As discussed in UCP, LLC's unaudited condensed consolidated financial statements as of June 30, 2013 and for the three and six month periods then ended, the historical condensed consolidated financial statements of UCP, LLC have been prepared on a stand-alone basis in accordance with accounting principles generally accepted in the United States of America and were derived from PICO's condensed consolidated financial statements and accounting records using the historical results of operations and assets and liabilities attributed to UCP, LLC's operations. UCP, LLC's financial statements and results of operations are not necessarily indicative of future performance and do not reflect what financial performance would have been had UCP, LLC been a stand-alone public company during the periods presented.

4

UCP, Inc.

BALANCE SHEET

(Unaudited)

	June 30, 2013
Assets:
Cash	$	100
Total assets	$	100
Total liabilities	$	—
Stockholder’s equity:
Common stock, $0.01 par value, 1,000 shares authorized, 100 shares issued and outstanding	$	1
Additional paid-in-capital	99
Total stockholder’s equity	100
Total liabilities and stockholder’s equity	$	100

See accompanying notes to the balance sheet.

5

UCP, Inc.

NOTES TO THE BALANCE SHEET

June 30, 2013

(Unaudited)

1. Background and Basis of Presentation

UCP, Inc., a Delaware corporation (the “Company”), was incorporated on May 7, 2013 for the purpose of facilitating an initial public offering (the “IPO”). At June 30, 2013, the Company had no material assets, no liabilities and had conducted no operations, and engaged only in activities in contemplation of the IPO.

The accompanying balance sheet of the Company was prepared in conformity with accounting principles generally accepted in the United States of America.

As of June 30, 2013, the Company had authorized 1,000 shares of common stock, par value $0.01 per share, 100 of which were issued and outstanding as of such date. As of June 30, 2013, all of the Company's outstanding common stock was held by PICO Holdings, Inc. (“PICO”).

2. Subsequent Events

The Company completed its IPO on July 23, 2013 and purchased a 42.3% economic interest in UCP, LLC with the net proceeds. In connection with the IPO, the Company became the sole managing member of UCP, LLC, the entity through which it conducts its post-IPO operations. As the sole managing member of UCP, LLC, the Company will control all of the business and affairs of UCP, LLC and its subsidiaries and will consolidate the results of operations of UCP, LLC in its condensed consolidated financial statements. Subsequent to the IPO and related transactions, the Company's sole material asset is its 42.3% economic interest in UCP, LLC; PICO holds the remaining 57.7% interest in UCP, LLC.

Subsequent events have been evaluated through September 3, 2013, the date the balance sheet was available to be issued.

6

UCP, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

	June 30, 2013		December 31, 2012
Assets:
Cash and cash equivalents	$	1,788	$	10,324
Real estate inventories	147,836		125,367
Fixed assets, net	860		680
Receivables	243		243
Other assets	2,960		920
Total assets	$	153,687	$	137,534
Liabilities and member’s equity:
Accounts payable and accrued liabilities	$	11,662	$	6,107
Debt	33,259		29,112
Total liabilities	44,921		35,219
Commitments and contingencies (Note 7)
Member’s equity	108,766		102,315
Total liabilities and member’s equity	$	153,687	$	137,534

See accompanying notes to condensed consolidated financial statements.

7

UCP, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME OR LOSS

(Unaudited)

(In thousands)

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
REVENUE:
Homebuilding	$	20,907		$	1,435		$	25,240		$	2,968
Land development	6,815			—			14,285			2,002
Total revenue	27,722			1,435			39,525			4,970
COSTS AND EXPENSES:
Cost of sales - homebuilding	16,482			1,057			19,942			2,119
Cost of sales - land development	5,136			9			9,716			1,358
Sales and marketing	2,099			238			3,231			459
General and administrative	5,326			2,386			8,806			4,594
Total costs and expenses	29,043			3,690			41,695			8,530
Loss from operations	(1,321		)	(2,255		)	(2,170		)	(3,560		)
Other income (expense), net	224			93			263			301
Net loss	(1,097		)	(2,162		)	(1,907		)	(3,259		)
Other comprehensive income (loss), net of tax	—			—			—			—
Comprehensive loss	$	(1,097	)	$	(2,162	)	$	(1,907	)	$	(3,259	)

See accompanying notes to condensed consolidated financial statements.

8

UCP, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY

(Unaudited)

(In thousands)

	Total Member’s Equity
Balance at January 1, 2013	$	102,315
Member contributions	33,956
Repayments of member contributions	(25,598		)
Net loss	(1,907		)
Balance at June 30, 2013	$	108,766
Balance at January 1, 2012	$	92,992
Member contributions	19,879
Repayments of member contributions	(1,817		)
Net loss	(3,259		)
Balance at June 30, 2012	$	107,795

See accompanying notes to condensed consolidated financial statements.

9

UCP, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2013			2012
Operating activities:
Net loss	$	(1,907	)	$	(3,259	)
Adjustments to reconcile net loss to net cash used in operating activities:
Abandonment of real estate inventories	12			68
Depreciation	113			66
Changes in operating assets and liabilities:
Real estate inventories	(17,790		)	(15,812		)
Receivables	—			5
Other assets	(2,040		)	405
Accounts payable and accrued liabilities	5,555			2,168
Net cash used in operating activities	(16,057		)	(16,359		)
Investing activities:
Purchases of fixed assets	(293		)	(408		)
Net cash used in investing activities	(293		)	(408		)
Financing activities:
Cash contributions from member	33,956			19,879
Repayments of member contributions	(25,598		)	(1,817		)
Proceeds from debt	10,011			1,001
Repayment of debt	(10,555		)	(2,789		)
Net cash provided by financing activities	7,814			16,274
Net decrease in cash and cash equivalents	(8,536		)	(493		)
Cash and cash equivalents – beginning of period	10,324			2,276
Cash and cash equivalents – end of period	$	1,788		$	1,783
Supplemental disclosure of cash flow information:
Debt incurred to acquire real estate inventories	$	4,691		$	360
Accrued offering cost	$	1,678		$	—

See accompanying notes to condensed consolidated financial statements.

10

UCP, LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2013 and 2012

(Unaudited)

1.    Organization, Basis of Presentation and Summary of Significant Accounting Policies

Business Description and Organizational Structure of the Company:

UCP, LLC, a Delaware limited liability company (together with its consolidated subsidiaries, “UCP” or the “Company”), is a wholly-owned subsidiary of PICO Holdings, Inc. (“PICO”), a NASDAQ listed diversified holding company, as of June 30, 2013. The Company is a homebuilder and land developer in Northern California and the Puget Sound area of Washington State. As described in Note 9 - Subsequent Events, UCP, Inc. completed the initial public offering of its Class A common stock, par value $0.01 per share (“Class A Common Stock”) on July 23, 2013 (the “IPO”). In connection with the IPO, UCP, Inc. became the sole managing member of UCP, LLC and purchased a 42.3% economic interest in UCP, LLC with the net proceeds, with PICO retaining the remaining 57.7% economic interest in UCP, LLC.

Prior to completion of the IPO, the Company was funded primarily though contributions from PICO. As of June 30, 2013 and December 31, 2012, the Company's capital structure was comprised solely of PICO's membership interests and the Company did not have any outstanding shares. During the six months ended June 30, 2013 and 2012, the Company received $34.0 million and $19.9 million, respectively in contributions from PICO. As the Company generated excess cash, primarily from the sale of real estate inventories, it repaid $25.6 million and $1.8 million of the contributions to PICO during the six months ended June 30, 2013 and 2012, respectively. Subsequent to the IPO, the Company does not anticipate receiving additional contributions from PICO or repaying any remaining contributions to PICO.

For the periods prior to the completion of the IPO, PICO allocated expenses to the Company for certain corporate services and other expenses. The material costs allocated were payroll and benefits, which were allocated based on estimated time for the services provided. These allocations include payroll and benefits related to corporate services, such as executive management, information technology, legal, finance and accounting, human resources, risk management, tax and treasury. The total amounts of the cost allocations from PICO were approximately $270,000 and $306,000 for the three months ended June 30,2013 and 2012, and $525,000 and $574,000, for the six months endedJune 30, 2013 and 2012, respectively. These cost allocations are primarily reflected within general and administrative expenses in the Company's condensed consolidated statements of operations. The Company's management believes the basis on which the expenses have been allocated is a reasonable reflection of the services and other benefits received by the Company during the periods presented, and that the financial statements reflect all of the costs of doing business related to the Company's operations, including expenses incurred by PICO on the Company's behalf.

After completion of the IPO, the Company will ultimately assume responsibility for the costs and performance of many of the functions historically undertaken by PICO. The allocations may not reflect the expense the Company would have incurred as a stand-alone public company for the periods presented. Actual costs that may have been incurred if the Company was a stand-alone public company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees, and strategic decisions made in certain areas. Following completion of the IPO, the Company expects PICO to continue to provide accounting, human resources and information technology functions on a transitional basis for a fee pursuant to a Transition Services Agreement.

Subsequent to the IPO and related transactions, as the sole managing member of UCP, LLC, UCP, Inc. will control all of the business and affairs of UCP, LLC and its subsidiaries and will consolidate the results of operations of UCP, LLC in its condensed consolidated financial statements.

Basis of Presentation:

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation.

11

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2012, which are included in UCP, Inc.'s prospectus that was filed by UCP, Inc. with the Securities and Exchange Commission (“SEC”) on July 18, 2013. The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring entries) necessary for the fair presentation of the Company’s results for the interim periods presented. The results for interim periods are not indicative of the results to be expected for the full year.

Use of Estimates in Preparation of Financial Statements:

The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses for each reporting period. The significant estimates made in the preparation of the Company’s condensed consolidated financial statements relate to the assessment of real estate impairments, warranty reserves and contingent liabilities. While management believes that the carrying value of such assets and liabilities are appropriate as of June 30, 2013 and December 31, 2012, it is reasonably possible that actual results could differ from the estimates upon which the carrying values were based.

Related Party Transactions:

As of June 30, 2013, loans with aggregate commitments of $17.1 million and an aggregate outstanding balance of $6.0 million were guaranteed by PICO. These loans are secured by liens on the projects that they finance. PICO has provided payment and completion guarantees with respect to these loans. In addition, PICO has agreed to indemnify the lender for any losses it may suffer in connection with hazardous materials on the financed property.

The Company is often required to provide performance bonds to governmental authorities and others to ensure the completion of its projects. As of June 30, 2013, PICO had guaranteed the Company’s obligations under performance bonds with an aggregate amount of $9.8 million. The Company does not expect PICO to provide additional guarantees, indemnities or any other forms of credit support after completion of the IPO.

Segment Reporting:

The Company determined that its operations are organized into two reportable segments: homebuilding and land development. In accordance with the aggregation criteria defined in the applicable accounting guidance, the Company considered similar economic and other characteristics, including product types, average selling prices, gross margins, production processes, suppliers, subcontractors, regulatory environments, land acquisition results and underlying supply and demand in determining its reportable segments.

Cash and Cash Equivalents:

Cash and cash equivalents include highly liquid instruments purchased with original maturities of three months or less.

Real Estate Inventories and Cost of Sales:

The Company capitalizes pre-acquisition costs, the purchase price of real estate, development costs and other allocated costs, including interest, during development and home construction. Applicable costs incurred after development or construction is substantially complete are charged to sales and marketing or general and administrative as appropriate. Pre-acquisition costs, including non-refundable land deposits, are expensed to cost of sales when the Company determines continuation of the related project is not probable.

12

Land, development and other common costs are typically allocated to real estate inventories using the relative-sales-value method. Direct home construction costs are recorded using thespecific identification method. Cost of sales - homebuilding includes the allocation of construction costs of each home and all applicable land acquisition, real estate development and related common costs based upon the relative-sales-value of the home. Changes to estimated total development costs subsequent to initial home closings in a community are generally allocated on a relative-sales-value method to remaining homes in the community. Cost of sales - land development includes land acquisition and development costs, capitalized interest, impairment charges, abandonment charges for projects that are no longer economically viable, and real estate taxes. Abandonment charges during the three months ended June 30, 2013 and 2012, were $3,000 and $9,000, respectively, and were $12,000 and $68,000 during the six months endedJune 30, 2013 and 2012, respectively. Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to fair value.

All real estate inventories are classified as held until the Company commits to a plan to sell the real estate, the real estate can be sold in its present condition, is being actively marketed for sale, and it is probable that the real estate will be sold within the next twelve months. At June 30, 2013 and December 31, 2012, the Company had real estate inventories of $7.6 million and $2.9 million, respectively, classified as held for sale.

Impairment of Real Estate Inventories:

The Company records an impairment loss when conditions exist where the carrying amount of real estate is not fully recoverable and exceeds its fair value. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses. The Company prepares and analyzes cash flows at the lowest level for which there is identifiable cash flows that are independent of the cash flows of other groups of assets.

If events or circumstances indicate that the carrying amount may be impaired, such impairment will be measured based upon the difference between the carrying amount and the fair value of such assets determined using the estimated future discounted cash flows, excluding interest charges, generated from the use and ultimate disposition of the respective real estate inventories. Such losses, if any, are reported within cost of sales - land development. No such losses were recorded during the three and six months ended June 30, 2013 and 2012.

When estimating undiscounted future cash flows of our real estate assets, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available on the market, pricing and incentives being offered by us or other builders in other communities, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs incurred to date and expected to be incurred, including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property. The Company did not have any real estate assets for which the estimated undiscounted future cash flows were not in excess of their carrying values.

Capitalization of Interest:

The Company capitalizes interest to real estate inventories during the period of development. Interest capitalized as a cost of real estate inventories is included in cost of sales - homebuilding or cost of sales - land development as related homes or real estate are sold. To the extent the Company’s debt exceeds the related asset under development, the Company expenses that portion of the interest incurred. Qualifying assets include projects that are actively selling or under development.

Fixed Assets, net:

Fixed assets are carried at cost, net of accumulated depreciation.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets.  Computer software and hardware are depreciated over three years, office furniture and fixtures are depreciated over seven years, vehicles are depreciated over five years and leasehold improvements are depreciated over the shorter of their useful life or lease term and range from one to three years.  Maintenance and repairs are charged to expense as incurred, while significant improvements are capitalized.  Depreciation expense is included in general and administrative expenses, and gains or losses on the sale of fixed assets are included in other income.

13

Receivables:

Receivables include amounts due from buyers for homes sold on the last day of the month and from utility companies for reimbursement of costs. At June 30, 2013 and December 31, 2012, the Company had no allowance for doubtful accounts recorded.

Other assets:

At June 30, 2013, other assets included amounts accrued related to the IPO. The detail of other assets is set forth below (in thousands):

	June 30, 2013		December 31, 2012
Deferred IPO costs	$	1,783	$	—
Customer deposits in escrow	461		388
Prepaid expenses	300		207
Deposits	416		325
	$	2,960	$	920

Homebuilding and Land Development Sales and Profit Recognition:

In accordance with Financial Accounting Standard Board (“FASB”) issued Accounting Standard Codification Topic 360 (“ASC Topic 360”), Property, Plant, and Equipment, revenue from home sales and other real estate sales are recorded and any profit is recognized when the respective sales are closed. Sales are closed when all conditions of escrow are met, title passes to the buyer, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured and the Company has no continuing involvement. The Company does not offer financing to any buyers. Sales price incentives are accounted for as a reduction of revenues when the sale is recorded. If the earnings process is not complete, the sale and any related profits are deferred for recognition in future periods. Any profit recorded is based on the calculation of cost of sales, which is dependent on an allocation of costs.

Warranty Reserves:

Estimated future direct warranty costs are accrued and charged to cost of sales - homebuilding in the period in which the related homebuilding revenue is recognized. Amounts accrued are based upon estimates of the amount the Company expects to pay for warranty work. The Company assesses the adequacy of its warranty reserves on a quarterly basis and adjusts the amounts recorded, if necessary. Warranty reserves are included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets.

Changes in warranty reserves are detailed in the table set forth below (in thousands):

	June 30, 2013			December 31, 2012
Warranty reserves, beginning of period	$	141		$	102
Warranty reserves accrued	170			51
Warranty expenditures	(6		)	(12		)
Warranty reserves, end of period	$	305		$	141

Consolidation of Variable Interest Entities:

The Company enters into purchase and option agreements for the purchase of real estate as part of the normal course of business. These purchase and option agreements enable the Company to acquire real estate at one or more future dates at pre-determined prices. The Company believes these acquisition structures reduce its financial risk associated with real estate acquisitions and holdings and allow the Company to better manage its cash position.

Based on the provisions of the relevant accounting guidance, the Company concluded that when it enters into a purchase agreement to acquire real estate from an entity, a variable interest entity (“VIE”), may be created. The Company evaluates all option and purchase agreements for real estate to determine whether they are a VIE. The applicable accounting guidance requires that for each VIE, the Company assess whether it is the primary beneficiary and, if it is, the Company consolidates the VIE in its condensed consolidated financial statements in accordance with ASC Topic 810 - Consolidations, and would reflect such assets and liabilities as “Real estate inventories not owned.”

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In order to determine if the Company is the primary beneficiary, it must first assess whether it has the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with us; and the ability to change or amend the existing option contract with the VIE. If the Company is not determined to control such activities, the Company is not considered the primary beneficiary of the VIE. If the Company does have the ability to control such activities, the Company will continue its analysis by determining if it is also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if the Company will benefit from a potentially significant amount of the VIE’s expected gains.

In substantially all cases, creditors of the entities with which the Company have option agreements have no recourse against the Company and the maximum exposure to loss on the applicable option or purchase agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Some of the Company’s option or purchase deposits may be refundable to the Company if certain contractual conditions are not performed by the party selling the lots. The Company did not consolidate any VIE at June 30, 2013 and December 31, 2012.

Income Taxes:

The Company is a limited liability company which is treated as an entity that is disregarded from its owner for income tax purposes and is subject to certain minimal taxes and fees. However, income taxes on taxable income or losses realized by the Company are the obligation of PICO. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements, nor has the Company been assessed interest or penalties by any major tax jurisdictions.

Recently Issued Accounting Standards:

In February 2013, guidance that requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the amount the reporting entity agreed to pay plus additional amounts the reporting entity expects to pay on behalf of its co-obligors was issued. The guidance further provides for disclosure of the nature and amount of the obligation. The amendment is effective for interim and annual reporting periods beginning after December 15, 2013. The Company is currently evaluating the effect of this standard will have on the condensed consolidated financial statements.

2.    Real Estate Inventories

Real estate inventories consisted of the following (in thousands):

	June 30, 2013		December 31, 2012
Deposits and pre-acquisition costs	$	2,607	$	2,177
Land held and land under development	119,734		110,463
Homes completed or under construction	21,445		9,441
Model homes	4,050		3,286
	$	147,836	$	125,367

Model homes and homes completed or under construction include all costs associated with home construction, including land, development, indirect costs, permits and fees, and vertical construction. Land under development includes costs incurred during site development, such as land, development, indirect costs and permits. As of June 30, 2013, the Company had $2.2 million of deposits pertaining to land purchase contracts for 1,255 lots with an aggregate purchase price of approximately $72.4 million, net of deposits.

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Interest Capitalization

Interest is capitalized on real estate inventories during development. Interest capitalized is included in cost of sales as related sales are recognized. For the three months ended June 30, 2013 and 2012, and for the six months endedJune 30, 2013 and 2012, interest incurred was $624,000 and $445,000, and $1.3 million and $898,000, respectively, and was capitalized in each respective period. Amounts capitalized to home inventory and land inventory were as follows (in thousands): 

	June 30,
	2013			2012
Interest expense capitalized as cost of home inventory	$	887		$	73
Interest expense capitalized as cost of land inventory	403			825
Total interest expense capitalized	1,290			898
Previously capitalized interest expense included in cost of sales - homebuilding	(358		)	(33		)
Previously capitalized interest expense included in cost of sales - land development	(7		)	(41		)
Net activity of capitalized interest	925			824
Capitalized interest expense in beginning inventory	4,620			3,431
Capitalized interest expense in ending inventory	$	5,545		$	4,255

3.    Fixed Assets, net

Fixed assets consisted of the following (in thousands): 

	June 30, 2013			December 31, 2012
Computer hardware and software	$	899		$	667
Office furniture and equipment	230			169
Vehicles	79			79
	1,208			915
Accumulated depreciation	(348		)	(235		)
Fixed assets, net	$	860		$	680

Depreciation expense for the three months ended June 30, 2013 and 2012 was $62,000 and $37,000, respectively, and for the six months endedJune 30, 2013 and 2012 was $113,000 and $66,000, respectively, and is recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations.

4.    Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following (in thousands): 

	June 30, 2013		December 31, 2012
Accounts payable and accrued expenses	$	10,757	$	5,263
Accrued payroll liabilities	600		703
Warranty reserves (Note 1)	305		141
	$	11,662	$	6,107

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5.     Debt

The Company enters into acquisition, development and construction debt agreements to purchase and develop real estate inventories and for the construction of homes, which are secured primarily by the underlying real estate. Certain of the loans are funded in full at the initial loan closing and others are revolving facilities under which the Company may borrow, repay and redraw up to a specified amount during the term of the loan. The loans are due at various dates but are generally repaid when lots are released from the loans based upon a specific release price, as defined in each respective loan agreement, or the loans are refinanced at current prevailing rates. The construction and development debt is required to be repaid with proceeds from home closings based upon a specific release price, as defined in each respective loan agreement. Certain of the construction and development debt agreements include provisions that require minimum loan-to-value ratios. During the term of the loan, the lender may require the Company to obtain a third-party written appraisal of the underlying real estate collateral. If the appraised fair value of the collateral securing the loan is below the specified minimum, the Company may be required to make principal payments in order to maintain the required loan-to-value ratios. As of June 30, 2013 and December 31, 2012, the lenders have not requested, and the Company has not obtained, any such appraisals. As of June 30, 2013, the Company had approximately $39.3 million of aggregate loan commitments and approximately $11.0 million of unused loan commitments. At June 30, 2013 and December 31, 2012, the weighted average interest rate on the Company’s outstanding debt was 6.5% and 6.7%, respectively.

Debt consisted of the following (in thousands):

	June 30, 2013		December 31, 2012
Acquisition Debt:
Interest rates from 4% to 4.75% - payments due through 2014	$	5,365	$	5,551
Interest rate of 5% - payments due through 2015	5,116		425
Interest rate of 6% - payments due through 2014	3,202		4,136
Interest rate of 6.5% - payments due through 2036	552		558
Interest rate of 10% - payments due through 2014	1,604		1,604
	15,839		12,274
Construction and Development Debt:
Interest rate of 6% - payments due through 2014	11,420		10,838
Interest rate of 10% - payments due through 2014	6,000		6,000
	17,420		16,838
Total debt	$	33,259	$	29,112

6.    Fair Value Disclosures

The accounting guidance regarding fair value disclosures defines fair value as the price that would be received for selling an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company determines the fair values of its financial instruments based on the fair value hierarchy established in accordance with ASC Topic 820 - Fair Value Measurements, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

• 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

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Estimated Fair Value of Financial Instruments Not Carried at Fair Value:

As of June 30, 2013 and December 31, 2012, the fair values of cash and cash equivalents, accounts payable and receivable approximated their carrying values because of the short-term nature of these assets or liabilities. The estimated fair value of the Company’s debt is based on cash flow models discounted at current market interest rates for similar instruments, which are based on Level 3 inputs.

The following presents the carrying value and fair value of the Company’s financial instruments which are not carried at fair value (in thousands):

	June 30, 2013				December 31, 2012
	Carrying Amount		Estimated Fair  Value		Carrying Amount		Estimated Fair  Value
Financial liabilities:
Debt	$	33,259	$	34,859	$	29,112	$	28,184

Non-Financial Fair Value Measurements:

Non-financial assets and liabilities include items such as inventory and long lived assets that are measured at fair value when acquired and resulting from impairment, if deemed necessary. There were no non-financial fair value measurements during the six months ended June 30, 2013 or 2012.

7.    Commitments and Contingencies

Lawsuits, claims and proceedings have been or may be instituted or asserted against the Company in the normal course of business, including actions brought on behalf of various classes of claimants. The Company is also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, the Company is subject to periodic examinations or inquiries by agencies administering these laws and regulations.

The Company records a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. The accrual for these matters is based on facts and circumstances specific to each matter and the Company revises these estimates when necessary.

In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, the Company generally cannot predict their ultimate resolution, related timing or any eventual loss. If the evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, disclosure of the nature with an estimate of possible range of losses or a statement that such loss is not reasonably estimable is made. The Company is not involved in any material litigation nor, to the Company's knowledge, is any material litigation threatened against it. At June 30, 2013 and December 31, 2012, the Company did not have any accruals for asserted or unasserted matters.

The Company obtains surety bonds in the normal course of business to ensure completion of certain infrastructure improvements at its projects. As of June 30, 2013 and December 31, 2012, the Company had outstanding surety bonds totaling $10.0 million and $6.9 million, respectively. The beneficiaries of the bonds are various municipalities. In the event that any such surety bond issued by a third party is called because the required improvements are not completed, the Company could be obligated to reimburse the issuer of the bond.

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8.    Segment Information

The Company’s operations are organized into two reportable segments: homebuilding and land development. The Company’s homebuilding operations construct and sell single-family homes, primarily in California. The homebuilding reportable segment includes real estate of similar economic characteristics, including similar historical and expected future long-term gross margin percentages, similar product types, production processes and methods of distribution. The land development operations develop and sell lots, primarily in California, and include real estate of similar economic characteristics, including similar historical and expected future long-term gross margin percentages, similar product types, production processes and methods of distribution. The reportable segments follow the same accounting policies as the condensed consolidated financial statements described in Note 1. Operating 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.

Financial information relating to reportable segments was as follows (in thousands): 

	June 30, 2013		December 31, 2012
Assets
Homebuilding	$	75,637	$	31,427
Land development	72,199		93,940
Corporate	5,851		12,167
Total	$	153,687	$	137,534

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenue
Homebuilding	$	20,907		$	1,435		$	25,240		$	2,968
Land development	6,815			—			14,285			2,002
Total	27,722			1,435			39,525			4,970
Gross margin
Homebuilding	4,425			378			5,298			849
Land development	1,679			(9		)	4,569			644
Total	6,104			369			9,867			1,493
Selling, marketing and general and administrative expenses	(7,425		)	(2,624		)	(12,037		)	(5,053		)
Other income (expense), net	224			93			263			301
Net loss	$	(1,097	)	$	(2,162	)	$	(1,907	)	$	(3,259	)

9.    Subsequent Events

As of June 30, 2013 and up to the completion of the IPO, each of UCP, LLC and UCP, Inc. were wholly-owned subsidiaries of PICO. On July 23, 2013, UCP, Inc. completed the IPO, became a publicly-owned company and purchased a 42.3% economic interest in UCP, LLC with the net proceeds, with PICO retaining the remaining 57.7% economic interest in UCP, LLC. In connection with the IPO, UCP, Inc. became the sole managing member of UCP, LLC; as such, UCP, Inc. will control all of the business and affairs of UCP, LLC and its subsidiaries. Subsequent to the IPO and related transactions, UCP, Inc. will consolidate the results of operations of UCP, LLC in its condensed consolidated financial statements.

Subsequent events have been evaluated through September 3, 2013, the date the condensed consolidated financial statements were available to be issued.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made statements in Management's Discussion and Analysis of Financial Condition and Results of Operations below, “Part II. Item 1A. Risk Factors” and in other sections of this report that are forward-looking statements. All statements other than statements of historical fact included in this report are forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical facts. These statements may include words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies, anticipated trends in our business and other future events or circumstances. These statements are only predictions based on our current expectations and projections about future events.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

• economic changes either nationally or in the markets in which we operate, including declines in employment, volatility of mortgage interest rates and inflation;

• continued or increased downturn in the homebuilding industry, either nationally or in the markets in which we operate;

• continued volatility and uncertainty in the credit markets and broader financial markets;

• our future operating results and financial condition;

• our business operations;

• changes in our business and investment strategy;

• availability of land to acquire and our ability to acquire such land on favorable terms or at all;

• availability, terms and deployment of capital;

• continued or increased disruption in the availability of mortgage financing or the number of foreclosures in our markets;

• shortages of or increased prices for labor, land or raw materials used in housing construction;

• delays in land development or home construction or reduced consumer demand resulting from adverse weather and geological conditions or other events outside our control;

• the cost and availability of insurance and surety bonds;

• changes in, or the failure or inability to comply with, governmental laws and regulations;

• the timing of receipt of regulatory approvals and the opening of communities;

• the degree and nature of our competition;

• our leverage and debt service obligations;

• our relationship, and actual and potential conflicts of interest, with PICO; and

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• availability of qualified personnel and our ability to retain our key personnel.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes, except as required by law. For a further discussion of these and other factors, see the section entitled “Item 1A. Risk Factors.” In light of these risks and uncertainties, the forward-looking events discussed in this report might not occur.

Overview

We are a homebuilder and land developer, with significant land acquisition and entitlement expertise, in growth markets in Northern California and with a growing presence in attractive markets in the Puget Sound area of Washington State. As of June 30, 2013 we have purchased or acquired control of (through executed purchase or option contracts) a total of approximately 4,915 residential lots in Northern California and approximately 930 lots in the Puget Sound area of Washington State. As of June 30, 2013, our property portfolio consisted of 55 communities in 18 cities in Northern California and the Puget Sound area of Washington State. Our operations are organized into two reportable segments: homebuilding and land development.

During the six months ended June 30, 2013, the overall U.S. housing market continued to show signs of improvement, driven by factors such as decreasing home inventories, high affordability, improving employment, increasing consumer confidence and more positive consumer sentiment for the overall U.S. economy. Individual markets continue to experience varying results, as local home inventories, affordability, and economic and employment factors strongly influence each local market.

Numerous factors can affect the performance of an individual market, however, we believe that trends in employment, housing inventory, affordability, interest rates and home prices have a particularly significant impact. We expect that these market trends will have an impact on our operating performance and community count. Trends in employment, housing inventory, home affordability, interest rates and home prices are the principal factors that affect our revenues and many of our costs and expenses, for example, when these trends are favorable, we expect our revenues from homebuilding and land development, as well as our related costs and expenses, to generally increase; conversely, when these trends are negative, we expect our revenue and costs and expenses to generally decline, although in each case the impact may not be immediate. When trends are favorable, we would expect to increase our community count by opening additional communities and expanding existing communities; conversely, when these trends are negative, we would expect to maintain our community count or decrease the pace at which we open additional communities and expand existing communities.

Our operations for the three months ended June 30, 2013 reflect our emphasis on growing our homebuilding segment, as evidenced by a 250% increase in the number of average selling communities, and a 1,357% increase in homebuilding revenue, as compared to the three months ended June 30, 2012. Our backlog at June 30, 2013 was $25.7 million higher than that at June 30, 2012. We delivered 57 homes during the second quarter 2013, as compared to six homes during the same period during 2012, and our average selling price of homes increased to approximately $367,000 during the second quarter of 2013, as compared to approximately $239,000 during the second quarter of 2012. Our land development segment also saw a continued demand for entitled or nearly entitled lots in competitive markets. Revenue from land development for the three months ended June 30, 2013 was $6.8 million, as compared to no land development sales during the three months ended June 30, 2012.

Our net loss was $1.1 million for the three months ended June 30, 2013, as compared to a net loss of $2.2 million for the three months ended June 30, 2012, and includes non-recurring IPO related expenses of approximately $897,000 that were incurred in the second quarter of 2013.

During the three months ended June 30, 2013, we identified land investment opportunities that met our underwriting criteria and we increased our owned and controlled lots, net of homes and lots sold, by 108 lots and 676 lots, respectively. We remain focused on seeking to acquire and develop strategically located and appropriately priced land in the Puget Sound market in Washington State, the San Francisco Bay Area, and select markets of the Central Valley area of California.

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Recent Developments-Initial Public Offering

On July 23, 2013, we completed the IPO and issued 7,750,000 shares of our Class A common stock. The shares began trading on the New York Stock Exchange on July 18, 2013. We used the net proceeds from the offering of approximately $108.1 million (after deducting the underwriting discount, but before other offering costs) to purchase a 42.3% economic interest in UCP, LLC through our acquisition of 7,750,000 newly-issued UCP, LLC Series B Units (as defined below) from UCP, LLC. The remaining 57.7% economic interest in UCP, LLC is held by PICO, through its ownership of 10,593,000 UCP, LLC Series A Units (as defined below). UCP, LLC is a holding company for the companies that directly or indirectly own and operate our business, and UCP, LLC intends to use the net proceeds from the sale of the UCP, LLC Series B Units for general corporate purposes, such as the acquisition of land and for land development, home construction and other related purposes. Prior to completion of the IPO, PICO was the sole stockholder of UCP, Inc. and the sole member of UCP, LLC.

In connection with the IPO, UCP, LLC's Amended and Restated Limited Liability Company Operating Agreement was amended and restated to, among other things, designate UCP, Inc. as the sole managing member of UCP, LLC and establish a new series of units UCP, LLC Series B Units (the “UCP, LLC Series B Units”), which will be held solely by UCP, Inc., and reclassify PICO's units into 10,593,000 UCP, LLC Series A Units (the “UCP, LLC Series A Units”), which will be held solely by PICO (and its permitted transferees). The UCP, LLC Series B Units rank on a parity with the UCP, LLC Series A Units as to distribution rights and rights upon liquidation, winding up or dissolution.

The amended and restated certificate of incorporation of UCP, Inc. authorizes two classes of common stock: Class A common stock and Class B common stock, par value $0.01 per share (“Class B common stock”). Shares of Class A common stock represent 100% of the economic rights of the holders of all classes of UCP, Inc.'s common stock. Shares of Class B common stock, which are held exclusively by PICO, are not entitled to any dividends paid by, or rights upon liquidation of, UCP, Inc. PICO holds 100 shares of Class B common stock of UCP, Inc., providing PICO with no economic rights but entitling PICO, without regard to the number of shares of Class B common stock held by PICO, to one vote on matters presented to stockholders of UCP, Inc. for each UCP, LLC Series A Unit held by PICO. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law. As of June 30, 2013, PICO held 10,593,000 UCP, LLC Series A Units and 100 shares of Class B common stock, which provide PICO with 57.7% of the aggregate voting power of UCP, Inc.'s outstanding Class A common stock and Class B common stock, effectively providing PICO with control over the outcome of votes on all matters requiring approval by our stockholders.

In connection with the IPO, UCP, Inc. entered into an Exchange Agreement, pursuant to which PICO (and its permitted transferees) have the right to cause UCP, Inc. to exchange PICO's UCP, LLC Series A Units for shares of UCP, Inc. Class A common stock on a one-for-one basis, subject to equitable adjustments for stock splits, stock dividends and reclassifications. As of June 30, 2013, giving effect to the Class A common stock that we would issue if PICO were to elect to exchange all of its UCP, LLC Series A Units for shares of Class A common stock, we would have 18,343,000 shares of Class A common stock outstanding. In addition, in connection with the IPO, we issued an aggregate of 430,333 Class A restricted stock units to the members of our management team, other officers and employees and directors. These Class A restricted stock units vest at various points in time through 2015, and we will issue Class A common stock on a one-for-one basis in connection with the vesting of each Class A restricted stock unit. Any UCP, LLC Series A Units being exchanged will be reclassified as UCP, LLC Series B Units in connection with such exchange. Exchanges by PICO of its UCP, LLC Series A Units for shares of UCP, Inc. Class A common stock are expected to result, with respect to UCP, Inc., in increases in the tax basis of the assets of UCP, LLC that otherwise would not have been available. These increases in tax basis may reduce the amount of tax that UCP, Inc. would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. In connection with the IPO, UCP, Inc. entered into a Tax Receivable Agreement with PICO (and certain permitted assignees thereof) that provides for the payment from time to time by UCP, Inc. to such persons of 85% of the amount of the tax benefits, if any, that UCP, Inc. realizes as a result of (i) these increases in tax basis and (ii) certain other tax benefits related to UCP, Inc.'s entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement.

In connection with the IPO, UCP, Inc. also entered into a Transition Services Agreement with PICO, pursuant to which PICO provides certain services to UCP, Inc. for a limited period of time, including, among other things, accounting, human resources and information technology services. UCP, Inc. expects that the amounts it will pay PICO pursuant to the Transition Services Agreement will be similar to the amount of costs that PICO historically allocated to UCP, LLC for similar services. The initial term of the Transition Services Agreement is one year, after which UCP, Inc. has the right to renew for up to two ninety day periods.

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Additionally, pursuant to an Investor Rights Agreement that UCP, Inc. entered into with PICO in connection with the IPO, PICO has the right to nominate two individuals for election to UCP, Inc.'s board of directors for as long as PICO owns 25% or more of the combined voting power of UCP, Inc.'s outstanding Class A and Class B common stock and one individual for as long as it owns at least 10% (in each case, excluding shares of any of UCP, Inc.'s common stock that are subject to issuance upon the exercise or exchange of rights of conversion or any options, warrants or other rights to acquire shares). However, the Investor Rights Agreement does not entitle PICO to nominate individuals for election to UCP, Inc.'s board of directors if their election would result in PICO nominees comprising more than two of UCP, Inc.'s directors (for as long as PICO owns 25% or more of the combined voting power of UCP, Inc.'s outstanding Class A and Class B common stock) or one of UCP, Inc.'s directors (for as long as PICO owns at least 10% of the combined voting power of UCP, Inc.'s outstanding Class A and Class B common stock).

Results of Operations - Three and Six Months Ended June 30, 2013 and 2012

Consolidated Financial Data

	Three Months Ended June 30,								Six Months Ended June 30,
	2013			2012			Change		2013			2012			Change
	(in thousands)
Revenue:
Homebuilding	$	20,907		$	1,435		$	19,472	$	25,240		$	2,968		$	22,272
Land Development	6,815			—			6,815		14,285			2,002			12,283
Total revenue	27,722			1,435			26,287		39,525			4,970			34,555
Cost of Sales:
Homebuilding	16,482			1,057			15,425		19,942			2,119			17,823
Land Development	5,136			9			5,127		9,716			1,358			8,358
Gross Margin	6,104			369			5,735		9,867			1,493			8,374
Expenses:
Sales and marketing	2,099			238			1,861		3,231			459			2,772
General and administrative	5,326			2,386			2,940		8,806			4,594			4,212
Total expenses	7,425			2,624			4,801		12,037			5,053			6,984
Loss from operations	(1,321		)	(2,255		)	934		(2,170		)	(3,560		)	1,390
Other income (expense), net	224			93			131		263			301			(38		)
Net loss	$	(1,097	)	$	(2,162	)	$	1,065	$	(1,907	)	$	(3,259	)	$	1,352

Select Operating Metrics

	Three Months Ended June 30,						Six Months Ended June 30,
	2013		2012		Change		2013		2012		Change
Net new home orders (1)	59		3		56		121		10		111
Cancellation rate (2)	4.8	%	40.0	%	(35.2	)%	8.3	%	16.7	%	(8.4	)%
Average selling communities during the period (3)	7		2		5		6		2		4

	June 30,
	2013		2012		Change
Selling communities at end of period	9		1		8
Backlog(4) (in thousands)	$	26,674	$	1,008	$	25,666
Backlog (4) (units)	78		4		74
Average sales price of backlog (in thousands)	$	342	$	252	$	90

⁽¹⁾  “Net new home orders” refers to new home sales contracts reduced by the number of sales contracts canceled during the relevant period.

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⁽²⁾  “Cancellation rate” refers to sales contracts canceled divided by sales contracts executed during the relevant period.

⁽³⁾  “Average selling communities during the period” refers to the average number of open selling communities at the end of each month during the period.

⁽⁴⁾  “Backlog” refers to homes under sales contracts that have not yet closed at the end of the relevant period. Sales contracts relating to homes in backlog may be canceled by the purchaser for a number of reasons, such as the prospective purchaser's inability to obtain suitable mortgage financing. Upon a cancellation, the escrow deposit is returned to the prospective purchaser (other than with respect to certain design-related deposits, which we retain). Accordingly, backlog may not be indicative of our future revenue.

The increase in net new home orders was primarily due to our having seven and six average selling communities during the three and six months ended June 30, 2013, respectively, as compared to two average selling communities during the three and six months ended June 30, 2012, respectively. The increase in average selling communities was also responsible for the increase in backlog (units) for the six months ended June 30, 2013, as compared to the similar period during 2012.

We also had nine selling communities at June 30, 2013, as compared to one selling community at June 30, 2012. Approximately $18.7 million of the increase in our backlog value at June 30, 2013 as compared to June 30, 2012 was due to an increased number of homes under sales contracts and approximately $7.0 million was due to a higher average sales price during 2013. The decrease in our cancellation rate was primarily due to a larger proportion of the parties with whom we entered into sales contracts being able to obtain mortgage financing to consummate the sale during the 2013 periods as compared to the 2012 periods. The average sales price increased during the 2013 period, due to increased sales of more expensive homes and homes in more expensive areas. During the 2013 period, we were selling homes in one community in Santa Clara County, California and one community in San Benito County, California, two counties and communities that have higher average home prices than the two communities located in the Central Valley and Monterey markets of California where we were selling during the 2012 period.

The number of homes we sell during any quarter depends upon numerous factors and, as such, the number of home sales in any quarter is unpredictable. The number of homes we have sold on a quarterly basis has fluctuated from quarter to quarter. Accordingly, it should not be assumed that our historical sales or growth will be maintained in future periods.

Owned and Controlled Lots

As of June 30, 2013 and December 31, 2012, we owned or controlled, pursuant to purchase or option contracts, an aggregate of 5,845 and 4,916 lots, respectively, as represented in the tables below:

	As of June 30, 2013
	Owned	Controlled(1)	Total
Central Valley Area-California	1,849	985	2,834
Monterey Bay Area-California	1,587	—	1,587
South San Francisco Bay Area-California	27	467	494
Puget Sound Area-Washington	900	30	930
Total	4,363	1,482	5,845

	As of December 31, 2012
	Owned	Controlled(1)	Total
Central Valley Area-California	1,880	599	2,479
Monterey Bay Area-California	1,602	—	1,602
South San Francisco Bay Area-California	32	92	124
Puget Sound Area-Washington	711	—	711
Total	4,225	691	4,916

⁽¹⁾  Controlled lots are those subject to a purchase or option contract.

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Revenue

	Three months ended June 30,								Six months ended June 30,
	2013		2012		Change				2013		2012		Change
	(Dollars in thousands)
Homebuilding
Revenue	$	20,907	$	1,435	$	19,472	1,356.9	%	$	25,240	$	2,968	$	22,272	750.4	%
Homes delivered (units)	57		6		51		850.0	%	69		12		57		475.0	%
Average selling price	$	367	$	239	$	128	53.6	%	$	366	$	247	$	119	48.2	%
Average cost of sales	$	289	$	176	$	113	64.2	%	$	289	$	177	$	112	63.3	%
Land development
Revenue	$	6,815	$	—	$	6,815	—	%	$	14,285	$	2,002	$	12,283	613.5	%
Lots sold (units)	54		—		54		—	%	108		26		82		315.4	%

Total revenue for the three months ended June 30, 2013 increased by $26.3 million, or 1,831.8%, to $27.7 million, as compared to $1.4 million for the three months ended June 30, 2012. Total revenue for the six months ended June 30, 2013 increased by $34.6 million, or 695.3%, to $39.5 million, as compared to $5.0 million for the six months ended June 30, 2012. The increase in revenue was primarily the result of increased home deliveries and lot sales during the 2013 periods attributable to several factors, including an increased number of selling communities, favorable sales pace at certain of those communities and increased demand from third-party homebuilders for lots. These factors were favorably impacted during the 2013 periods by a housing recovery in many of our markets, which contributed to increased demand for homes by home buyers and lots by homebuilders.

Homebuilding Revenue

Revenue from homebuilding for the three months ended June 30, 2013 increased by $19.5 million, or 1,356.9%, to $20.9 million, as compared to $1.4 million for the three months ended June 30, 2012. The increase was primarily the result of an increase in the number of homes delivered to 57 during the 2013 period, as compared to six homes during the 2012 period, and due to an increase in the average selling price of homes to approximately $367,000 during the 2013 period, as compared to approximately $239,000 during the 2012 period. Of this increase, $12.2 million related to increased units delivered and $7.3 million related to an increase in average selling price. The increase in average selling price during the 2013 period was primarily the result of increased deliveries at communities located in areas with higher home prices. During the 2013 period, we were selling homes in Santa Clara and San Benito counties of California, that have higher average home prices than the Central Valley and Monterey markets of California where all of the homes we sold during the 2012 period were located.

Revenue from homebuilding for the six months ended June 30, 2013 increased by $22.3 million, or 750.4%, to $25.2 million, as compared to $3.0 million for the six months ended June 30, 2012. The increase was primarily the result of an increase in the number of homes delivered to 69 during the 2013 period, as compared to 12 homes during the 2012 period, and due to an increase in the average selling price of homes to approximately $366,000 during the 2013 period, as compared to approximately $247,000 during the 2012 period. Of this increase, $14.1 million related to increased units delivered and $8.2 million related to an increase in average selling price. The increase in average selling price during the 2013 period was primarily the result of increased deliveries at communities located in areas with higher home prices. During the 2013 period, we were selling homes in Santa Clara and San Benito counties of California, that have higher average home prices than the Central Valley and Monterey markets of California where all of the homes we sold during the 2012 period were located.

Land Development Revenue

Revenue from land development for the three months ended June 30, 2013 was $6.8 million; we had no land development revenue for the three months ended June 30, 2012. We sold 54 lots sold during the 2013 period, and no lots during the 2012 period. The lots sold during the 2013 period were a mix of improved and unimproved parcels in the South San Francisco Bay and Puget Sound areas.

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Revenue from land development for the six months ended June 30, 2013 increased by $12.3 million, or 613.5%, to $14.3 million, as compared to $2.0 million for the six months ended June 30, 2012. The increase was primarily the result of an increase in the number of lots sold to 108 during the 2013 period, as compared to 26 lots during the 2012 period. The lots sold during the 2013 period were a mix of improved and unimproved parcels in the South San Francisco Bay and Puget Sound areas. All of the lots sold during the 2012 period were finished lots in the Puget Sound area.

Gross Margin and Adjusted Gross Margin

	Three Months Ended June 30,										Six Months Ended June 30,
	2013			%		2012			%		2013			%		2012			%
	(Dollars in thousands)
Consolidated Adjusted Gross Margin
Sales	$	27,722		100.0	%	$	1,435		100.0	%	$	39,525		100.0	%	$	4,970		100.0	%
Cost of Sales	21,618			78.0	%	1,066			74.3	%	29,658			75.0	%	3,477			70.0	%
Gross Margin	6,104			22.0	%	369			25.7	%	9,867			25.0	%	1,493			30.0	%
Add: interest in cost of sales	301			1.1	%	18			1.3	%	365			0.9	%	74			1.5	%
Add: impairment and abandonment charges	3			—	%	9			0.6	%	12			—	%	68			1.4	%
Adjusted Gross Margin(1)	$	6,408		23.1	%	$	396		27.6	%	$	10,244		25.9	%	$	1,635		32.9	%
Consolidated Gross margin percentage	22.0		%			25.7		%			25.0		%			30.0		%
Consolidated Adjusted gross margin percentage(1)	23.1		%			27.6		%			25.9		%			32.9		%
Homebuilding Adjusted Gross Margin
Home sales	$	20,907		100.0	%	$	1,435		100.0	%	$	25,240		100.0	%	$	2,968		100.0	%
Cost of home sales	16,482			78.8	%	1,057			73.7	%	19,942			79.0	%	2,119			71.4	%
Homebuilding gross margin	4,425			21.2	%	378			26.3	%	5,298			21.0	%	849			28.6	%
Add: interest in cost of home sales	296			1.4	%	18			1.3	%	358			1.4	%	33			1.1	%
Add: impairment and abandonment charges	—			—	%	—			—	%	—			—	%	—			—	%
Adjusted homebuilding gross margin(1)	$	4,721		22.6	%	$	396		27.6	%	$	5,656		22.4	%	$	882		29.7	%
Homebuilding gross margin percentage	21.2		%			26.3		%			21.0		%			28.6		%
Adjusted homebuilding gross margin percentage(1)	22.6		%			27.6		%			22.4		%			29.7		%
Land Sales Adjusted Gross Margin
Land sales	$	6,815		100.0	%	$	—				$	14,285		100.0	%	$	2,002		100	%
Cost of land sales	5,136			75.4	%	9					9,716			68.0	%	1,358			67.8	%
Land sales gross margin	1,679			24.6	%	(9		)			4,569			32.0	%	644			32.2	%
Add: interest in cost of land sales	5			0.1	%	—					7			—	%	41			2.0	%
Add: Impairment and abandonment charges	3			—	%	9					12			0.1	%	68			3.4	%
Adjusted land sales gross margin(1)	$	1,687		24.8	%	$	—				$	4,588		32.1	%	$	753		37.6	%
Land sales gross margin percentage	24.6		%								32.0		%			32.2		%
Adjusted land sales gross margin percentage(1)	24.8		%								32.1		%			37.6		%

⁽¹⁾  Consolidated adjusted gross margin percentage, homebuilding adjusted gross margin percentage and land development adjusted gross margin percentage are non-U.S. GAAP financial measures. Adjusted gross margin is defined as gross margin plus capitalized interest, impairment and abandonment charges. We use adjusted gross margin information as a supplemental measure when evaluating our operating performance.

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We believe this information is meaningful, because it isolates the impact that leverage and non-cash impairment and abandonment charges have on gross margin. However, because adjusted gross margin information excludes interest expense and impairment and abandonment charges, all of which have real economic effects and could materially impact our results, the utility of adjusted gross margin information as a measure of our operating performance is limited. In addition, other companies may not calculate gross margin information in the same manner that we do. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance. The table above provides a reconciliation of adjusted gross margin numbers to the most comparable U.S. GAAP financial measure.

The decrease in our homebuilding gross margin percentage and homebuilding adjusted gross margin percentage was primarily due to increased cost of sales-homebuilding during the three months ended June 30, 2013, as compared to the three months ended June 30, 2012. The increased cost of sales-homebuilding during the three and six month periods in 2013 as compared to the same periods in 2012, was primarily attributable to a higher cost basis in the homes we sold during the 2013 periods. For the six month periods ended June 30, 2013 and June 30, 2012 our land development gross margin percentage was substantially the same. The decrease in our land development adjusted gross margin percentage for the six months ended June 30, 2013 as compared to the six months ended June 30, 2012, was attributable to lower capitalized interest associated with the projects sold in 2012 and additionally there was approximately $68,000 of impairment charges, unrelated to the lots sold, during the six month period ending June 30, 2012.

Sales and Marketing, and General and Administrative Expenses

	Three Months Ended June 30,
	(In thousands)				As a percentage of Total Revenue
	2013		2012		2013		2012
Sales and marketing	$	2,099	$	238	7.6	%	16.6	%
General and administrative	5,326		2,386		19.2	%	166.3	%
Total sales and marketing and general and administrative	$	7,425	$	2,624	26.8	%	182.9	%
	Six Months Ended June 30,
	(In thousands)				As a percentage of Total Revenue
	2013		2012		2013		2012
Sales and marketing	$	3,231	$	459	8.2	%	9.2	%
General and administrative	8,806		4,594		22.2	%	92.4	%
Total sales and marketing and general and administrative	$	12,037	$	5,053	30.4	%	101.6	%

Sales and marketing expense for the three months ended June 30, 2013 increased approximately $1.9 million, or 782%, to $2.1 million, as compared to approximately $238,000 for the same period in 2012. The increase in sales and marketing expenses was primarily attributable to an 850% increase in the number of homes delivered, and a 250% increase in the average number of selling communities for the three months ended June 30, 2013, as compared to the same period in 2012. As a percentage of total revenue, sales and marketing expenses decreased to 7.6% during the three months ended June 30, 2013, as compared to 16.6% during the three months period ended June 30, 2012.

Sales and marketing expense for the six months ended June 30, 2013 increased approximately $2.8 million, or 604%, to $3.2 million, as compared to approximately $459,000 for the same period in 2012. The increase in sales and marketing expenses was primarily attributable to a 475% increase in the number of homes delivered, and a 200% increase in the average number of selling communities for the six months ended June 30, 2013, as compared to the same period in 2012. As a percentage of total revenue, sales and marketing expenses decreased to 8.2% during the six months ended June 30, 2013, as compared to 9.2% during the six months period ended June 30, 2012.

General and administrative (“G&A expense”) for the three months ended June 30, 2013 increased $2.9 million to $5.3 million, as compared to $2.4 million for the same period in 2012. The increase in G&A expense was primarily attributable to an increase in office headcount to 60 employees from 29 employees and non-recurring costs related to the IPO of approximately $897,000. As a percentage of total revenue, G&A expenses decreased to 19.2% during the three month period ended June 30, 2013, compared to 166.3% for the same period in 2012. Excluding the non-recurring costs related to the IPO, G&A expense as a percentage of total revenue for the three month period ended June 30, 2013 was 16.0%.

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G&A expense for the six months ended June 30, 2013 increased $4.2 million to $8.8 million, as compared to $4.6 million for the for the same period in 2012. The increase in G&A expense was primarily attributable to the growth in our homebuilding operation, an increase in office headcount to 60 employees from 29 employees, and non-recurring costs related to the IPO of approximately $897,000. As a percentage of total revenue, G&A expense decreased to 22.2% during the six month period ended June 30, 2013, as compared to 92.4% for the same period in 2012. Excluding the non-recurring costs related to the IPO, G&A expense as a percentage of total revenue for the six month period was 20.0%.

Other Income (Expense), Net

Other income (expense), net for the three months ended June 30, 2013 increased by $131,000 to $224,000, as compared to $93,000 for the three months ended June 30, 2012. The increase was primarily attributable to recognition of $150,000 of income during the 2013 period relating to the beneficial settlement of a claim we had against a third party, there was no such income during the 2012 period.

Other income (expense), net for the six months ended June 30, 2013 decreased by $38,000 to $263,000, as compared to $301,000 for the six months ended June 30, 2012. The decrease was primarily attributable to recognition of $200,000 of income during the first quarter of 2012 relating to an easement we granted to a third party, there was no such income during the 2013 period.

Net Loss

As a result of the foregoing factors, our net loss for the three months ended June 30, 2013 was $1.1 million, compared to a net loss for the three months ended June 30, 2012 of $2.2 million; and the net loss for the six months ended June 30, 2013 was $1.9 million, compared to a net loss of $3.3 million for the six months ended June 30, 2012.

Liquidity and Capital Resources

Historically, our principal uses of capital have been the funding of our operating expenses, investment activities (principally acquiring and developing land, and building homes), repaying indebtedness and repaying capital contributions to PICO. Our principal sources of liquidity have been cash on hand, cash provided by operations, cash provided by financing activities (such as mortgage financing and construction and development financing) and capital contributions from PICO.

For the foreseeable future, we expect our principal uses of cash to be similar to what they have been in the past, although subsequent to the IPO we will no longer make repayments of member contributions to PICO. We anticipate funding future capital requirements in a manner similar to our historical funding, although we will not receive additional capital contributions from PICO. As a public company, we may have access to additional forms of financing, such as proceeds from the sale of equity securities or debt securities, that we have not historically used to finance our business.

Having completed the IPO, and receiving the proceeds therefrom, we believe that we have access to sufficient capital resources to fund our business for at least the next twelve months. We generally have the ability to defer future investment activity, such as developing land or building additional homes for sale, until such time as we have adequate capital resources available to us.

Our funding strategy contemplates the use of debt and equity financing and the reinvestment of cash from operations. We will seek to manage our balance sheet in a manner that provides us with flexibility to access various types of financing, such as equity capital, secured debt and, possibly over time, unsecured debt financing. We intend to finance future acquisitions and developments with the most advantageous source of capital available to us at the time of the transaction, which may include a combination of common and preferred equity, secured and unsecured corporate level debt, property-level debt and mortgage financing and other public, private or bank debt.

Cash provided by or used in operating activities is significantly impacted by, among other factors, the number of communities that we have in various stages of development and will vary significantly over time.

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We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. The ratio of debt-to-capital and the ratio of net debt-to-capital are calculated as follows (dollars in thousands):

	At June 30, 2013			At December 31, 2012
Debt	$	33,259		$	29,112
Member's equity	108,766			102,315
Total capital	$	142,025		$	131,427
Ratio of debt-to-capital	23.4		%	22.2		%
Debt	$	33,259		$	29,112
Less: cash and cash equivalents	1,788			10,324
Net debt	$	31,471		$	18,788
Member's equity	108,766			102,315
Total capital	$	140,237		$	121,103
Ratio of net debt-to-capital(1)	22.4		%	15.5		%

⁽¹⁾ The ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents) by the sum of net debt plus member's equity. The most directly comparable U.S. GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. We reconcile this non-U.S. GAAP financial measure to the ratio of debt-to-capital in the table above.

Cash Flows - Six Months Ended June 30, 2013 to Six Months Ended June 30, 2012

The following compares our cash flows for the six months ended June 30, 2013 to the six months ended June 30, 2012:

• Net cash used in operating activities was relatively unchanged between the periods, the $1.3 million decrease in net loss during the 2013 period was partially offset by an increase in cash used for real estate purchases during the 2013 period.

• Net cash used in investing activities was consistent period to period.

• Net cash provided by financing activities decreased by approximately $8.5 million primarily due increased repayments of member contributions to PICO during the 2013 period.

Off-Balance Sheet Arrangements and Contractual Obligations

In the ordinary course of business, we may enter into purchase or option contracts to procure lots for development and construction of homes or for sale to third-party homebuilders. We are subject to customary obligations associated with entering into contracts for the purchase of land. These contracts typically require a cash deposit and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements by the sellers, including obtaining applicable property and development entitlements.

We may also utilize purchase or option contracts with land sellers as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Purchase or option contracts generally require a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices. We generally have the right to terminate our obligations under both purchase or option contracts by forfeiting our cash deposit with no further financial responsibility to the land seller. As of June 30, 2013, we had outstanding $2.2 million of cash deposits (of which approximately $588,000 were non-refundable) pertaining to purchase contracts for 1,255 lots with an aggregate remaining purchase price of approximately $72.4 million (net of deposits).

Our use of contracts providing us an option to purchase land depends on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital from financial intermediaries to finance the development of land, general housing market conditions, and local market dynamics.

As of June 30, 2013, there was $33.3 million of outstanding principal balances on our various loan facilities. We had $11.0 million of availability under our secured revolving credit facilities subject to the borrowing base terms set forth in each of our secured revolving credit facilities.

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Inflation

Our business 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 home buyers. 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.

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements. We typically experience the highest new home order activity in spring and summer, although this activity is also highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since it typically takes four to six months to construct a new home, we generally deliver more homes in the second half of the year as spring and summer home orders convert to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters, and the majority of cash receipts from home deliveries occur during the second half of the year. We expect this seasonal pattern to continue over the long-term, although it may be affected by volatility in the homebuilding industry. We currently expect the traditional seasonality cycle and its impact on our results to become more prominent if and as the present housing recovery progresses and the housing markets and homebuilding industry return to a more normal operating environment.

Item 3.  Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risks related to fluctuations in interest rates on our outstanding variable rate debt, which consists of our secured revolving credit facility and our acquisition, construction and development loans. We did not hedge our exposure to changes in interest rates with swaps, forward or option contracts on interest rates or commodities, or other types of derivative financial instruments during the three and six months ended June 30, 2013. However, we may choose to hedge our exposure to changes in interest rates with these or other types of instruments in the future if, for example, we incur significant amounts of additional variable rate debt. We have not entered into and currently do not hold derivatives for trading or speculative purposes.

Based on the current amount and terms of our variable rate debt, we do not believe that the future changes in interest rates will have a material adverse impact on our financial position, results of operations or liquidity.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15(d)- 15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2013, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1.  Legal Proceedings

See Note 7 in Notes to UCP, LLC’s Condensed Consolidated Financial Statements for a discussion of legal proceedings.

Item 1A.  Risk Factors

We have disclosed under the heading “Risk Factors” beginning on page 23 of our prospectus dated July 17, 2013, which constitutes part of our Registration Statement on Form S-1 (File No. 333-187735), the risk factors which materially affect our business, financial condition or results of operations. There have been no material changes from the risk factors previously disclosed in our prospectus. You should carefully consider the risk factors set forth in the prospectus and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

On July 17, 2013, a registration statement on Form S-1 (Registration No. 333-187735), relating to the initial public offering of our Class A common stock was declared effective by the Securities and Exchange Commission. Under this registration statement, we registered 8,912,500 shares of our Class A common stock, consisting of 7,750,000 shares sold to Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Zelman Partners LLC and JMP Securities LLC, the underwriters of the offering, and 1,162,500 shares subject to an option granted to such underwriters.  The offering was completed on July 17, 2013, and 7,750,000 shares of Class A common stock registered under the registration statement were issued to the underwriters and sold at a price to the public of $15.00 per share.  The underwriters did not exercise their option to purchase all or a portion of the 1,162,500 optional shares and the offering was terminated on July 17, 2013.

The aggregate gross proceeds from the shares of Class A common stock sold by us were $116.3 million. The aggregate net proceeds to us from the sale were approximately $105.6 million, after deducting an aggregate of $10.6 million in underwriting discounts paid to the underwriters and other expenses incurred in connection with the offering.

We used the net proceeds from the offering to purchase 7,750,000 newly-issued UCP, LLC Series B Units.  UCP, LLC intends to use such proceeds for general corporate purposes, such as the acquisition of land and for land development, home construction and other related purposes.  Pending these uses, these proceeds are currently held in various demand deposit accounts.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

None.

Item 6.  Exhibits

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Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation of UCP, Inc.
3.2	Amended and Restated Bylaws of UCP, Inc.
10.1	UCP, Inc. 2013 Long-Term Incentive Plan
10.2	Registration Rights Agreement between UCP, Inc. and PICO Holdings, Inc., dated July 23, 2013
10.3	Employment Agreement between UCP, Inc. and Dustin L. Bogue, dated July 23, 2013
10.4	Employment Agreement between UCP, Inc. and William J. La Herran, dated July 23, 2013
10.5	Employment Agreement between UCP, Inc. and James W. Fletcher, dated July 23, 2013
10.7	Transition Services Agreement between PICO Holdings, Inc. and UCP, Inc., dated July 23, 2013
10.8	Tax Receivable Agreement among UCP, Inc., UCP, LLC and PICO Holdings, Inc., dated July 23, 2013
10.9	Exchange Agreement among UCP, Inc., UCP, LLC and PICO Holdings, Inc., dated July 23, 2013
10.10	Second Amended and Restated Limited Liability Company Operating Agreement of UCP, LLC, dated July 23, 2013
31.1	Certification of Dustin L. Bogue, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of William J. La Herran, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Dustin L. Bogue, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of William J. La Herran, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS†	XBRL Instance Document
101.SCH†	XBRL Taxonomy Extension Schema Document
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB†	XBRL Taxonomy Extension Label Linkbase Document
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document

† XBRL information is deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under such sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		UCP, Inc.
Date:	September 3, 2013	By:	/s/	William J. La Herran
		William J. La Herran
		Chief Financial Officer
		(Principal Financial Officer and Authorized Signatory)

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EX-3.1

EXHIBIT 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

UCP, INC.

(a Delaware corporation)

UCP, Inc. was incorporated by the filing of its original certificate of incorporation (the “Original Certificate of Incorporation”) with the Secretary of State of the State of Delaware on May 7, 2013. This Amended and Restated Certificate of Incorporation of UCP, Inc., which amends, restates and integrates the provisions of the Original Certificate of Incorporation, was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”) and by the written consent of the stockholders in accordance with Section 228 of the DGCL.

ARTICLE I

NAME

The name of the corporation is UCP, Inc. (hereinafter called the “Corporation”).

ARTICLE II

REGISTERED OFFICE

The address of the Corporation's registered office in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company.

ARTICLE III

PURPOSE

The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

ARTICLE IV

STOCK

SECTION 4.01Authorized Stock. The aggregate number of shares of all classes of stock which the Corporation shall have authority to issue is (A) 501,000,000 shares of common stock, divided into 500,000,000 shares of Class A common stock, par value $0.01 per share (“Class A Common Stock”) and 1,000,000 shares of Class B common stock, par value $0.01 per share (“Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”); and (B) 50,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”).

SECTION 4.02Common Stock.

(a)Voting.

(i)Except as otherwise provided (i) by the DGCL, (ii) by Section 4.03 of this Article IV, or (iii) by resolutions, if any, of the Board of Directors of the Corporation (“Board of Directors”) fixing the relative powers, preferences and rights and the qualifications, limitations or restrictions of the Preferred Stock, the entire voting power of the shares of the Corporation for the election of directors and for all other purposes shall be vested exclusively in the Class A Common Stock and the Class B Common Stock, voting together as a single class. Each share of Class A Common Stock shall have one vote upon all matters to be voted on by the holders of the Common Stock and each share of Class B Common Stock shall have, without regard to the number of shares of Class B Common Stock (or fraction thereof) held by such holder, a number of votes upon all matters be

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voted on by the holders of the Common Stock that is equal to the product of (x) the total number of UCP, LLC Series A Units (as designated in the Second Amended and Restated Limited Liability Company Operating Agreement of UCP, LLC dated on or about the date hereof and as amended from time to time, by and between the Corporation and PICO Holdings, Inc. (“PICO”)), held of record by such holder multiplied by (y) the Exchange Rate (as defined in the Exchange Agreement dated on or about the date hereof as amended from time to time, by and among the Corporation, UCP, LLC and PICO (the “Exchange Agreement”)). Except as otherwise provided by the DGCL or this Certificate of Incorporation, the holders of Class A Common Stock and Class B Common Stock shall vote together as a single class on all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Class A Common Stock and Class B Common Stock, as a single class with such holders of Preferred Stock).

(b)Dividends. Subject to the rights, if any, of the holders of any outstanding series of Preferred Stock, each share of Class A Common Stock shall be entitled to receive and share equally in all dividends paid out of any funds of the Corporation legally available therefor when, as and if declared by the Board of Directors. Dividends and other distributions shall not be declared or paid on the Class B Common Stock.

(c)Liquidation. Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights, if any, of the holders of any outstanding series of Preferred Stock, the holders of shares of Class A Common Stock shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them. The holders of shares of Class B Common Stock, as such, shall not be entitled to receive any assets of the Corporation in the event of the dissolution, liquidation or winding up of the Corporation.

(d)Retirement of Class B Common Stock. In the event that no UCP, LLC Series A Units remain exchangeable for shares of Class A Common Stock, the Class B Common Stock will be transferred to the Corporation and thereupon shall be retired. In the event that any outstanding share of Class B Common Stock shall cease to be held by a holder of a UCP, LLC Series A Unit, such share shall automatically and without further action on the part of the Corporation or any holder of Class B Common Stock be transferred to the Corporation and thereupon shall be retired.

(e)Exchange of UCP, LLC Series A Units for Class A Common Stock. Pursuant to and in accordance with the Exchange Agreement, UCP, LLC Series A Units may be exchanged for Class A Common Stock in accordance with the Exchange Agreement. The Corporation covenants that it will at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of issuance upon exchange of the outstanding UCP, LLC Series A Units for Class A Common Stock, such number of shares of Class A Common Stock that are issuable upon any such exchange; provided that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of any such exchange by delivery of shares of Class A Common Stock which are held in the treasury of the Corporation. The Corporation covenants that all shares of Class A Common Stock issued upon any such exchange will, upon issuance, be validly issued, fully paid and non-assessable.

SECTION 4.03Preferred Stock. The Preferred Stock may be issued at any time and from time to time in one or more series. Subject to the provisions of this Certificate of Incorporation, the Board of Directors is authorized to fix from time to time by resolution or resolutions the number of shares of any class or series of Preferred Stock, and to determine the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of any such class or series. Further, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any such class or series, the Board of Directors is authorized to increase or decrease (but not below the number of shares of such class or series then outstanding) the number of shares of any such class or series subsequent to the issuance of shares of that class or series.

ARTICLE V

BOARD OF DIRECTORS

SECTION 5.01Powers. Except as otherwise expressly provided by the DGCL or this Certificate of Incorporation, the management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors.

SECTION 5.02Number of Directors; Election; Term.

(a)    Subject to the rights and preferences of any series of outstanding Preferred Stock, the number of directors constituting the whole Board of Directors shall be not fewer than three (3) and shall be fixed from time to time solely by resolution adopted by affirmative vote of a majority of such directors then in office and may not be fixed by any other person or

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persons, including stockholders.

(b)    Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, the directors of the Corporation shall be divided into three classes as nearly equal in number as is practicable, hereby designated Class I, Class II and Class III. The Board of Directors is authorized to assign members of the Board of Directors already in office to such classes. The term of office of the initial Class I directors shall expire upon the election of directors at the first annual meeting of stockholders following the effectiveness of this Article V; the term of office of the initial Class II directors shall expire upon the election of directors at the second annual meeting of stockholders following the effectiveness of this Article V; and the term of office of the initial Class III directors shall expire upon the election of directors at the third annual meeting of stockholders following the effectiveness of this Article V. At each annual meeting of stockholders, commencing with the first annual meeting of stockholders following the effectiveness of this Article V, each of the successors elected to replace the directors of a class whose term shall have expired at such annual meeting shall be elected to hold office until the third annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, if the number of directors that constitutes the Board of Directors is changed, any newly created directorships or decrease in directorships shall be so apportioned by the Board of Directors among the classes as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

(c)    Notwithstanding the foregoing provisions of this Section, and subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, each director shall serve until such director's successor is duly elected and qualified or until such director's earlier death, resignation or removal.

(d)    There shall be no cumulative voting in the election of directors. The directors of the Corporation need not be elected by written ballot unless the Bylaws of the Corporation so provide.

(e)    Notwithstanding any of the other provisions of this Article V, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the certificate of designation for such series of Preferred Stock, and such directors so elected shall not be divided into classes pursuant to this Article V unless expressly provided by such terms. During any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed pursuant to the provisions of this Article V, then upon commencement and for the duration of the period during which such right continues; (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to such provisions, and (ii) each such additional director shall serve until such director's successor shall have been duly elected and qualified, or until such director's right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to such director's earlier death, resignation or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such series of stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation or removal of such additional directors, shall forthwith terminate, and the total authorized number of directors of the Corporation shall be reduced accordingly.

(f)Advance notice of stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation.

SECTION 5.03    Removal. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, a director may be removed from office by the stockholders of the Corporation only for cause.

SECTION 5.04    Vacancies. Subject to the rights and preferences of any series of outstanding Preferred Stock, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise provided by law, be filled solely by the affirmative vote of a majority of the remaining directors then in office, even if such a majority is less than a quorum of the Board of Directors, or by a sole remaining director, and shall not be filled by any other person or persons, including stockholders. Any director so chosen shall hold office for the remainder of the full term of the class for which such director shall have been chosen or in which such vacancy occurred and until his successor shall be elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

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ARTICLE VI

STOCKHOLDER ACTION

The authority contemplated by Section 228 of the DGCL which permits stockholders to act by written consent shall be expressly denied to the stockholders of the Corporation. Accordingly, the stockholders shall have no ability to take any action unless such action is taken at an annual or special meeting of the stockholders.

ARTICLE VII

SPECIAL MEETINGS OF STOCKHOLDERS

A special meeting of the stockholders of the Corporation may be called at any time only by the Chairman of the Board of Directors, the Chief Executive Officer (or if there is no Chief Executive Officer, the President) or the Board of Directors of the Corporation pursuant to a resolution adopted by a majority of the total number of directors then in office. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting.

ARTICLE VIII

EXISTENCE

The Corporation shall have perpetual existence.

ARTICLE IX

AMENDMENT

SECTION 9.01    Amendment of Certificate of Incorporation. 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 the laws of the State of Delaware, and all rights conferred herein are granted subject to this reservation.

SECTION 9.02    Amendment of Bylaws. The Bylaws of the Corporation may be altered, changed or repealed, and new Bylaws made, by the majority vote of the whole Board of Directors.

ARTICLE X

LIABILITY OF DIRECTORS

SECTION 10.01        Personal Liability. To the fullest extent elimination or limitation of personal liability of directors is permitted by the DGCL, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment to or repeal of this provision 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.

SECTION 10.02        Indemnification. Each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the Corporation shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the DGCL. The right to indemnification conferred in this Article X shall also include the right to be paid by the Corporation the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by the DGCL. The rights to indemnification and advancement conferred in this Article X shall be contract rights and shall become vested by virtue of the director's or officer's service at the time when the state of facts giving rise to the claim occurred. The Corporation may, by action of its Board of Directors, provide indemnification to such of the employees and agents of the Corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by the DGCL.

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SECTION 10.03        Insurance. 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 expense, liability or loss 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 the DGCL.

SECTION 10.04        Non-Exclusivity. The rights and authority conferred in this Article X shall not be exclusive of any other right which any person may otherwise have or hereafter acquire.

SECTION 10.05        Applicability. Neither the amendment nor repeal of this Article X, nor the adoption of any provision of this Certificate of Incorporation or the Bylaws of the Corporation, nor, to the fullest extent permitted by the DGCL, any modification of law, shall eliminate or reduce the effect of this Article X in respect of any acts or omissions occurring prior to such amendment, repeal, adoption or modification. Any vested rights to indemnification or advancement hereunder may not be amended or otherwise modified or limited without the express written consent of the affected director.

ARTICLE XI

BUSINESS OPPORTUNITIES

SECTION 11.01        Business Opportunities. To the fullest extent permitted by the DGCL and except as may be otherwise expressly agreed in writing by the Corporation and PICO or any affiliate or subsidiary thereof (other than the Corporation, UCP, LLC and their respective subsidiaries) the Corporation, on behalf of itself and its subsidiaries (including UCP, LLC), renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, any business opportunity that may be from time to time presented to PICO or any of its officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries (other than the Corporation, UCP, LLC and their respective subsidiaries) and that may be a business opportunity for PICO or any of its affiliates and subsidiaries, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and no such person shall be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person, acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information regarding any such business opportunity, to the Corporation or its subsidiaries unless, in the case of any such person who is a director or officer of the Corporation, any such business opportunity is expressly offered to such director or officer solely in his or her capacity as a director or officer of the Corporation. Neither PICO nor any of its affiliates or subsidiaries (other than the Corporation, UCP, LLC and their respective subsidiaries) shall have any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation or any of its subsidiaries.

SECTION 11.02        Termination. The provisions of this Article XI shall have no further force or effect with respect to PICO or any of its affiliates or subsidiaries on the date that no person who is a director or officer of the Corporation is also a director, officer, member, partner or employee of PICO or any of their affiliates or subsidiaries. Neither the alteration, amendment or repeal of this Article XI nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article XI nor the termination of applicability pursuant to the immediately preceding sentence shall eliminate or reduce the effect of this Article XI in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article XI, would accrue or arise, prior to such alteration, amendment, repeal, adoption or termination.

SECTION 11.03        Deemed Notice. Any person purchasing or otherwise acquiring any interest in any shares of stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XI.

ARTICLE XII

DGCL SECTION 203 AND BUSINESS COMBINATIONS

SECTION 12.01        The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.

SECTION 12.02        Notwithstanding the foregoing, the Corporation shall not engage in any business combination (as defined below) with any interested stockholder (as defined below) for a period of three (3) years following the time that such stockholder became an interested stockholder, unless:

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(a)    prior to such time, the Board of Directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

(b)    upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares of voting stock outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

(c)    at or subsequent to such time, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting power of all outstanding voting shares of the Corporation which are not owned by the interested stockholder.

SECTION 12.03        The restrictions contained in Section 12.02 shall not apply if:

(a)    the Corporation does not have a class of voting stock that is: (i) listed on a national securities exchange; or (ii) held of record by more than 2,000 stockholders, unless any of the foregoing results from action taken, directly or indirectly, by an interested stockholder or from a transaction in which a person becomes an interested stockholder; or

(b)    a stockholder becomes an interested stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an interested stockholder; and (ii) would not, at any time within the three-year period immediately prior to a business combination between the Corporation and such stockholder, have been an interested stockholder but for the inadvertent acquisition of ownership.

SECTION 12.04        For purposes of this Article XII, references to:

(a)    “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.

(b)    “associate,” when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.

(c)    “business combination,” when used in reference to the Corporation and any interested stockholder of the Corporation, means:

(i)    any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section 12.02 is not applicable to the surviving entity;

(ii)    any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;

(iii)    any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (A) pursuant to the exercise, exchange or conversion of any security exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (B) pursuant to a merger under Section 251(g) of the DGCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became

6

such; (D) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (E) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (C)-(E) of this subsection (iii) shall there be an increase in the interested stockholder's proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation;

(iv)    any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or of securities exercisable for, exchangeable for or convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or

(v)    any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (i)-(iv) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.

(d)    “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Article XII, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.

(e)    “Existing Holder” means PICO and its affiliates and subsidiaries.

(f)    “interested stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; but “interested stockholder” shall not include (A) the Existing Holder or any of its affiliates or successors, or any “group”, or any members of such group, to which such persons are a party under Rule 13d-5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (B) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation, provided, in the case of this clause (B), that such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

(g)“person” means any individual, corporation, partnership, unincorporated association or other entity.

(h)“stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.

(i)“voting stock” means, with respect to any corporation, stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of voting stock shall refer to such percentage of the votes of such voting stock.

(j)“owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its affiliates or associates:

(i)    beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act, as amended or any successor provision) such stock, directly or indirectly;

7

(ii)    has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person's right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten (10) or more persons; or

(iii)    has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subsection (l)(ii) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.

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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Incorporation to be executed, signed and acknowledged by the undersigned as of the date set forth below.

Dated: July 17, 2013

UCP, INC.
By:	/s/ Dustin L. Bogue
	Name:	Dustin L. Bogue
	Title:	Chief Executive Officer and Director

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EX-3.2

EXHIBIT 3.2

AMENDED AND RESTATED BYLAWS

OF

UCP, INC.

(Adopted as of July 17, 2013)

ARTICLE I

Offices

Section 1.1    Registered Offices. The registered office of UCP, Inc. (the “Corporation”) in the State of Delaware shall be located at 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company. The registered office and/or registered agent of the Corporation may be changed from time to time by action of the Board of Directors.

Section 1.2    Other Offices. The Corporation may also have offices at such other 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.

Section 1.3    Books. The books of the Corporation may be kept within or without of 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

Stockholders Meetings

Section 2.1    Annual Meetings.

(a)An annual meeting of stockholders shall be held for the election of directors and the transaction of such other business as may properly be brought before the meeting in accordance with these Bylaws at such date, time and place, if any, as may be fixed by resolution of the Board of Directors of the Corporation from time to time.

(b)Only such business (other than stockholder nominations of directors, which shall be made in compliance with, and shall be exclusively governed by, Section 3.1(a)) shall be conducted at an annual meeting of stockholders as shall have been properly brought before the meeting. For business to be properly brought before the meeting, it must be (i) authorized by the Board of Directors and specified in the notice, or a supplemental notice, of the meeting, (ii) otherwise brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 2.1 and at the time of the annual meeting of stockholders, who is entitled to vote at the meeting on any such business and who has complied with the notice and other requirements set forth in these Bylaws; clause (iii) shall be the exclusive means for a stockholder to submit such business (other than proposals properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and included in the Corporation's notice of the meeting, which proposals are not governed by these Bylaws) before an annual meeting of stockholders.

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(c)For business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.1(b)(iii), the stockholder must have given timely written notice thereof to the Secretary of the Corporation as hereinafter provided and such proposal must otherwise be a proper subject for action by the Corporation's stockholders. To be timely, a stockholder's written notice shall set forth all information required under this Section 2.1(c) and shall be delivered or mailed to and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the immediately preceding year's annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days from the first anniversary of the immediately preceding year's annual meeting date, written notice by a stockholder in order to be timely must be received not earlier than the 120^th day before the date of such annual meeting and not later than the later of the 90^th day before the date of such annual meeting, as originally convened, or the close of business on the tenth day following the day on which the first public disclosure of the date of such annual meeting was made. In no event shall the public disclosure of an adjournment or postponement of an annual meeting commence a new time period for the giving of stockholder's notice as described above. A stockholder's notice to the Secretary delivered pursuant to this Section 2.1(c) shall set forth:

(i) as to each matter the stockholder proposes to bring before the meeting, (A) a description of the proposal or business (including the complete text of any resolutions to be presented at the annual meeting, and, in the event that such business includes a proposal to amend these Bylaws, the text of the proposed amendment) desired to be brought before the annual meeting, (B) the reasons for conducting such business at the annual meeting, and (C) any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

(ii) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the proposal of business on the date of such stockholder's notice;

(iii) as to the stockholder giving the notice and any Stockholder Associated Person:

(A)the class or series and number of shares of capital stock or other securities of the Corporation (collectively, “Company Securities”), if any, which are owned beneficially or of record by such person, the date(s) on which such Company Securities were acquired and the investment intent of such acquisition(s), and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

(B)the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such person,

(C)whether and the extent to which such person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (x) manage risk or the benefit of changes in the price

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of Company Securities for such person, or (y) increase or decrease the voting power of such person in the Corporation disproportionately to such person's economic interest in the Company Securities; and

(D)a representation that such stockholder or Stockholder Associated Person intends to appear in person or by proxy at the annual meeting to bring such business before the meeting;

(iv) as to the stockholder giving the notice or any Stockholder Associated Person with an interest or ownership referred to in clause (i) or clause (iii)(C) of this Section 2.1(c):

(A)the name and address of such stockholder, as they appear on the Corporation's stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person, and

(B)the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person;

(v) as to the stockholder giving the notice and any Stockholder Associated Person, a description of all arrangements or understandings between such person and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder or such beneficial owner in such business, including any anticipated benefit to the stockholder or such beneficial owner therefrom; and

(vi) as to the stockholder giving the notice and any Stockholder Associated Person, a representation that such person intends to appear in person or by proxy at the annual meeting to bring such business before the meeting (the information described in clauses (iii) through (vi), the “Proposing Stockholder Information”).

(d)Unless otherwise required by law, if a stockholder (or qualified representative) does not appear at the meeting of stockholders to present business proposed by such stockholder pursuant to Section 2.1(c), such proposed business shall not be transacted, even though proxies in respect of such vote may have been received by the Corporation. No business shall be conducted at any annual meeting except in accordance with the procedures set forth in Section 2.1. The chairman of the meeting at which any business is proposed by a stockholder shall, if the facts warrant, determine and declare to the meeting that such business was not properly brought before the meeting in accordance with the provisions of Section 2.1(c), and in such event, the business not properly before the meeting shall not be transacted.

Section 2.2    Special Meetings. Special meetings of stockholders may be called only as set forth in the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) of the Corporation.

Section 2.3    Notice of Meetings. A written notice of each annual or special meeting of stockholders shall be given stating the place, if any, date and time of the meeting, 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, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting) and, in the

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case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, such notice of meeting shall be given not less than ten nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, personally, by mail or, to the extent and in the manner permitted by applicable law, electronically. If mailed, such notice shall be deemed to be 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 2.4    Adjournments. Any annual or special meeting of stockholders may be adjourned from time to time to reconvene at the same or some other place, if any, and notice need not be given of any such adjourned meeting if the date, time and place, if any, thereof and the means of remote communication, if any, by which stockholders and proxyholders may be deemed present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting any business may be transacted which might have been transacted at the original meeting. 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 adjourned meeting in accordance with Section 2.3. If the Board of Directors shall fix a new record date for determination of stockholders entitled to vote at an adjourned meeting, the Board of Directors shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as the record date determined for stockholders entitled to vote at the adjourned meeting.

Section 2.5    Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the presence in person or by proxy of the holders of stock having a majority of the votes which could be cast by the holders of all outstanding classes of stock entitled to vote at the meeting shall constitute a quorum at each meeting of stockholders. In the absence of a quorum, the stockholders so present may, by the affirmative vote of the holders of stock having a majority of the votes which could be cast by all such holders, adjourn the meeting from time to time in the manner provided in Section 2.4 of these Bylaws until a quorum is present. If a quorum is present when a meeting is convened, the subsequent withdrawal of stockholders, even though less than a quorum remains, shall not affect the ability of the remaining stockholders lawfully to transact business.

Section 2.6    Conduct; Remote Communication.

(a)    Meetings of stockholders shall be presided over by the Chairman of the Board or, in his or her absence, by the Chief Executive Officer, or in his or her absence, by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

(b)    If authorized by the Board of Directors in accordance with these Bylaws and applicable law, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication, (1) participate in a meeting of stockholders and (2) 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

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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 2.7    Voting.

(a)    Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors of election unless so required by Section 2.9 of these Bylaws or so determined by the holders of stock having a majority of the votes which could be cast by the holders of all outstanding stock entitled to vote which are present in person or by proxy at such meeting. Unless otherwise provided in the Certificate of Incorporation, directors shall be elected by a plurality of the votes cast in the election of directors. Each other question shall, unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, be decided by the vote of the holders of stock having a majority of the votes which could be cast by the holders of all classes of stock entitled to vote on such question which are present in person or by proxy at the meeting.

(b)    Stock of the Corporation standing in the name of another corporation and entitled to vote may be voted by such officer, agent or proxy as the bylaws or other internal regulations of such other corporation may prescribe or, in the absence of such provision, as the board of directors or comparable body of such other corporation may determine.

(c)    Stock of the Corporation standing in the name of a deceased person, a minor, an incompetent or a debtor in a case under Title 11, United States Code, and entitled to vote may be voted by an administrator, executor, guardian, conservator, debtor-in-possession or trustee, as the case may be, either in person or by proxy, without transfer of such shares into the name of the official or other person so voting.

(d)    A stockholder whose voting stock of the Corporation is pledged shall be entitled to vote such stock unless on the transfer records of the Corporation the pledgor has expressly empowered the pledgee to vote such shares, in which case only the pledgee, or such pledgee's proxy, may represent such shares and vote thereon.

(e)If voting stock is held of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary 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: (i) if only one votes, such act binds all; (ii) if more than one vote, the act of the majority so voting binds all; and (iii) if more than one vote, but the vote is evenly split on any particular matter each faction may vote such stock proportionally, or any person voting the shares, or a beneficiary, if any, may apply to the Court of Chancery of the State of Delaware or such other court as may have jurisdiction to appoint an additional person to act with the persons so voting the stock, which shall then be voted as determined by a majority of such persons and the person appointed by the Court. If the instrument so filed shows that any such tenancy is held in unequal interests, a majority or even split for the purpose of this subsection shall be a majority or even split in interest.

(f)Stock of the Corporation belonging to the Corporation, or to another corporation a majority of the shares entitled to vote in the election of directors of which are held by the Corporation,

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shall not be voted at any meeting of stockholders and shall not be counted in the total number of outstanding shares for the purpose of determining whether a quorum is present. Nothing in this Section 2.7 shall limit the right of the Corporation to vote shares of stock of the Corporation held by it in a fiduciary capacity.

Section 2.8    Proxies.

(a)    Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy filed with the Secretary before or at the time of the meeting. No such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed 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 filing with the Secretary an instrument in writing revoking the proxy or another duly executed proxy bearing a later date.

(b)    A stockholder may authorize another person or persons to act for such stockholder as proxy (i) by executing a writing authorizing such person or persons to act as such, which execution may be accomplished by such stockholder or such stockholder's authorized officer, director, partner, employee or agent (or, if the stock is held in a trust or estate, by a trustee, executor or administrator thereof) signing such writing or causing his or her signature to be affixed to such writing by any reasonable means, including, but not limited to, facsimile signature, or (ii) by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission (each, a “Transmission”) to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such Transmission; provided that any such Transmission must either set forth or be submitted with information from which it can be determined that such Transmission was authorized by such stockholder.

(c)    Any inspector or inspectors appointed pursuant to Section 2.9 of these Bylaws shall examine Transmissions to determine if they are valid. If no inspector or inspectors are so appointed, the Secretary or such other person or persons as shall be appointed from time to time by the Board of Directors shall examine Transmissions to determine if they are valid. If it is determined that a Transmission is valid, the person or persons making that determination shall specify the information upon which such person or persons relied. Any copy, facsimile telecommunication or other reliable reproduction of such a writing or Transmission may be substituted or used in lieu of the original writing or Transmission for any and all purposes for which the original writing or Transmission could be used; provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or Transmission.

Section 2.9    Voting Procedures and Inspectors of Elections.

(a)    If the Corporation has a class of voting stock that is (i) listed on a national securities exchange, (ii) authorized for quotation on an interdealer quotation system of a registered national securities association or (iii) held of record by more than 2,000 stockholders, the Board of Directors shall, in advance of any meeting of stockholders, appoint one or more inspectors (individually an “Inspector,” and collectively the “Inspectors”) to act at such meeting and make a written report thereof. The Board of Directors may designate one or more persons as alternate Inspectors to replace any Inspector who shall fail to act. If no Inspector or alternate is able to act at such meeting, the chairman of the meeting shall

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appoint one or more other persons to act as Inspectors. Each Inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of Inspector with strict impartiality and according to the best of his or her ability.

(b)     The Inspectors shall (i) ascertain the number of shares of stock of the Corporation outstanding and the voting power of each, (ii) determine the number of shares of stock of the Corporation present in person or by proxy at such meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by the Inspectors and (v) certify their determination of the number of such shares present in person or by proxy at such meeting and their count of all votes and ballots. The Inspectors may appoint or retain other persons or entities to assist them in the performance of their duties.

(c)    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 such meeting. No ballots, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the Inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by any stockholder shall determine otherwise.

(d)    In determining the validity and counting of proxies and ballots, the Inspectors shall be limited to an examination of the proxies, any envelopes submitted with such proxies, any information referred to in paragraphs (b) and (c) of Section 2.8 of these Bylaws, ballots and the regular books and records of the Corporation, except that the Inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by a stockholder of record to cast or more votes than such stockholder holds of record. If the Inspectors consider other reliable information for the limited purpose permitted herein, the Inspectors, at the time they make their certification pursuant to paragraph (b) of this Section 2.9, shall specify the precise information considered by them, including the person or persons from whom such information was obtained, when and the means by which such information was obtained and the basis for the Inspectors' belief that such information is accurate and reliable.

Section 2.10    Fixing Date of Determination of Stockholders of Record.

(a)    In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, 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 shall, unless otherwise required by law, be not more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting, unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors in respect of a meeting, the record 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. 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 determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled

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to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

(b)    In order that the Corporation may determine the stockholders 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 shall not be more than sixty (60) days prior to such action. If no such record date is so fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 2.11    List of Stockholders Entitled to Vote. The Secretary shall prepare, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address 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 for a period of at least ten 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 the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, the list shall be open to the examination of any stockholder during the whole time thereof on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

ARTICLE III

Board of Directors

Section 3.1    Election; Resignation; Vacancies.

(a)    Except as provided in the Investor Rights Agreement dated , 2013 by and among the Corporation and the parties thereto (the “Investor Rights Agreement”), only persons who are nominated in accordance with the procedures set forth in this Section 3.1(a) shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at a meeting of stockholders by the Board of Directors or by any stockholder of the Corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (a). Any nomination by a stockholder (other than pursuant to the Investor Rights Agreement) must be made by timely written notice to the Secretary as hereinafter provided. To be timely, a stockholder's written notice shall set forth all information required under this Section 3.1(a) and shall be delivered or mailed to and received at the principal executive offices of the Corporation: (i) with respect to an election to be held at an annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials

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or a notice of availability of proxy materials (whichever is earlier) for the immediately preceding year's annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days from the first anniversary of the immediately preceding year's annual meeting date, written notice by a stockholder in order to be timely must be received not earlier than the 120^th day before the date of such annual meeting and not later than the later of the 90^th day before the date of such annual meeting, as originally convened, or the close of business on the tenth day following the day on which the first public disclosure of the date of such annual meeting was made, and (ii) with respect to an election to be held at a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which the first public disclosure of the date of such special meeting was made. In no event shall the public disclosure of an adjournment or postponement of any annual or special meeting commence a new time period for giving of a stockholder notice as described above. A stockholder's notice to the Secretary delivered pursuant to this Section 3.1(a) shall set forth:

(i) as to each person whom the stockholder proposes to nominate for election or re-election as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder; and

(ii) as to the stockholder giving the notice and any Stockholder Associated Person, the Proposing Stockholder Information with respect to such person.

Such notice shall be accompanied by a written representation and agreement, in the form provided by the Secretary upon written request, executed by the Proposed Nominee, that such Proposed Nominee (i) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation, (ii) consents to being named as a nominee and to serve as a director if elected, (iii) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such Proposed Nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (B) any Voting Commitment that could limit or interfere with such Proposed Nominee's ability to comply, if elected as a director of the Corporation, with such Proposed Nominee's fiduciary duties under applicable law and (iv) would be in compliance if elected as a director of the Corporation, and will comply with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

At the request of the Board of Directors any person nominated by the Board of Directors for election as a director shall furnish to the Secretary (in accordance with any applicable time periods prescribed for delivery of notice under these Bylaws) that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

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Notwithstanding anything in this Section 3.1(a) to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public disclosure of such action at least 90 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the immediately preceding year's annual meeting, a stockholder's notice required by this Section 3.1(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of the Corporation not later than the tenth day following the day on which such public disclosure is first made by the Corporation.

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.1(a) or the Investor Rights Agreement. Unless otherwise required by law, if a stockholder (or qualified representative) does not appear at the meeting of stockholders to present a nomination proposed by such stockholder pursuant to this Section 3.1(a), such nomination shall be disregarded, even though proxies in respect of such vote may have been received by the Corporation. The chairman of the meeting at which a stockholder nomination is presented shall, if the facts warrant, determine and declare to the meeting that such nomination was not made in accordance with the procedures prescribed by this Section 3.1(a), and, in such event, the defective nomination shall be disregarded.

(b)    Any director may resign at any time by giving written notice to the Chairman of the Board, the Chief Executive Officer or the Secretary. A resignation shall take effect when the resignation is delivered to the officer to whom it is directed unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events, without any need for its acceptance. A resignation that is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable.

(c)    Subject to the rights of holders of any series of preferred stock with respect to the election of directors, a director may be removed from office by the stockholders of the Corporation only for cause.

(d)     Any newly created directorship or any vacancy occurring in the Board of Directors for any reason shall be filled as set forth in the Certificate of Incorporation.

Section 3.2    Regular Meetings. Unless otherwise determined by the Board of Directors, a regular annual meeting of the Board of Directors shall be held, without call or notice, immediately after and, if the annual meeting of stockholders is held at a place, at the same place as the annual meeting of stockholders, for the purpose of electing officers and transacting any other business that may properly come before such meeting. Additional regular meetings of the Board of Directors may be held without call or notice at such times as shall be fixed by resolution of the Board of Directors.

Section 3.3    Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer, the Secretary or by any member of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four hours before the special meeting. The purpose or purposes of a special meeting need not be stated in the call or notice.

Section 3.4    Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board or, in his or her absence, by the Chief Executive Officer, or in his or her absence, by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in

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his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting. A majority of the directors present at a meeting, whether or not they constitute a quorum, may adjourn such meeting to any other date, time or place without notice other than announcement at the meeting.

Section 3.5    Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the transaction of business. Unless the Certificate of Incorporation or these Bylaws otherwise provide, 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.

Section 3.6    Committees. The Board of Directors may, by resolution, designate one or more committees, including but not limited to an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each committee to consist of one or more 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 the committee. In the absence or disqualification of a member of the committee, the member or members present at any meeting and not disqualified from voting, whether or not a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and provided in these Bylaws or in the resolution of the Board of Directors designating such committee, or an amendment to such resolution, 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.

Section 3.7    Telephonic Meetings. Directors, or any committee of directors designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other 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 3.7 shall constitute presence in person at such meeting.

Section 3.8    Board of Director Action by Written Consent Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, 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 such committee, as the case may be, consent thereto in writing (which may be in counterparts) or by electronic transmission, and the written consent or consents or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or such committee. Such filing shall be made in paper form if the minutes of the Corporation are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Such action by written consent or consent by electronic transmission shall have the same force and effect as a unanimous vote of the Board of Directors.

Section 3.9    Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules not inconsistent with the provisions of law for the conduct of its business. In the absence of such rules, each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to this Article III of these Bylaws.

Section 3.10    Reliance upon Records. Every director, and every member of any committee of the Board of Directors, shall, in the performance of his or her duties, be fully protected in

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relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors, or by any other person as to matters the director or member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, including, but not limited to, such records, information, opinions, reports or statements as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid, or with which the Corporation's capital stock might properly be purchased or redeemed.

Section 3.11    Interested Directors. A director who is directly or indirectly a party to a contract or transaction with the Corporation, or is a director or officer of or has a financial interest in any other corporation, partnership, association or other organization which is a party to a contract or transaction with the Corporation, may be counted in determining whether a quorum is present at any meeting of the Board of Directors or a committee thereof at which such contract or transaction is considered or authorized, and such director may participate in such meeting and vote on such authorization to the extent permitted by applicable law, including Section 144 of the General Corporation Law of the State of Delaware.

Section 3.12    Compensation. Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have the authority to fix the compensation of directors. The directors shall be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors or a committee thereof and may be paid a fixed sum for attendance at each such meeting and an annual retainer or salary for services as a director or committee member. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV

Officers

Section 4.1    Executive Officers; Election; Qualification; Term of Office. The Board of Directors shall elect a Chairman of the Board from among its members and shall elect a Chief Executive Officer and a Chief Financial Officer. The Board of Directors shall also elect a Secretary and may elect a President, one or more Vice Presidents, and one or more Assistant Secretaries. Any number of offices may be held by the same person. Each officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his or her election, and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal.

Section 4.2    Resignation; Removal; Vacancies. Any officer may resign at any time by giving written notice to the Chairman of the Board, the Chief Executive Officer or the Secretary. Unless otherwise stated in a notice of resignation, it shall take effect when received by the officer to whom it is directed, without any need for its acceptance. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation. A vacancy occurring in any office of the Corporation may be filled for the unexpired portion of the term thereof by the Board of Directors at any regular or special meeting.

Section 4.3    Powers and Duties of Executive Officers. The officers of the Corporation shall have such powers and duties in the management of the Corporation as may be prescribed by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices,

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subject to the control of the Board of Directors. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties.

Section 4.4    Chief Executive Officer. The Chief Executive Officer of the Corporation shall in general supervise and control all of the business affairs of the Corporation, subject to the direction of the Board of Directors.

Section 4.5    President. The President, if there be one, shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Chief Executive Officer, the President shall perform the duties of the Chief Executive Officer and, when so performing, shall have all the powers and be subject to all the restrictions upon the office of Chief Executive Officer.

Section 4.6    Chief Financial Officer. The Chief Financial Officer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Chief Financial Officer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all such officer's transactions as Chief Financial Officer and of the financial condition of the Corporation.

Section 4.7    Secretary. In addition to such other duties, if any, as may be assigned to the Secretary by the Board of Directors, the Chairman of the Board or the Chief Executive Officer, the Secretary shall (i) keep the minutes of proceedings of the stockholders, the Board of Directors and any committee of the Board of Directors in one or more books provided for that purpose; (ii) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (iii) be the custodian of the records and seal of the Corporation; (iv) affix or cause to be affixed the seal of the Corporation or a facsimile thereof, and attest the seal by his or her signature, to all documents the execution of which under seal is authorized by the Board of Directors; and (v) unless such duties have been delegated by the Board of Directors to a transfer agent of the Corporation, keep or cause to be kept a register of the name and address of each stockholder, as the same shall be furnished to the Secretary by such stockholder, and have general charge of the stock transfer records of the Corporation.

Section 4.8    Assistant Secretaries. Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President, if there be one, or any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of such person's disability or refusal to act, shall perform 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 4.9    Vice Presidents. Except as may be otherwise provided in these Bylaws, Vice Presidents, if there be any, shall perform such duties and possess such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer or the President. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other such title.

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Section 4.10    Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

ARTICLE V

Stock Certificates and Transfers

Section 5.1    Certificated and Uncertificated Shares. Shares of the Corporation's stock may be certificated or uncertificated, as provided under Delaware law. All certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. The certificates shall be signed by (i) the Chairman of the Board of Directors, the Chief Executive Officer, the President, if any, or a Vice President, if any, and (ii) the Treasurer or an Assistant Treasurer, the Secretary or an Assistant Secretary, or the General Counsel of the Corporation, and certify the number of shares owned by such holder in the Corporation.

Section 5.2    Signatures. Any signature required to be on a certificate may be a 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 person were such officer, transfer agent or registrar at the date of issue.

Section 5.3    Lost Certificates; Issuance of New Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate 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, 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 his legal representative, to advertise the same in such manner as the Board of Directors 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 5.4    Transfers of Stock. Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. Transfers of stock shall be made on the books of the Corporation only by the record holder of such stock, or by their attorney lawfully constituted in writing, and, in the case of stock represented by a certificate, upon the surrender of the certificate.

Section 5.5    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 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, in advance, a record date, which shall not be more than sixty (60) days nor less than ten days before the date of such meeting, nor more than sixty days prior to any such other corporate action. 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.

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Section 5.6    Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and 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, except as otherwise provided by law.

ARTICLE VI

Notices

Section 6.1    Manner of Notice.

(a)    Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, whenever notice is required to be given to any stockholder, director or member of any committee of the Board of Directors, such notice may be given by (i) personal delivery, (ii) depositing it, in a sealed envelope, in the United States mails, first class, postage prepaid, addressed, (iii) delivering to a company for overnight or second day mail or delivery, (iv) delivering it to a telegraph company, charges prepaid, for transmission, or by transmitting it via telecopier, or (v) any other reliable means permitted by applicable law (including, subject to Section 6.1(b), electronic transmission) to such stockholder, director or member, either at the address of such stockholder, director or member as it appears on the records of the Corporation or, in the case of such a director or member, at his or her business address; and such notice shall be deemed to be given at the time when it is thus personally delivered, deposited, delivered or transmitted, as the case may be. Such requirement for notice shall also be deemed satisfied, except in the case of stockholder meetings, if actual notice is received orally or by other writing by the person entitled thereto as far in advance of the event with respect to which notice is being given as the minimum notice period required by law or these Bylaws.

(b)    Without limiting the foregoing, any notice to stockholders given by the Corporation pursuant to these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation and shall also be deemed revoked if (1) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to the Secretary of the Corporation, the transfer agent or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by a form of electronic transmission in accordance with these Bylaws shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of such posting and the giving of such separate notice; and (iv) if by another form of electronic transmission, when directed to the stockholder.

Section 6.2    Dispensation with Notice.

(a)    Whenever notice is required to be given by law, the Certificate of Incorporation or these Bylaws to any stockholder to whom (i) notice of two consecutive annual meetings of stockholders, and all notices of meetings of stockholders to such stockholder during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends

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or interest on securities of the Corporation during a 12‑month period, have been mailed addressed to such stockholder at the address of such stockholder as shown on the records of the Corporation and have been returned undeliverable, the giving of such notice to such stockholder shall not be required. Any action or meeting which shall be taken or held without notice to such stockholder shall have the same force and effect as if such notice had been duly given. If any such stockholder shall deliver to the Corporation a written notice setting forth the then current address of such stockholder, the requirement that notice be given to such stockholder shall be reinstated.

(b)    Whenever notice is required to be given by law, the Certificate of Incorporation or these Bylaws to any person with whom communication is unlawful, the giving of such notice to such person shall not be required, and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given.

Section 6.3    Waiver of Notice. Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, 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 stockholders, directors, or members of a committee or directors need be specified in any written waiver of notice.

ARTICLE VII

Indemnification

Section 7.1    Right to Indemnification.

(a)    The Corporation shall indemnify and hold harmless, to the fullest extent permitted by law as in effect on the date of adoption of these Bylaws or as it may thereafter be amended, any person who was or is made or is threatened to be made a party 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, or a person for 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, partnership, joint venture or other enterprise, against any and all liability and loss (including judgments, fines, penalties and amounts paid in settlement) suffered or incurred and expenses reasonably incurred by such person. The Corporation may, by action of its Board of Directors, provide indemnification to such of the employees and agents of the Corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by Delaware law. The Corporation shall not be required to indemnify a person in connection with a proceeding initiated by such person, including a counterclaim or crossclaim, unless the proceeding was authorized by the Board of Directors.

(b)    For purposes of this Article VII: (i) any reference to “other enterprise” shall include all plans, programs, policies, agreements, contracts and payroll practices and related trusts for the benefit of or relating to employees of the Corporation and its related entities (“employee benefit plans”); (ii) any reference to “fines”, “penalties”, “liability” and “expenses” shall include any excise taxes, penalties, claims, liabilities and reasonable expenses (including reasonable legal fees and related

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expenses) assessed against or incurred by a person with respect to any employee benefit plan; (iii) any reference to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation or trustee or administrator of any employee benefit plan which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, beneficiaries, fiduciaries, administrators and service providers; (iv) any reference to serving at the request of the Corporation as a director, officer, employee or agent of a partnership or trust shall include service as a partner or trustee; and (v) a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” for purposes of this Article VII.

Section 7.2    Prepayment of Expenses. The Corporation shall pay or reimburse the reasonable expenses incurred in defending any proceeding in advance of its final disposition if the Corporation has received an undertaking by the person receiving such payment or reimbursement to repay all amounts advanced if it should be ultimately determined that he or she is not entitled to be indemnified under this Article VII or otherwise.

Section 7.3    Claims. If a claim for indemnification or payment of expenses under this Article VII is not paid in full within 60 days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

Section 7.4    Non-Exclusivity of Rights. The rights conferred on any person by this Article VII shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

Section 7.5    Other Indemnification. The Corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee, partner or agent of another corporation, partnership, joint venture or other enterprise shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture or other enterprise.

Section 7.6    Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

ARTICLE VIII

General

Section 8.1    Fiscal year. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors. Initially, the fiscal year of the Corporation shall end on December 31 of each year.

Section 8.2    Seal. The corporate seal shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors.

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Section 8.3    Definitions.

(a)    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.

(b)    For purposes of these Bylaws, “public disclosure” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(c)    For purposes of these Bylaws, a “qualified representative” of a stockholder shall mean a duly authorized officer, manager or partner of such stockholder or a person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders, which writing (or a reliable reproduction thereof) shall be produced at the meeting of stockholders.

(d)    For purposes of these Bylaws, “Stockholder Associated Person” of any stockholder means (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

Section 8.4    Amendment of Bylaws. These Bylaws may be altered or repealed, and new Bylaws made, by the majority vote of the whole Board of Directors; provided, however, that a Bylaw adopted by the holders of stock representing a majority of the votes which could be cast by the holders of all outstanding stock that prescribes the required vote for the election of directors may not be altered by the Board of Directors. The holders of stock representing a majority of the votes which could be cast by the holders of all outstanding stock may make additional Bylaws and may alter and repeal any Bylaws whether adopted by them or otherwise.

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EX-10.1

EXHIBIT 10.1

UCP, INC.

2013 LONG-TERM INCENTIVE PLAN

I. INTRODUCTION

1.1 Purposes. The purposes of the UCP, Inc. 2013 Long-Term Incentive Plan (this “Plan”) are (i) to align the interests of the Company's stockholders and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company's growth and success, (ii) to advance the interests of the Company by attracting and retaining officers, other employees, Non-Employee Directors, consultants, independent contractors and agents and (iii) to motivate such persons to act in the long‑term best interests of the Company and its stockholders.

1.2Certain Definitions.

“Agreement” shall mean the written or electronic agreement evidencing an award hereunder between the Company and the recipient of such award.

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

“Change in Control” shall have the meaning set forth in Section 5.8(b).

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Committee” shall mean the Committee designated by the Board or a subcommittee thereof, consisting of two or more members of the Board, each of whom may be (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of the Code and (iii) “independent” within the meaning of the rules of the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, within the meaning of the rules of the principal stock exchange on which the Common Stock is then traded.

“Common Stock” shall mean the Class A common stock, par value $0.01 per share, of the Company, and all rights appurtenant thereto.

“Company” shall mean UCP, Inc., a Delaware corporation, or any successor thereto.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Fair Market Value” shall mean the closing transaction price of a share of Common Stock as reported on the New York Stock Exchange on the date as of which such value is being determined or, if the Common Stock is not listed on the New York Stock Exchange, the closing transaction price of a share of Common Stock on the principal national stock exchange on which the Common Stock is traded on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if the Common Stock is not listed on a national stock exchange or if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate and in compliance with Section 409A of the Code.

EXHIBIT 10.1

“Free-Standing SAR” shall mean an SAR which is not granted in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock) or, to the extent permitted in the applicable award Agreement, cash or a combination of shares of Common Stock and cash, with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.

“Incentive Stock Option” shall mean an option to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option.

“Non-Employee Director” shall mean any director of the Company who is not an officer or employee of the Company or any Subsidiary.

“Nonqualified Stock Option” shall mean an option to purchase shares of Common Stock which is not an Incentive Stock Option.

“Performance Award” shall mean a right to receive an amount of cash, Common Stock, or a combination of both, contingent upon the attainment of specified Performance Measures within a specified Performance Period.

“Performance Measures” shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met (i) as a condition to the grant or exercisability of all or a portion of an option or SAR or (ii) during the applicable Restriction Period or Performance Period as a condition to the vesting of the holder's interest, in the case of a Restricted Stock Award, of the shares of Common Stock subject to such award, or, in the case of a Restricted Stock Unit Award or Performance Award, to the holder's receipt of the shares of Common Stock subject to such award or of payment with respect to such award. To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder, such criteria and objectives shall be one or more of the following corporate-wide or subsidiary, division, operating unit or individual measures, stated in either absolute terms or relative terms, such as rates of growth or improvement: the attainment by a share of Common Stock of a specified Fair Market Value for a specified period of time; earnings per share; return on assets; return on equity; return on investments; return on invested capital; total stockholder return; earnings or net income of the Company before or after taxes and/or interest; earnings before interest, taxes, depreciation and amortization; revenues; market share; cash flow or cost reduction goals; interest expense after taxes; economic value created; gross margin; operating margin; net cash provided by operations; and strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, reductions in errors and omissions, reductions in lost business, management of employment practices and employee benefits, supervision of litigation and information technology, quality and quality audit scores, efficiency, and goals relating to acquisitions or divestitures, or any combination of the foregoing. The applicable performance measures may be applied on a pre- or post-tax basis. In the sole discretion of the Committee, unless such action would cause a grant to a covered employee to fail to qualify as qualified performance-based compensation under Section 162(m) of the Code, the Committee may amend or adjust the Performance Measures or other terms and conditions of an outstanding award in recognition of unusual, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles.

EXHIBIT 10.1

“Performance Period” shall mean any period designated by the Committee during which (i) the Performance Measures applicable to an award shall be measured and (ii) the conditions to vesting applicable to an award shall remain in effect.

“Restricted Stock” shall mean shares of Common Stock which are subject to a Restriction Period and which may, in addition thereto, be subject to the attainment of specified Performance Measures within a specified Performance Period.

“Restricted Stock Award” shall mean an award of Restricted Stock under this Plan.

“Restricted Stock Unit” shall mean a right to receive one share of Common Stock or, in lieu thereof and to the extent permitted in the applicable award Agreement, the Fair Market Value of such share of Common Stock in cash, which shall be contingent upon the expiration of a specified Restriction Period and which may, in addition thereto, be contingent upon the attainment of specified Performance Measures within a specified Performance Period.

“Restricted Stock Unit Award” shall mean an award of Restricted Stock Units under this Plan.

“Restriction Period” shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award, or (ii) the conditions to vesting applicable to a Restricted Stock Unit Award shall remain in effect.

“SAR” shall mean a stock appreciation right which may be a Free‑Standing SAR or a Tandem SAR.

“Stock Award” shall mean a Restricted Stock Award, Restricted Stock Unit Award or Unrestricted Stock Award.

“Subsidiary” shall mean any corporation, limited liability company, partnership, joint venture or similar entity in which the Company owns, directly or indirectly, an equity interest possessing more than 50% of the combined voting power of the total outstanding equity interests of such entity.

“Substitute Award”shall mean an award granted under this Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, including a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an option or SAR.

“Tandem SAR” shall mean an SAR which is granted in tandem with, or by reference to, an option (including a Nonqualified Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of such option, shares of Common Stock (which may be Restricted Stock) or, to the extent permitted in the applicable award Agreement, cash or a combination of shares of Common Stock and cash, with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered.

“Tax Date” shall have the meaning set forth in Section 5.5.

EXHIBIT 10.1

“Ten Percent Holder” shall have the meaning set forth in Section 2.1(a).

“Unrestricted Stock”shall mean shares of Common Stock which are not subject to a Restriction Period or Performance Measures.

“Unrestricted Stock Award”shall mean an award of Unrestricted Stock under this Plan.

1.3Administration. This Plan shall be administered by the Committee. Any one or a combination of the following awards may be made under this Plan to eligible persons: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Nonqualified Stock Options; (ii) SARs in the form of Tandem SARs or Free‑Standing SARs; (iii) Stock Awards in the form of Restricted Stock, Restricted Stock Units or Unrestricted Stock; and (iv) Performance Awards. The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock, the number of SARs, the number of Restricted Stock Units, the dollar value subject to a Performance Award, the purchase price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for any reason at any time, unless such action would cause a grant to a covered employee to fail to qualify under Section 162(m) of the Code and regulations thereunder as qualified performance-based compensation, take action such that (i) any or all outstanding options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any outstanding Restricted Stock or Restricted Stock Units shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding Restricted Stock, Restricted Stock Units or Performance Awards shall lapse and (iv) the Performance Measures (if any) applicable to any outstanding award shall be deemed to be satisfied at the target or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be conclusive and binding on all parties.

The Committee may delegate some or all of its power and authority hereunder to the Board or, subject to applicable law, to the President and Chief Executive Officer or such other executive officer of the Company as the Committee deems appropriate; provided, however, that (i) the Committee may not delegate its power and authority to the Board or the President and Chief Executive Officer or other executive officer of the Company with regard to the grant of an award to any person who is a “covered employee” within the meaning of Section 162(m) of the Code or who, in the Committee's judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding and (ii) the Committee may not delegate its power and authority to the President and Chief Executive Officer or other executive officer of the Company with regard to the selection for participation in this Plan of an officer, director or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer, director or other person.

No member of the Board or Committee, and neither the President and Chief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Board and the Committee and the President and Chief Executive Officer or other executive officer shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys' fees) arising therefrom to

EXHIBIT 10.1

the full extent permitted by law (except as otherwise may be provided in the Company's Certificate of Incorporation and/or By-laws) and under any directors' and officers' liability insurance that may be in effect from time to time.

A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting.

1.4Eligibility. Participants in this Plan shall consist of such officers, other employees, Non-Employee Directors, consultants, independent contractors, agents and persons expected to become officers, other employees, Non-Employee Directors, consultants, independent contractors and agents of the Company and its Subsidiaries as the Committee in its sole discretion may select from time to time. The Committee's selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Except as provided otherwise in an Agreement, for purposes of this Plan, references to employment by the Company shall also mean employment by a Subsidiary, and references to employment shall include service as a Non-Employee Director, consultant, independent contractor or agent. The Committee shall determine, in its sole discretion, the extent to which a participant shall be considered employed during any periods during which such participant is on a leave of absence.

1.5SharesAvailable. Subject to adjustment as provided in Section 5.7 and to all other limits set forth in this Section 1.5, 1,834,300 shares of Common Stock shall initially be available for all awards under this Plan. Subject to adjustment as provided in Section 5.7, no more than 1,834,300 shares of Common Stock in the aggregate may be issued under the Plan in connection with Incentive Stock Options. The number of shares of Common Stock that remain available for future grants under the Plan shall be reduced by the sum of the aggregate number of shares of Common Stock which become subject to outstanding options, outstanding Free-Standing SARs, outstanding Stock Awards and outstanding Performance Awards denominated in shares of Common Stock.

To the extent that shares of Common Stock subject to an outstanding option, SAR, Stock Award or Performance Award granted under the Plan are not issued or delivered by reason of (i) the expiration, termination, cancellation or forfeiture of such award (excluding shares subject to an option cancelled upon settlement in shares of a related Tandem SAR or shares subject to a Tandem SAR cancelled upon exercise of a related option) or (ii) the settlement of such award in cash, then such shares of Common Stock shall again be available under this Plan; provided, however, that shares of Common Stock subject to an award under this Plan shall not again be available for issuance under this Plan if such shares are (x) shares that were subject to an option or an SAR and were not issued or delivered upon the net settlement or net exercise of such option or SAR, (y) shares delivered to or withheld by the Company to pay the purchase price or the withholding taxes related to an outstanding option or SAR or (z) shares repurchased by the Company on the open market with the proceeds of an option exercise. Shares delivered to or withheld by the Company to pay the withholding taxes for Stock Awards or Performance Awards shall again be available for issuance under this Plan.

The number of shares of Common Stock available for awards under this Plan shall not be reduced by (i) the number of shares of Common Stock subject to Substitute Awards or (ii) available shares under a stockholder approved plan of a company or other entity which was a party to a corporate transaction with the Company (as appropriately adjusted to reflect such corporate transaction) which become subject to awards granted under this Plan (subject to applicable stock exchange requirements).

EXHIBIT 10.1

Shares of Common Stock to be delivered under this Plan shall be made available from authorized and unissued shares of Common Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof.

1.6Per Person Limits. To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder (i) the maximum number of shares of Common Stock with respect to which options or SARs, or a combination thereof, may be granted during any fiscal year of the Company to any person shall be 400,000, subject to adjustment as provided in Section 5.7, (ii) the maximum number of shares of Common Stock with respect to which Stock Awards subject to Performance Measures or Performance Awards denominated in Common Stock that may be earned by any person for each 12-month period during a Performance Period shall be 400,000, subject to adjustment as provided in Section 5.7, and (iii) the maximum amount that may be earned by any person for each 12-month period during a Performance Period with respect to Performance Awards denominated in cash shall be $3,000,000. The aggregate grant date fair value of shares of Common Stock that may be granted during any fiscal year of the Company to any Non-Employee Director shall not exceed $200,000.

II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1Stock Options. The Committee may, in its discretion, grant options to purchase shares of Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion thereof, that is not an Incentive Stock Option shall be a Nonqualified Stock Option. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Company, or any parent or Subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Nonqualified Stock Options.

Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a.)Number of Shares and Purchase Price. The number of shares of Common Stock subject to an option and the purchase price per share purchasable upon exercise of the option shall be determined by the Committee; provided, however, that the purchase price per share purchasable upon exercise of an option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option; providedfurther, that if an Incentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than 10 percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or Subsidiary) (a “Ten Percent Holder”), the purchase price per share shall not be less than the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.

Notwithstanding the foregoing, in the case of an option that is a Substitute Award, the purchase price per share of the shares subject to such option may be less than 100% of the Fair Market Value per share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate purchase price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor company or other entity that were subject

EXHIBIT 10.1

to the grant assumed or substituted for by the Company, over (y) the aggregate purchase price of such shares.

(b.) Option Period and Exercisability. The period during which an option may be exercised shall be determined by the Committee; provided, however, that no option shall be exercised later than ten (10) years after its date of grant; providedfurther, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the exercisability of all or a portion of an option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only with respect to whole shares of Common Stock.

(c.)Method of Exercise. An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanying such notice with payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of shares of Common Stock having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, (D) in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem SARs which are cancelled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No shares of Common Stock shall be issued and no certificate representing shares of Common Stock shall be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company's satisfaction).

2.2Stock Appreciation Rights. The Committee may, in its discretion, grant SARs to such eligible persons as may be selected by the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR.

SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a.)Number of SARs and Base Price. The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that such base price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such SAR (or, if earlier, the date of grant of the option for which the SAR is exchanged or substituted).

Notwithstanding the foregoing, in the case of an SAR that is a Substitute Award, the base price per share of the shares subject to such SAR may be less than 100% of the Fair Market Value per share on the

EXHIBIT 10.1

date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate base price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor company or other entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate base price of such shares.

(b.)Exercise Period and Exercisability. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no SAR shall be exercised later than ten (10) years after its date of grant; providedfurther, that no Tandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free‑Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.3(c), or such shares shall be transferred to the holder in book entry form with restrictions on the shares duly noted, and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.3(d). Prior to the exercise of an SAR, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR.

(c.)Method of Exercise. A Tandem SAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Company may reasonably request. A Free-Standing SAR may be exercised (A) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (B) by executing such documents as the Company may reasonably request. No shares of Common Stock shall be issued and no certificate representing shares of Common Stock shall be delivered until any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company's satisfaction).

2.3Termination of Employment or Service. All of the terms relating to the exercise, cancellation or other disposition of an option or SAR (i) upon a termination of employment with or service to the Company of the holder of such option or SAR, as the case may be, whether by reason of disability, retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement.

2.4Repricing. The Committee may, in its sole discretion and without the approval of the stockholders of the Company, (i) reduce the purchase price or base price of any previously granted option or SAR, (ii) cancel any previously granted option or SAR in exchange for another option or SAR with a lower purchase price or base price or (iii) cancel any previously granted option or SAR in exchange for cash or another award if the purchase price of such option or the base price of such SAR exceeds the Fair Market Value of a share of Common Stock on the date of such cancellation, in each case other than in connection with a Change in Control.

EXHIBIT 10.1

III. STOCK AWARDS

3.1StockAwards. The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is a Restricted Stock Award, Restricted Stock Unit Award or Unrestricted Stock Award.

3.2Terms of Unrestricted Stock Awards. The number of shares of Common Stock subject to an Unrestricted Stock Award shall be determined by the Committee. Unrestricted Stock Awards shall not be subject to any Restriction Periods or Performance Measures. Upon the grant of an Unrestricted Stock Award, subject to the Company's right to require payment of any taxes in accordance with Section 5.5, a certificate or certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award or such shares shall be transferred to the holder in book entry form.

3.3Terms of Restricted Stock Awards. Restricted Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a.)Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Award shall be determined by the Committee.

(b.)Vesting and Forfeiture. The Agreement relating to a Restricted Stock Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if the holder of such award remains continuously in the employment of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

(c.)Stock Issuance. During the Restriction Period, the shares of Restricted Stock shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing a Restricted Stock Award shall be registered in the holder's name and may bear a legend, in addition to any legend which may be required pursuant to Section 5.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock Award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), subject to the Company's right to require payment of any taxes in accordance with Section 5.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award.

(d.)Rights with Respect to Restricted Stock Awards. Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a Restricted

EXHIBIT 10.1

Stock Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that (i) a distribution with respect to shares of Common Stock, other than a regular cash dividend, and (ii) a regular cash dividend with respect to shares of Common Stock that are subject to performance-based vesting conditions, in each case, shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.

3.4Terms of Restricted Stock Unit Awards. Restricted Stock Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a.)Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Unit Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Unit Award shall be determined by the Committee.

(b.)Vesting and Forfeiture. The Agreement relating to a Restricted Stock Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Restricted Stock Unit Award (i) if the holder of such award remains continuously in the employment of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

(c.)Settlement of Vested Restricted Stock Unit Awards. The Agreement relating to a Restricted Stock Unit Award shall specify (i) whether such award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Any dividend equivalents with respect to Restricted Stock Units that are subject to performance-based vesting conditions shall be subject to the same restrictions as such Restricted Stock Units. Prior to the settlement of a Restricted Stock Unit Award, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award.

3.5Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Restriction Period or Performance Period relating to a Stock Award, or any forfeiture and cancellation of such award (i) upon a termination of employment with or service to the Company of the holder of such award, whether by reason of disability, retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement.

IV. PERFORMANCE AWARDS

4.1Performance Awards. The Committee may, in its discretion, grant Performance Awards to such eligible persons as may be selected by the Committee.

EXHIBIT 10.1

4.2Terms of Performance Awards. Performance Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a.)Value of Performance Awards and Performance Measures. The method of determining the value of the Performance Award and the Performance Measures and Performance Period applicable to a Performance Award shall be determined by the Committee.

(b.)Vesting and Forfeiture. The Agreement relating to a Performance Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Performance Award if the specified Performance Measures are satisfied or met during the specified Performance Period and for the forfeiture of such award if the specified Performance Measures are not satisfied or met during the specified Performance Period.

(c.)Settlement of Vested Performance Awards. The Agreement relating to a Performance Award shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. If a Performance Award is settled in shares of Restricted Stock, such shares of Restricted Stock shall be issued to the holder in book entry form or a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.3(c) and the holder of such Restricted Stock shall have such rights as a stockholder of the Company as determined pursuant to Section 3.3(d). Any dividends or dividend equivalents with respect to a Performance Award that is subject to performance-based vesting conditions shall be subject to the same restrictions as such Performance Award. Prior to the settlement of a Performance Award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company.

4.3Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Award, or any forfeiture and cancellation of such award (i) upon a termination of employment with or service to the Company of the holder of such award, whether by reason of disability, retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement.

V. GENERAL

5.1EffectiveDateand TermofPlan.This Plan shall be submitted to the stockholders of the Company for approval and, if so approved, the Plan shall become effective as of July 22, 2013. This Plan shall terminate on the tenth anniversary of its effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. Awards hereunder may be made at any time prior to the termination of this Plan.

5.2Amendments. The Board may amend this Plan as it shall deem advisable; provided, however, that no amendment to the Plan shall be effective without the approval of the Company's stockholders if stockholder approval is required by applicable law, rule or regulation, including Section 162(m) of the Code and any rule of the New York Stock Exchange, or any other stock exchange on which the Common Stock is then traded; providedfurther, that no amendment may impair the rights of a holder of an outstanding award without the consent of such holder.

EXHIBIT 10.1

5.3Agreement. Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an Agreement is executed by the Company and, to the extent required by the Company, either executed by the recipient or accepted by the recipient by electronic means approved by the Company within the time period specified by the Company. Upon such execution or execution and electronic acceptance, and delivery of the Agreement to the Company, such award shall be effective as of the effective date set forth in the Agreement.

5.4Non-Transferability. No award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or, to the extent expressly permitted in the Agreement relating to such award, to the holder's family members, a trust or entity established by the holder for estate planning purposes or a charitable organization designated by the holder, in each case, without consideration. Except to the extent permitted by the foregoing sentence or the Agreement relating to an award, each award may be exercised or settled during the holder's lifetime only by the holder or the holder's legal representative or similar person. Except as permitted by the second preceding sentence, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any award, such award and all rights thereunder shall immediately become null and void.

5.5Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company; (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation; (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation; (D) in the case of the exercise of an option, a cash payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the award. Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.

5.6Restrictions on Shares. Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares thereunder, such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of

EXHIBIT 10.1

any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

5.7Adjustment. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of securities available under this Plan, the terms of each outstanding option and SAR (including the number and class of securities subject to each outstanding option or SAR and the purchase price or base price per share), the terms of each outstanding Restricted Stock Award and Restricted Stock Unit Award (including the number and class of securities subject thereto), the terms of each outstanding Performance Award (including the number and class of securities subject thereto), the maximum number of securities with respect to which options or SARs may be granted during any fiscal year of the Company to any one grantee, the maximum number of shares of Common Stock that may be awarded during any fiscal year of the Company to any one grantee pursuant to a Stock Award that is subject to Performance Measures or a Performance Award shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price and in accordance with Section 409A of the Code. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

5.8Change in Control.

(a.)Subject to the terms of the applicable award Agreement, in the event of a Change in Control, the Board (as constituted prior to such Change in Control) may, in its discretion:

(i.)provide that (A) some or all outstanding options and SARs shall become exercisable in full or in part, either immediately or upon a subsequent termination of employment, (B) the Restriction Period applicable to some or all outstanding Restricted Stock Awards and Restricted Stock Unit Awards shall lapse in full or in part, either immediately or upon a subsequent termination of employment, (C) the Performance Period applicable to some or all outstanding awards shall lapse in full or in part, and (D) the Performance Measures applicable to some or all outstanding awards shall be deemed to be satisfied at the target or any other level;

(ii.)require that shares of stock of the corporation resulting from such Change in Control, or a parent corporation thereof, be substituted for some or all of the shares of Common Stock subject to an outstanding award, with an appropriate and equitable adjustment to such award as shall be determined by the Committee in accordance with Section 5.7; and/or

(iii.)require outstanding awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment in an amount equal to (1) in the case of an option or an SAR, the aggregate number of shares of Common Stock then subject to the portion of such option or SAR surrendered multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock

EXHIBIT 10.1

as of the date of the Change in Control, over the purchase price or base price per share of Common Stock subject to such option or SAR, (2) in the case of a Stock Award or a Performance Award denominated in shares of Common Stock, the aggregate number of shares of Common Stock then subject to the portion of such award surrendered, multiplied by the Fair Market Value of a share of Common Stock as of the date of the Change in Control, and (3) in the case of a Performance Award denominated in cash, the value of the Performance Award then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 5.8(a)(i); (B) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to clause (B) above.

(b.)For purposes of the Plan, “Change in Control” shall mean, except as otherwise provided below, the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company. In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, the following provisions shall apply:

(i.)A “change in the ownership” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(v). If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of the Company, or to have effective control of the Company within the meaning of clause (ii) of this Section 5.8(b), and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of the Company.

(ii.)A “change in the effective control” of the Company shall occur on either of the following dates:

(A) The date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi). If a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of the Company; or

(B) The date on which a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi).

EXHIBIT 10.1

(iii.)A “change in the ownership of a substantial portion of the assets” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vii)(B).

Notwithstanding the occurrence of any of the foregoing events, an initial public offering or any bona fide primary or secondary public offering following the occurrence of an initial public offering shall not constitute a Change in Control.

5.9 Deferrals.The Committee may determine that the delivery of shares of Common Stock or the payment of cash, or a combination thereof, upon the exercise or settlement of all or a portion of any award (other than awards of Incentive Stock Options, Nonqualified Stock Options and SARs) made hereunder shall be deferred, or the Committee may, in its sole discretion, approve deferral elections made by holders of awards. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, subject to the requirements of Section 409A of the Code.

5.10Awards Subject to Clawback. The awards granted under this Plan and any cash payment or shares of Common Stock delivered pursuant to an award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable Agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

5.11NoRight ofParticipation, Employment or Service. Unless otherwise set forth in an employment agreement, no person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by or service with the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment or service of any person at any time without liability hereunder.

5.12Rights as Stockholder. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security.

5.13Designation of Beneficiary. To the extent permitted by the Company, a holder of an award may file with the Company a written designation of one or more persons as such holder's beneficiary or beneficiaries (both primary and contingent) in the event of the holder's death or incapacity. To the extent an outstanding option or SAR granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such option or SAR pursuant to procedures prescribed by the Company. Each beneficiary designation shall become effective only when filed in writing with the Company during the holder's lifetime on a form prescribed by the Company. The spouse of a married holder domiciled in a

EXHIBIT 10.1

community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Company of a new beneficiary designation shall cancel all previously filed beneficiary designations. If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding award held by such holder, to the extent vested or exercisable, shall be payable to or may be exercised by such holder's executor, administrator, legal representative or similar person.

5.14Governing Law. This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

5.15Foreign Employees. Without amending this Plan, the Committee may grant awards to eligible persons who are foreign nationals and/or reside outside the U.S. on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries operates or has employees.

EX-10.2

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is dated July 23, 2013 and is by and among UCP, Inc., a Delaware corporation (the “Company”), and PICO Holdings, Inc. (“PICO”), a Delaware corporation.

RECITALS

WHEREAS, the Company is currently contemplating an underwritten initial public offering (“IPO”) of shares of its Common Stock (as defined below);

WHEREAS, the Company, PICO and UCP, LLC have entered into an Exchange Agreement, July 23, 2013 (the “Exchange Agreement”), under which PICO has the right to receive Common Stock in exchange for UCP, LLC Series A Units held by PICO on the terms and conditions set out therein; and

WHEREAS, the Company desires to grant registration rights to PICO on the terms and conditions set out in this Agreement.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Certain Definitions. As used in this Agreement:

“Affiliate” has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.

“Agreement” has the meaning set forth in the preamble.

“Audit Committee” means the Audit Committee of the Board of Directors of the Company.

“Blackout Period” has the meaning set forth in Section 2.3(g).

“Company” has the meaning set forth in the preamble.

“Common Stock” means the shares of Class A common stock, par value $0.01 per share, of the Company, and any other capital stock of the Company into which such stock is reclassified or reconstituted.

“Control” (including its correlative meanings, “Controlled by” and “under common Control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.

“Demand Party” has the meaning set forth in Section 2.1(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

“Exchange Agreement” has the meaning set forth in the preamble.

“FINRA” means the Financial Industry Regulatory Authority.

“Free Writing Prospectus” has the meaning set forth in Section 2.4(c).

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Holder” means PICO or any Transferee of PICO.

“Indemnified Parties” has the meaning set forth in Section 3.1.

“IPO” has the meaning set forth in the preamble.

“Law” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.

“Lockup Period” has the meaning set forth in Section 2.5(d)(i).

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“PICO” has the meaning set forth in the preamble.

“Public Offering” means a public offering of equity securities in the Company or any successor thereto or any Subsidiary of the Company pursuant to a registration statement declared or otherwise becoming effective under the Securities Act.

“Registrable Securities” means (i) all shares of Common Stock issued or issuable to the Holders pursuant to the Exchange Agreement and (ii) any shares of Common Stock issued or issuable with respect to any shares described in clause (i) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any Registrable Securities, such Securities will cease to be Registrable Securities when:

(i)    a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement;

(ii)    such Registrable Securities shall have been sold pursuant to Rule 144 or 145 (or any similar provision then in effect) under the Securities Act;

(iii)    such Registrable Securities may be sold pursuant to Rule 144 or 145 (or any similar provision then in effect) under the Securities Act, without reporting obligations or restriction as to volume; or

(iv)    such Registrable Securities cease to be outstanding.

“Registration Expenses” means any and all expenses incident to the performance by the Company of its obligations under this Agreement, including:

(i)    all SEC, stock exchange and FINRA registration and filing fees (including, if applicable, the fees and expenses of any “qualified independent underwriter,” as such term is defined in Rule 5121 of FINRA, and of its counsel);

(ii)    all fees and expenses of complying with securities or blue sky Laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities);

(iii)    all printing, messenger and delivery expenses;

(iv)    all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange and FINRA and any rating agency fees;

(v)    the reasonable fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or “cold comfort” letters required by or incident to such performance and compliance;

(vi)    any fees and disbursements of underwriters customarily paid by the issuers of Securities but excluding underwriting discounts and commissions and transfer taxes, if any;

(vii)    the reasonable fees and out-of-pocket expenses of not more than one law firm (as selected by the holders of a majority of the Registrable Securities included in such registration) incurred by all the Holders in connection with the registration; and

(viii)    the costs and expenses of the Company relating to analyst and investor presentations or any “road show” undertaken in connection with the registration and/or marketing of the Registrable Securities (including reasonable out of pocket expenses of Holders); and

(ix)    any other fees and disbursements customarily paid by issuers of securities.

“SEC” means the U.S. Securities and Exchange Commission or any successor agency.

“Securities” means capital stock, limited partnership interests, limited liability company interests, beneficial interests, warrants, options, notes, bonds, debentures, and other securities, equity interests, ownership interests and similar obligations of every kind and nature of any Person.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

“Shelf Notice” has the meaning set forth in Section 2.3(a).

“Shelf Registration Statement” has the meaning set forth in Section 2.3(a).

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing director or general partner of such limited liability company, partnership, association or other business entity.

“Transfer” (including its correlative meanings, “Transferor”, “Transferee” and “Transferred”) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security. When used as a noun, “Transfer” shall have such correlative meaning as the context may require.

SECTION 1.2 Other Definitional Provisions; Interpretation.

(a)The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and references in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specified.

(b)The headings in this Agreement are included for convenience of reference only and do not limit or otherwise affect the meaning or interpretation of this Agreement.

(c)The meanings given to terms defined herein are equally applicable to both the singular and plural forms of such terms.

ARTICLE II

REGISTRATION RIGHTS

SECTION 2.1 Demand Registration.

(a)    At any time following the expiration of the Lockup Period, upon the written request of a Holder (in such capacity, a “Demand Party”) requesting that the Company effect the registration under the Securities Act of Registrable Securities and specifying the amount and intended method of disposition thereof, the Company will (i) promptly give written notice of such requested registration to any other Holders pursuant to Section 2.2 and other holders of Securities entitled to

notice of such registration, if any, and (ii) as expeditiously as possible, and in any event within forty-five (45) days after a request for registration pursuant to this Section 2.1(a) is given to the Company, use its reasonable best efforts to file a registration statement to effect the registration under the Securities Act of:

(A)    such Registrable Securities which the Company has been so requested to register by the Demand Party in accordance with the intended method of disposition thereof;

(B)    the Registrable Securities of any other Holders which the Company has been requested to register by written request given to the Company within fifteen (15) days after the giving of such written notice by the Company pursuant to Section 2.2; and

(C)    all shares of Common Stock which the Company may elect to register in connection with any offering of Registrable Securities pursuant to this Section 2.1.

Notwithstanding the foregoing, the Company shall not be obligated to file a registration statement relating to any registration request under this Section 2.1(a):

(x) within a period of sixty (60) days (or such lesser period as the managing underwriters in an underwritten offering may permit) after the effective date of any other registration statement relating to any registration request under this Section 2.1(a) or relating to any registration referred to in Section 2.2 or 2.3; or

(y) if the Company has previously effected one (1) such registration pursuant to this Section 2.1(a) at the request of a Holder.

(b)    The Company shall use reasonable best efforts to cause the registration statement filed pursuant to Section 2.1(a) to be declared effective by the SEC (if such registration statement is not an automatic shelf registration statement) within ninety (90) days after the filing date thereof. A demand registration shall not be deemed to have been effected and shall not count for purposes of Section 2.1(a): (i) unless a registration statement with respect thereto has become effective and has remained effective for a period of at least ninety (90) days (or such shorter period in which all Registrable Securities included in such registration statement have actually been sold thereunder), (ii) if, after it has become effective, such registration statement becomes subject prior to ninety (90) days after effectiveness to any stop order, injunction or other order or requirement of the SEC or other Governmental Authority for any reason or (iii) if the conditions to closing specified in the underwriting agreement entered into in connection with such registration statement are not satisfied, other than by reason of any act or omission by such Demand Party.

(c)    Each registration statement prepared at the request of a Demand Party shall be effected on such appropriate form as requested by the Demand Party and as shall be reasonably acceptable to the Company.

(d)    The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.1.

(e)    If a requested registration pursuant to this Section 2.1 involves an underwritten offering, the Demand Party shall have the right to select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter; provided, however, that such investment banker or bankers and managers shall be reasonably satisfactory to the Company. For the avoidance of doubt, each applicable Holder participating in such an underwritten offering shall be responsible for paying the underwriting discounts and commissions applicable to such Holder's Registrable Securities sold by the underwriters in such underwritten offering.

(f)    If a requested registration pursuant to this Section 2.1 involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of Securities requested to be included in such registration (including Securities of the Company which are not Registrable Securities) exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of the Securities offered in such offering, then the number of such Securities to be included in such registration shall be allocated in the following order of priority: (i) first, up to the number of Registrable Securities requested to be included in such registration by the Demand Party and such other Holders who have requested to have Registrable Securities included in such registration pursuant to Section 2.2, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among the Demand Party and the requesting Holders on the basis of the relative number of Registrable Securities requested to be included in such registration statement; (ii) second, Securities the Company proposes to sell; and (iii) third, all other Securities of the Company duly requested to be included in such registration statement by holders thereof who have then-existing registration rights with respect to such Securities, which, in the

opinion of the managing underwriter, can be sold without having the adverse effect referred to above,which number of Securities shall be allocated pro rata among such other holders on the basis of the amount of such other Securities requested to be included or such other method determined by the Company.

(g)    The Company shall not be obligated to maintain the effectiveness of a registration statement under the Securities Act filed pursuant to this Section 2.1 for a period longer than ninety (90) days. In addition, the Company shall be entitled to postpone (upon written notice to all applicable Holders) for up to two occasions, and in no event for more than an aggregate of one hundred twenty (120) days, the filing or the effectiveness of a registration statement filed pursuant to this Section 2.1 (but no more than twice in any period of twelve (12) consecutive months) if the Audit Committee determines in good faith and in its reasonable judgment that the filing or effectiveness of such registration statement would cause the disclosure of material, non-public information that the Company has a bona fide business purpose for preserving as confidential. If the Company shall so postpone the filing of a registration statement, the Holders of Registrable Securities to be registered shall have the right to withdraw the request for registration by giving written notice from such Holders within forty‑five (45) days after receipt of the notice of postponement (and, in the event of such withdrawal, such request shall not be counted for purposes of determining the number of requests for registration to which the Holders are entitled pursuant to Section 2.1(a) or 2.2(a), as the case may be).

SECTION 2.2 Piggyback Rights.

(a)    If at any time following the expiration of the Lockup Period, the Company proposes to register equity Securities under the Securities Act (other than a registration on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes), whether for its own account or for the account of Security holders, it will, at each such time following expiration of the Lockup Period, give prompt written notice to the Holders of its intentions and of such Holders' rights under this Section 2.2; provided that the Company shall not be obligated to provide the foregoing notice to Holders or to effect the registration of Registrable Securities of the Holders pursuant to this Section 2.2 if the Company has previously effected three (3) such registrations for any Holders pursuant to this Section 2.2. Subject to the foregoing proviso, upon the written request of any Holder made within fifteen (15) days after the receipt of any such notice (which request shall specify the number of Registrable Securities intended to be disposed of by such Holder), the Company will use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Securities which the Holders have so requested to be registered; provided that: (i) if, at any time after giving written notice of its intention to register any Securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the Securities to be sold by it, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith) (and, for the avoidance of doubt, in such event, the request of any Holders to be included in such registration shall not be counted for purposes of determining the number of requests for registration to which the Holders are entitled pursuant to this Section 2.2(a)); and (ii) if such registration involves an underwritten offering, the Holders requesting to be included in the registration must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company, with, in the case of a combined primary and secondary offering, only such differences, including any with respect to representations and warranties, indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings.

(b)    The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.2.

(c)    If a registration pursuant to this Section 2.2 involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of Registrable Securities and other Securities requested to be included in such registration exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of the Securities offered in such offering, then the number of Securities to be included in such registration shall be allocated in the following order of priority: (i) first, 100% of the Securities the Company proposes to sell; (ii) second, up to the number of Registrable Securities requested to be included in such registration by all Holders who have requested to have Registrable Securities included in such registration, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Securities requested to be included in such registration statement; and (iii) third, all other Securities of the Company duly requested to be included in such registration statement by holders thereof who have then-existing registration rights with respect to such Securities, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above,which number of Securities shall be allocated pro rata among such other holders on the basis of the amount of such other Securities requested to be included or such other method determined by the Company.

(d)The Company shall not be obligated to effect any registration of Registrable Securities under this Section 2.2 incidental to the registration of any of its Securities in connection with:

(1)any Public Offering relating to employee benefits plans or dividend reinvestment plans; or

(2)any Public Offering relating to the acquisition or merger after the date hereof by the Company or any of its Subsidiaries of or with any other businesses.

(e)If a registration pursuant to this Section 2.2 involves an underwritten offering, the Company shall select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter; provided, however, that if PICO has requested that its Registrable Securities be registered pursuant to this Section 2.2 such investment banker or bankers and managers shall be reasonably satisfactory to PICO. For the avoidance of doubt, each applicable Holder participating in such an underwritten offering shall be responsible for paying the underwriting discounts and commissions applicable to such Holder's Registrable Securities sold by the underwriters in such underwritten offering.

SECTION 2.3 Shelf Registration.

(a)    At any time following the expiration of the Lockup Period and subject to the availability of a Registration Statement on Form S-3 to the Company, any Demand Party may by written notice delivered to the Company (the “Shelf Notice”) request that the Company file as soon as practicable (but no later than forty-five (45) days after the date the Shelf Notice is delivered), and use reasonable best efforts to cause to be declared effective by the SEC (if the Shelf Registration Statement (as defined below) is not an automatic shelf registration statement) within ninety (90) days after such filing date, a Registration Statement on Form S-3 providing for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act relating to the offer and sale, from time to time, of the Registrable Securities owned by such Demand Party and any other Holders who elect to participate therein as provided in Section 2.3(b) in accordance with the plan and method of distribution set forth in the prospectus included in such Registration Statement on Form S-3 (the “Shelf Registration Statement”).

(b)    Promptly after receipt of a Shelf Notice pursuant to Section 2.3(a), the Company will deliver written notice thereof to each other Holder pursuant to Section 2.2. Each such Holder may elect to participate in the Shelf Registration Statement by delivering to the Company a written request to so participate within fifteen (15) days after the Shelf Notice is received by any such Holder.

(c)    Subject to Section 2.3(g), the Company will use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, and, if necessary, to file one or more successor Shelf Registration Statements and keep such successor Shelf Registration Statement(s) continuously effective, such that there is no period when a Shelf Registration Statement is not in effect until the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the plan and method of distribution disclosed in the prospectus included in the Shelf Registration Statement.

(d)    Subject to Section 2.3(g), each Holder who elected to participate in the Shelf Registration Statement shall have the right to request that an underwritten offering be effected off the Shelf Registration Statement at any time; provided that in no event shall the Company be obligated to effect: (i) an underwritten offering pursuant to this Section 2.3(d) within a period of sixty (60) days (or such lesser period as the managing underwriters in an underwritten offering may permit) after the effective date of any registration statement relating to any registration effected pursuant to Section 2.1 or 2.2; or (ii) more than three (3) underwritten offerings pursuant to this Section 2.3(d) in any single six‑month period. Promptly after receipt of a request that an underwritten offering be effected off the Shelf Registration Statement, the Company will deliver written notice thereof to each other Holder who elected to participate in the Shelf Registration Statement, and each such Holder may elect to participate in the underwritten offering by delivering to the Company a written request to so participate within five (5) days after such notice is received by any such Holder. If an underwritten offering is effected off the Shelf Registration Statement, the holders of at least a majority of the Registrable Securities included in the Shelf Registration Statement shall have the right to select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter; provided, however, that such investment banker or bankers and managers shall be reasonably satisfactory to the Company. For the avoidance of doubt, each applicable Holder participating in such an underwritten offering shall be responsible for paying the underwriting discounts and commissions applicable to such Holder's Registrable Securities sold by the underwriters in such underwritten offering. A request for an underwritten offering may be withdrawn by at least a majority of the Registrable Securities included in such offering prior to the consummation thereof, and, in such event, such withdrawal shall not be treated as a request for an underwritten offering which shall have been effected pursuant to this Section 2.3(d).

(e)    If an underwritten offering is effected off the Shelf Registration Statement and the managing underwriter advises the Company in writing that, in its opinion, the number of Securities requested to be included in such underwritten offering (including Securities of the Company which are not Registrable Securities) exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of the Securities offered in such offering, then the number of such Securities to be included in such underwritten offering shall be allocated in the following order of priority: (i) first, 100% of the Securities the Company proposes to sell, if any; (ii) second, up to the number of Registrable Securities requested to be included in such underwritten offering by all Holders who have requested to have Registrable Securities included in such underwritten offering, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Securities requested to be included in such underwritten offering; and (iii) third, all other Securities of the Company duly requested to be included in such underwritten offering by holders thereof who have then-existing registration rights with respect to such Securities, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above,which number of Securities shall be allocated pro rata among such other holders on the basis of the amount of such other Securities requested to be included or such other method determined by the Company.

(f)The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.3.

(g)Notwithstanding anything to the contrary contained in this Agreement, the Company shall be entitled, from time to time, by providing written notice to the Holders who elected to participate in the Shelf Registration Statement, to require such Holders to suspend the use of the prospectus for sales of Registrable Securities under the Shelf Registration Statement for a reasonable period of time not to exceed sixty (60) days in succession or one hundred twenty (120) days in the aggregate in any 12-month period (a “Blackout Period”) if the Company shall determine that it is required to disclose in the Shelf Registration Statement a financing, acquisition, corporate reorganization or other similar transaction or other material event or circumstance affecting the Company or its securities, and that the disclosure of such information at such time would be detrimental to the Company or the holders of its equity Securities. Immediately upon receipt of such notice, the Holders covered by the Shelf Registration Statement shall suspend the use of the prospectus until the requisite changes to the prospectus have been made as required below. Any Blackout Period shall terminate at such time as the public disclosure of such information is made, and the Company will promptly notify such Holders of the termination of the Blackout Period. After the expiration of any Blackout Period and without any further request from a Holder, the Company shall as promptly as reasonably practicable prepare a post-effective amendment or supplement to the Shelf Registration Statement or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include an 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. The time period for which the Company is required to maintain the effectiveness of the Shelf Registration Statement shall be extended by the aggregate number of days of all Blackout Periods occurring with respect thereto.

SECTION 2.4 Registration Procedures. If and whenever the Company is required to file a registration statement with respect to, or to use its reasonable best efforts to effect or cause the registration of, any Registrable Securities under the Securities Act as provided in this Agreement, the Company will as expeditiously as possible:

(a)    prepare and file with the SEC a registration statement on an appropriate form with respect to such Registrable Securities and, if such registration statement is not an automatically effective registration statement, use its reasonable best efforts to cause such registration statement to become effective; provided, however, that the Company may discontinue any registration of Securities which it has initiated for its own account at any time prior to the effective date of the registration statement relating thereto (and, in such event, the Company shall pay the Registration Expenses incurred in connection therewith); and provided, further, that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will furnish to counsel for the sellers of Registrable Securities covered by such registration statement copies of all documents proposed to be filed, which documents will be subject to the review of such counsel;

(b)    prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Securities covered by such registration statement during such period in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; provided that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will furnish to counsel for the sellers of Registrable Securities covered by such registration statement copies of all documents proposed to be filed, which documents will be subject to the review of such counsel;

(c)    furnish to each seller of such Registrable Securities such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits filed therewith, excluding any documents incorporated by reference), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus) and each free writing prospectus (as defined in Rule 405 of the Securities Act) (a “Free Writing Prospectus”) utilized in connection therewith and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities by such seller;

(d)    use its reasonable best efforts to register or qualify such Registrable Securities covered by such registration in such jurisdictions as each seller shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this subsection (d), it would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction;

(e)    use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities, and maintain such registrations or approvals, as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities;

(f)    notify each seller of any such Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the Company's becoming aware that the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such seller, promptly prepare, file and furnish to such seller a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include 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 in the light of the circumstances then existing;

(g)    otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its Security holders, as soon as reasonably practicable (but not more than eighteen (18) months) after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act;

(h)(i) use its reasonable best efforts to list such Registrable Securities on any securities exchange on which other Securities of the Company are then listed if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange; and (ii) provide a transfer agent and registrar for such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

(i)enter into such customary agreements (including an underwriting agreement in customary form), which may include indemnification provisions in favor of underwriters and other Persons in addition to, or in substitution for, the indemnification provisions hereof, and take such other actions as sellers of a majority of such Registrable Securities or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(j)obtain a “cold comfort” letter or letters from the Company's independent public accountants in customary form and covering matters of the type customarily covered by “cold comfort” letters as the seller or sellers of a majority of such Registrable Securities shall reasonably request;

(k)make available for inspection by any seller of such Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such seller or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company as reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, and cause all of the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

(l)notify counsel for the Holders of Registrable Securities included in such registration statement and the managing underwriter or agent, immediately, and confirm the notice in writing: (i) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment to any prospectus or any Free Writing Prospectus utilized in connection therewith shall have been filed; (ii) of the receipt of any comments from the SEC; (iii) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information; and (iv) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;

(m)provide each holder of Registrable Securities included in such registration statement reasonable opportunity to comment on the registration statement, any post-effective amendments to the registration statement, any supplement to the prospectus or any amendment to any prospectus;

(n)make every reasonable effort to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment;

(o)if requested by the managing underwriter or agent or any holder of Registrable Securities covered by the registration statement, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or agent or such holder reasonably requests to be included therein, including, with respect to the number of Registrable Securities being sold by such holder to such underwriter or agent, the purchase price being paid therefor by such underwriter or agent and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment;

(p)cooperate with the holders of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Securities to be sold under the registration statement, and enable such Securities to be in such denominations and registered in such names as the managing underwriter or agent, if any, or the Holders may request;

(q)use its reasonable best efforts to make available the executive officers of the Company to participate with the holders of Registrable Securities and any underwriters in any “road shows” that may be reasonably requested by the holders in connection with distribution of Registrable Securities;

(r)obtain for delivery to the holders of Registrable Securities being registered and to the underwriter or agent an opinion or opinions from counsel for the Company in customary form and in form, substance and scope reasonably satisfactory to such holders, underwriters or agents and their counsel; and

(s)cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA.

SECTION 2.5 Other Registration-Related Matters.

(a)    The Company may require any seller of Registrable Securities pursuant to Section 2.1, 2.2 or 2.3 to furnish to the Company in writing such information regarding such Person and pertinent to the disclosure requirements relating to the registration and the distribution of the Registrable Securities which are included in such Public Offering as the Company may from time to time reasonably request in writing.

(b)    Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(f), each Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until its receipt of the copies of the amended or supplemented prospectus contemplated by Section 2.4(f) and, if so directed by the Company, each Holder will deliver to the Company or destroy (at the Company's expense) all copies, other than permanent file copies then in their possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company gives any such notice, any applicable period during which such registration statement must remain effective pursuant to this Agreement shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.4(f) to

and including the date when all such sellers of Registrable Securities covered by such registration statement shall receive such a supplemented or amended prospectus and such prospectus shall have been filed with the SEC.

(c)    Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(l)(iv), each Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until the lifting of such stop order, other order or suspension or the termination of such proceedings and, if so directed by the Company, each Holder will deliver to the Company or destroy (at the Company's expense) all copies, other than permanent file copies then in its possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company gives any such notice, any applicable period during which such registration statement must remain effective pursuant to this Agreement shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.4(l)(iv) to and including the date when such stop order, other order or suspension is lifted or such proceedings are terminated.

(d)    (i) Each Holder (x) shall, with respect to the Registrable Securities owned by such Holder, be bound by any and all restrictions on the sale, disposition, distribution, hedging or other transfer of any interest in Registrable Securities imposed on PICO in connection with the IPO by the underwriters managing such offering for the duration of the term of such restriction (the period in which such sale, disposition, distribution, hedging or other transfer of any interest is restricted, the “Lockup Period”) and (y) will, in connection with a Public Offering of the Company's equity Securities (whether for the Company's account or for the account of any Holder or Holders, or both), upon the request of the Company or of the underwriters managing any underwritten offering of the Company's Securities, agree in writing not to effect any sale, disposition, distribution, hedging or other transfer of Registrable Securities (other than those included in the Public Offering) without the prior written consent of the managing underwriter for such period of time commencing seven (7) days before and ending one hundred eighty (180) days (or such earlier date as the managing underwriter shall agree) after the effective date of such registration; provided that all directors and officers of the Company, holders of more than 5% of the Registrable Securities and all other Persons with registration rights with respect to the Company's Securities (whether or not pursuant to this Agreement) holding more than 5% of the Registrable Securities shall enter into agreements similar to those contained in this Section 2.4(d)(i) (without regard to this proviso); and (ii) the Company and its Subsidiaries will, in connection with an underwritten Public Offering of the Company's Securities in respect of which Registrable Securities are included, upon the request of the underwriters managing such offering, agree in writing not to effect any sale, disposition or distribution of equity Securities of the Company (other than those included in such Public Offering, offered on Form S-8, issuable upon conversion of Securities or upon the exercise of options, or the grant of options in the ordinary course of business pursuant to then-existing management equity plans or equity-based employee benefit plans, in each case outstanding on the date a request is made pursuant to Section 2.1(a) or 2.3(a) or a notice is given by the Company pursuant to Section 2.2(a), as the case may be), without the prior written consent of the managing underwriter, for such period of time commencing seven (7) days before and ending one hundred eighty (180) days (or such earlier date as the managing underwriter shall agree) after the effective date of such registration.

(e)    With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Securities of the Company to the public without registration after such time as a public market exists for Registrable Securities, the Company agrees:

(1)    to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its Securities to the public;

(2)    to use its commercially reasonable efforts to then file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

(3)    so long as a Holder owns any Registrable Securities, to furnish to such Holder promptly upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its Securities to the public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents of the Company as such Holder may reasonably request in availing itself or himself of any rule or regulation of the SEC allowing such Holder to sell any such Securities without registration.

(f)    Counsel to represent holders of Registrable Securities shall be selected by the holders of at least a majority of the Registrable Securities included in the relevant registration.

(g)    Each of the parties hereto agrees that the registration rights provided to the Holders herein are not intended to, and shall not be deemed to, override or limit any other restrictions on Transfer to which any such Holder may otherwise be subject.

ARTICLE III

INDEMNIFICATION

SECTION 3.1 Indemnification by the Company. In the event of any registration of any Securities of the Company under the Securities Act pursuant to Section 2.1, 2.2 or 2.3, the Company hereby indemnifies and agrees to hold harmless, to the fullest extent permitted by Law, each Holder who sells Registrable Securities covered by such registration statement, each Affiliate of such Holder and their respective directors, officers, managers, general and limited partners (and the directors, officers, managers, employees, Affiliates and controlling Persons of any of the foregoing), each other Person who participates as an underwriter in the offering or sale of such Securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act (collectively, the “Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, and reasonable and documented expenses to which such Indemnified Party may become subject under the Securities Act, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) arise out of or are based upon: (a) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any Free Writing Prospectus, or any amendment or supplement to any of the foregoing, or any document incorporated by reference therein; or (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in the case of a prospectus, in the light of the circumstances when they were made, and the Company will reimburse such Indemnified Party for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company will not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, in any such preliminary, final or summary prospectus, or Free Writing Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information with respect to such Indemnified Party furnished to the Company by such Indemnified Party expressly for use in the preparation thereof. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and will survive the Transfer of such Securities by such Holder or any termination of this Agreement.

SECTION 3.2 Indemnification by the Holders. If Registrable Securities of a Holder are included in any registration statement filed in accordance with Section 2.1, 2.2 or 2.3, such Holder does hereby agree, severally and not jointly, to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 3.1) the Company, all other Holders or any prospective underwriter, as the case may be, and any of their respective Affiliates, directors, officers, managers and controlling Persons, with respect to any untrue statement in or omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any Free Writing Prospectus or any amendment or supplement to any of the foregoing, if such untrue statement or omission was made in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by such Holder expressly for use in the preparation of such registration statement, preliminary, final or summary prospectus or Free Writing Prospectus or amendment or supplement, or a document incorporated by reference into any of the foregoing. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective Affiliates, directors, officers or controlling Persons and will survive the Transfer of such Securities by such Holder. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

SECTION 3.3 Notices of Claims, Etc. Promptly after receipt by an Indemnified Party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Article III, such Indemnified Party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided that the failure of the Indemnified Party to give notice as provided herein will not relieve the indemnifying party of its obligations under Section 3.1 or 3.2, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an Indemnified Party, unless in such Indemnified Party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel selected by the Holders of at least a majority of the Registrable Securities included in the relevant registration, 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 for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. If, in such Indemnified Party's reasonable judgment, having common counsel would result in a conflict of interest between the interests of such indemnified and indemnifying parties, then such Indemnified Party may employ separate counsel reasonably acceptable to the indemnifying party to represent or defend such Indemnified Party in such action, it being understood, however, that the indemnifying party will not be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such Indemnified Parties (and not more than one separate firm of local counsel at any time for all such Indemnified Parties) in such action. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

SECTION 3.4 Contribution. If the indemnification provided for hereunder from the indemnifying party is unavailable to an Indemnified Party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein for reasons other than those described in the proviso in the first sentence of Section 3.1, then the indemnifying party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or Indemnified Parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 3.4 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such contribution obligation.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. 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.

SECTION 3.3 Non-Exclusivity. The obligations of the parties under this Article III will be in addition to any liability which any party may otherwise have to any other party.

ARTICLE IV

OTHER

SECTION 4.1 Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by facsimile (provided a copy is thereafter promptly delivered as provided in this Section 4.1) or nationally recognized overnight courier, addressed to such party at the address or facsimile number set forth below or such other address or facsimile number as may hereafter be designated in writing by such party to the other parties:

if to the Company:

UCP, Inc.

6489 Camden Avenue, Suite 204

San Jose, California 95120

(Telephone) (408) 323-1113

(Facsimile) (408) 323-1114

Attention: General Counsel

if to PICO:

Pico Holdings, Inc.

7979 Ivanhoe Avenue, Suite 300

La Jolla, California 92037

(Telephone) (888) 389-3222

(Facsimile) (858) 456-6480

Attention: President

if to any other Holder, at the last address or facsimile number last provided by such Holder in writing, or if none, to PICO's address set forth above.

SECTION 4.2Assignment. Neither the Company nor any Holder shall assign all or any part of this Agreement without the prior written consent of the Company and PICO; provided, however, that PICO may assign its rights and corresponding obligations in whole or in part to any of its Affiliates. Except as otherwise provided herein, this Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns.

SECTION 4.3Amendments; Waiver. This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company and the Holders holding a majority of the shares of Common Stock subject to this Agreement; provided that no such amendment, supplement or other modification shall adversely affect the economic interests of any Holder hereunder disproportionately to other Holders without the written consent of such Holder. No waiver by any party of any of the provisions hereof will be effective unless explicitly set forth in writing and executed by the party so waiving. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, will be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach.

SECTION 4.4Entire Agreement; No Third Party Beneficiaries. This Agreement (a) constitutes the entire agreement and supersedes all other prior agreements, both written and oral, among the parties with respect to the subject matter hereof and (b) is not intended to confer upon any Person, other than the parties hereto and the parties entitled to indemnification or contribution pursuant to Sections 3.2, 3.3 or 3.4 hereto, any rights or remedies hereunder.

SECTION 4.5Governing Law; Equitable Remedies. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF). The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions and other equitable remedies to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any of the Selected Courts (as defined below), this being in addition to any other remedy to which they are entitled at law or in equity. Any requirements for the securing or posting of any bond with respect to such remedy are hereby waived by each of the parties hereto. Each party further agrees that, in the event of any action for an injunction or other equitable remedy in respect of such breach or enforcement of specific performance, it will not assert the defense that a remedy at law would be adequate.

SECTION 4.6Consent To Jurisdiction. With respect to any suit, action or proceeding (“Proceeding”) arising out of or relating to this Agreement or any transaction contemplated hereby each of the parties hereto hereby irrevocably (i) submits to the exclusive jurisdiction of the United States District Court for the Northern District of California or the Superior Court of the State of California located in the County of Santa Clara (the “Selected Courts”) and waives any objection to venue being laid in the Selected Courts whether based on the grounds of forum non conveniens or otherwise and hereby agrees not to commence any such Proceeding other than before one of the Selected Courts; provided, however, that a party may commence any Proceeding in a court other than a Selected Court solely for the purpose of enforcing an order or judgment issued by one of the Selected Courts; (ii) consents to service of process in any Proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company, PICO or any Holder at their respective addresses referred to in Section 4.1 hereof; provided, however, that nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law; and (iii) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

SECTION 4.7 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or entity or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

SECTION 4.8 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall, taken together, be considered one and the same agreement.

SECTION 4.9 Effectiveness. This Agreement shall become effective, as to any Holder, as of the date signed by the Company and countersigned by such Holder.

SECTION 4.10 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “included,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

UCP, INC.

By: /s/ Dustin L. Bogue

Name: Dustin L. Bogue

Title: President and CEO

PICO HOLDINGS, INC.

By: /s/ Maxim C. W. Webb

Name: Maxim C. W. Webb

Title: Chief Financial Officer

EX-10.3

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) between UCP, Inc., a Delaware corporation (the “Company”), and Dustin L. Bogue (the “Executive”) is entered into as of July 23, 2013 (the “Effective Date”). In consideration of the covenants contained herein, the parties agree as follows:

1. Employment. The term of Executive's employment by the Company under this Agreement will begin on the Effective Date, and will continue until the third anniversary of the Effective Date, unless earlier terminated pursuant to Section 4 hereof; provided, however, that on the third anniversary of the Effective Date and each annual anniversary of such date thereafter, the Agreement shall automatically be extended for one additional year unless either the Company or Executive shall have terminated this automatic extension provision by written notice to the other party at least 60 days prior to the automatic extension date. The term of employment in effect from time to time hereunder is hereinafter called the “Employment Period.” Subject to the terms of this Agreement, Executive's employment is at will, which means that either Executive or the Company may terminate this relationship with or without Cause or notice.

2.Position and Duties.

(a) Position. During the Employment Period, Executive shall serve as the President and Chief Executive Officer of the Company and shall report to the Board of Directors of the Company (the “Board”) and have the normal duties, responsibilities and authority of an executive serving in such positions, subject to the direction of the Board. Executive shall be appointed to serve as a member of the Board. At each annual meeting of the Company's stockholders during the Employment Period, the Company shall nominate Executive to serve as a member of the Board, with such service as a member of the Board subject to any required stockholder approval. Upon the termination of Executive's service as President and Chief Executive Officer for any reason, unless otherwise determined by the Board, Executive shall be deemed to have resigned from the Board (and any boards of subsidiaries) and any other positions held at the Company or any of its subsidiaries or affiliates voluntarily, without any further required action by Executive, as of the cessation of Executive's services, and Executive, at the Board's request, shall execute any documents deemed in the discretion of the Company to be reasonably necessary to reflect his resignation(s).

(b) Obligations. During the Employment Period, Executive shall devote his full business time and efforts to the business and affairs of the Company and its subsidiaries. Notwithstanding the foregoing, during his employment, Executive may devote reasonable time to the supervision of his personal investments and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and other types of activities, to the extent that such other activities are not competitive with the Company or otherwise conflict with the business of the Company or Executive's duties hereunder; provided, however, that before Executive agrees to serve on the board of directors of any for-profit company (whether publicly or privately held), Executive will obtain the approval of the Audit Committee of the Board (or such other committee to which the Board may subsequently delegate this responsibility).

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EXHIBIT 10.3

3.Compensation and Benefits.

(a) Base Salary. As compensation for Executive's performance of Executive's duties hereunder, Company shall pay to Executive an initial Base Salary of $500,000 per year, payable in accordance with the normal payroll practices of the Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions. The Base Salary shall be reviewed for increases by the Board in good faith, based upon Executive's performance, not less often than annually. The term “Base Salary” shall refer to the Base Salary as so increased by the Board.

(b) Annual Incentive Compensation. During the Employment Period, Executive shall be eligible to receive an annual cash incentive bonus determined by the Compensation Committee of the Board (the “Committee”) in its sole discretion, as a percentage of Executive's Base Salary, with a target bonus of not less than 50% of Executive's Base Salary, and based upon Executive's and/or the Company's achievement of annual performance goals or objectives established by the Committee, in its sole discretion. Payment of any annual cash incentive bonus earned shall be made on or before March 15th of each calendar year immediately following the year in which such compensation is earned.

(c) Equity-Based Compensation. Subject to approval by the Committee, Executive shall be eligible to be granted equity-based compensation awards based upon Executive's and/or the Company's achievement of annual performance goals or objectives established by the Committee, in its sole discretion; provided that the target grant date value of such awards granted each year during the Employment Period shall be not less than 125% of Executive's Base Salary.

(d) Other Benefits.

(i)Savings and Retirement Plans. Executive shall be entitled to participate in all qualified and non-qualified savings and retirement plans applicable generally to other senior executives of the Company, in accordance with the terms of the plans, as may be amended from time to time.

(ii)Welfare Benefit Plans. Executive and/or his eligible dependents shall be eligible to participate in and shall receive all benefits under the Company's welfare benefit plans and programs applicable generally to other senior executives of the Company, in accordance with the terms of the plans, as may be amended from time to time.

(iii)Fringe Benefits. During the Employment Period, Executive shall be entitled to such fringe benefits as may be available generally to other senior executives of the Company.

(iv)Vacation. Executive shall be entitled to accrue paid vacation time consistent with the applicable policies of the Company as in effect from time to time, but in no event shall Executive be eligible to accrue less than five weeks of such vacation per year.

(v)Business Expenses. Subject to Section 16 and compliance with applicable Company policies (including any requirements for acceptable documentation), Executive shall be

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EXHIBIT 10.3

reimbursed for all reasonable travel and other expenses incurred in the performance of Executive's duties on behalf of the Company.

4.Termination of Employment.

(a) The Employment Period shall end upon the first to occur of: (i) the expiration of the term of this Agreement pursuant to Section 1 hereof; (ii) termination of Executive's employment by the Company on account of Executive's inability to perform the essential functions of Executive's position, with or without reasonable accommodation, due to a physical or mental disability (as determined by the Board in good faith), for a period of more than six consecutive months (“Termination for Disability”); (iii) termination of Executive's employment by the Company for Cause (as defined in Exhibit A attached hereto) (“Termination for Cause”); (iv) termination of Executive's employment by the Company other than a Termination for Disability or a Termination for Cause (“Termination Without Cause”); (v) Executive's death; (vi) termination of Executive's employment by Executive for Good Reason (as defined in Exhibit A attached hereto) (“Termination for Good Reason”); or (vii) termination of Executive's employment by Executive for any reason other than Good Reason.

(b) If the Employment Period ends for any reason set forth in Section 4(a), except as otherwise provided in this Section 4, Executive shall cease to have any rights to salary, bonus (if any) or benefits hereunder, other than (i) payment of unpaid Base Salary through and including the date of termination or resignation (which in the case of a termination by the Company shall be paid on the final day of employment, and in the case of a resignation shall be paid out on the final day of employment or within seventy-two hours after the resignation, whichever occurs later), (ii) Executive's business expenses that are reimbursable pursuant to Section 3(d) but have not been reimbursed by the Company as of the date of termination, (iii) Executive's annual bonus for the fiscal year immediately preceding the fiscal year in which the date of termination occurs, if such bonus has been earned, but has not been paid as of the date of termination, (iv) any accrued vacation pay to the extent not theretofore paid, and (v) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company (“Accrued Compensation and Benefits”).

(c) If the Employment Period ends on account of Termination Without Cause or Termination for Good Reason, Executive shall receive a severance payment (the “Severance Payment”) in an amount equal to twotimes the sum of (A) Executive's Base Salary at the time of termination (or, in the event of a Termination for Good Reason, the Base Salary prior to the event constituting Good Reason if such Base Salary is higher than the Base Salary at the time of termination) plus (B) Executive's target annual bonus for the year in which Executive's employment terminates. In addition, if the Employment Period ends on account of death, Termination Without Cause, Termination for Good Reason or Termination for Disability, the Company shall pay Executive after such termination of employment (or to Executive's family in the event of his death), on a monthly basis, an amount equal to the monthly amount of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) continuation coverage premium for such month, at the same level and cost to Executive (or Executive's family in the event of his death) as immediately preceding the date of termination, under the Company group medical plan in which Executive participated immediately preceding the date of termination, less the amount of Executive's portion of such monthly premium as in effect immediately preceding the date of termination, until the earlier of (A) 24 months after the date of termination; and (B) the date on which Executive and his family have obtained other

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EXHIBIT 10.3

substantially similar healthcare coverage or become entitled to Medicare coverage. Subject to Section 16, the Severance Payment shall be paid in a lump sum payment on the sixtieth day following the termination date. As a condition to Executive's receipt of the post-employment payments and benefits set forth in this Section 4(c), Executive must execute, return, not rescind and comply with a commercially reasonable written release agreement in a form prescribed by the Company (the “Release”).

(d) If, during the two year period following a Change in Control (as defined in Exhibit A attached hereto), Executive's employment is terminated due to a Termination Without Cause or a Termination for Good Reason, Executive shall receive the benefits set forth in Section 4(c), except that (1) in lieu of the Severance Payment described in Section 4(c), Executive shall receive three times the sum of (A) Executive's Base Salary at the time of such termination or Change in Control, whichever Base Salary level is greater, plus (B) the average of Executive's annual bonuses for the three most recently completed years prior to Executive's termination of employment or Change in Control, whichever average is greater or, if Executive has not been employed for at least three full years, the average of Executive's annual bonuses for all completed years prior to Executive's termination of employment or Change in Control, whichever is greater (the “CIC Severance Payment”). Subject to Section 16, the CIC Severance Payment shall be paid in a lump sum payment on the sixtieth day following the termination date. As a condition to Executive's receipt of the post-employment payments and benefits set forth in this Section 4(d), Executive must execute, return, not rescind and comply with a Release.

(e) Notwithstanding the foregoing, if the payment required to be paid under Section 4(d), when considered either alone or with other payments paid or imputed to Executive (the “Total Payments”) from the Company that would be deemed “excess parachute payments” under Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), is determined by the Company, with the assistance of a nationally recognized accounting firm acceptable to Executive, to be a “parachute payment” under Section 280G(b)(2) of the Code, then the Total Payments shall be automatically reduced to an amount equal to $1.00 less than three times (3x) the “base amount” (as defined in Section 280G(3) of the Code) (the “Reduced Amount”); provided, however, such reduction shall not apply if the sum of (A) the Total Payments less (B) the amount of excise tax payable by the Executive under Section 4999 of the Code with respect to the Total Payments, is greater than the Reduced Amount. Any such reduction shall occur in the following order: (i) by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); (ii) by reducing the CIC Severance Payment and any other cash payments not subject to Section 409A of the Code; (iii) by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (iv), by reducing any cash payments that are subject to Section 409A of the Code (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (v) by reducing the payments of any restricted stock, restricted stock units, performance awards or similar equity-based awards that have been awarded to Executive by the Company that are subject to performance-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); (vi) by reducing the payments of any restricted stock, restricted

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EXHIBIT 10.3

stock units, performance awards or similar equity-based awards that have been awarded to Executive by the Company that are subject to time-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and (vii) by reducing the acceleration of vesting of any stock options that are not described in (i), above.

5.Confidential Information. Executive acknowledges that the information, observations and data obtained by him while employed by the Company pursuant to this Agreement, as well as those obtained by him while employed by the Company or any of its subsidiaries prior to the date of this Agreement, concerning the business or affairs of the Company or any of its subsidiaries (“Confidential Information”) are the property of the Company or such subsidiary. Therefore, Executive agrees that during the Employment Period and for three years thereafter that he shall not disclose to any unauthorized person or use for his own account any Confidential Information without the prior written consent of the Board unless and except to the extent that such Confidential Information becomes generally known to and available for use by the public other than as a result of Executive's acts or omissions to act. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the business of the Company or any of its subsidiaries or affiliates which he may then possess or have under his control.

6.Enforcement. Because the services of Executive are unique and Executive has access to confidential information of the Company, the parties hereto agree that the Company would be damaged irreparably in the event the provisions of Section 5 hereof were not performed in accordance with its terms or were otherwise breached and that money damages would be an inadequate remedy for any such nonperformance or breach. Therefore, the Company or its successors or assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security).

7.Indemnification and Insurance. The Company shall indemnify Executive to the full extent provided for in its corporate Bylaws and to the maximum extent that the Company indemnifies any of its other directors and senior executive officers, and he will be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and senior executive officers against all costs, charges, liabilities and expenses incurred or sustained by him in connection with any action, suit or proceeding to which he may be made a party by reason of his being or having been a director, officer or employee of the Company or any of its affiliates or his serving or having served any other enterprise, plan or trust as a director, officer, employee or fiduciary at the request of the Company or any of its affiliates (other than any dispute, claim or controversy arising under or relating to this Agreement (except for this Section 7)). The Company will enter into an indemnification agreement with the Executive in the standard form that it has or will adopt for the benefit of its other directors and senior executive officers.

8.Survival. Sections 5, 6, 7 and 16 hereof shall survive and continue in full force and effect in accordance with their respective terms, notwithstanding any termination of the Employment Period.

9.Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or sent by certified mail, return receipt requested, postage prepaid, addressed (a) if to Executive, to his last known address shown on the payroll records of the Company, and if to the Company, to UCP, Inc., 6489 Camden Avenue, Suite 204, San Jose, CA 95120 attention: Chairman of the Compensation Committee

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EXHIBIT 10.3

of the Board of Directors, with a copy to the General Counsel of the Company at the same address, or (b) to such other address as either party shall have furnished to the other in accordance with this Section 9.

10.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter hereof.

12.Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable by Executive and his heirs, executors and personal representatives, and the Company and its successors and assigns. Any successor or assignee of the Company shall assume the liabilities of the Company hereunder.

13.Governing Law. This Agreement shall be governed by the internal laws (as opposed to the conflicts of law provisions) of the State of California.

14.Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

15.Withholding. All payments and benefits under this Agreement are subject to withholding of all applicable taxes.

16.Code Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. The payments to Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for such purposes, each payment to Executive under this Agreement shall be considered a separate payment. In the event the terms of this Agreement would subject Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement. To the extent any amounts under this Agreement are payable by reference to Executive's “termination of employment” such term and similar terms shall be deemed to refer to Executive's “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, to the extent any payments hereunder constitutes nonqualified deferred compensation, within the meaning of Section 409A, and Executive is a specified employee (within the meaning of Section 409A of the Code) as of the date of Executive's separation from service, each such payment that is payable upon Executive's separation from service and would have been paid prior to the six-month anniversary of Executive's separation from service, shall be delayed until the earlier to occur of (i) the first day of the seventh month following Executive's separation from service or (ii) the date of Executive's death. Any reimbursement payable to

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EXHIBIT 10.3

Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all expense reports reasonably required by Employer under any applicable expense reimbursement policy, and shall be paid to Executive within 30 days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

	UCP, INC.
		By:	/s/ Michael C. Cortney
		Name:	Michael C. Cortney
		Title:	Chairman
EXECUTIVE:				/s/ Dustin L. Bogue
Name:				Dustin L. Bogue

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EXHIBIT 10.3

EXHIBIT A

DEFINITIONS

“Cause” shall mean the occurrence of any of the following conditions:

(i)any act or omission that constitutes a material breach by Executive of any of his material obligations under this Agreement, after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has materially breached such obligations and Executive's failure to cure such alleged breach not later than 30 days following his receipt of such notice;

(ii)conviction or plea of guilty to a charge of commission of a felony;

(iii)the commission of dishonest, fraudulent or deceptive acts or practices in connection with Executive's employment that are materially injurious to the Company, monetarily or otherwise; or

(iv)Executive's ongoing willful refusal to follow the proper and lawful directions of the Board after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has refused to follow its instructions and Executive's failure to cure such refusal not later than 30 days following his receipt of such notice.

For purposes of this definition, no act, or failure to act, on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board or (B) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the conditions set forth in clauses (i), (ii), (iii) or (iv) above have been satisfied, and specifying the particulars thereof in detail.

“Change in Control” shall mean, except as otherwise provided below, the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company. In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, the following provisions shall apply:

(i)A “change in the ownership” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(v). If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of the Company, or to have effective control of the Company within the meaning of clause (ii) of this definition, and such person or group acquires

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EXHIBIT 10.3

additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of the Company.

(ii)A “change in the effective control” of the Company shall occur on either of the following dates:

(A) The date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi). If a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of the Company; or

(B) The date on which a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi).

(iii)A “change in the ownership of a substantial portion of the assets” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vii)(B).

Notwithstanding the occurrence of any of the foregoing events, an initial public offering or any bona fide primary or secondary public offering following the occurrence of an initial public offering shall not constitute a Change in Control. Additionally, the ownership of stock by PICO Holdings, Inc., or its affiliates, as of and following the initial public offering shall not constitute a Change of Control.

“Good Reason” shall mean any of the following actions, if taken without the express written consent of Executive: (i) a material diminution in Executive's Base Salary; (ii) a material diminution in Executive's authority, duties or responsibilities; (iii) requiring Executive to move his place of employment more than 50 miles from his place of employment prior to such move; or (iv) a material breach by the Company of this Agreement. Executive's employment with the Company may be terminated for Good Reason if (i) Executive provides written notice to Company of the occurrence of the Good Reason event (as described above) within 90 days after Executive has knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which Executive believes constitute Good Reason, (ii)  Company fails to correct the circumstances constituting “Good Reason” within 30 days after such notice; and (iii) Executive resigns within six months after the initial existence of such circumstances.

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EX-10.4

EXHIBIT 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) between UCP, Inc., a Delaware corporation (the “Company”), and William J. La Herran (the “Executive”) is entered into as of July 23, 2013 (the “Effective Date”). In consideration of the covenants contained herein, the parties agree as follows:

1. Employment. The term of Executive's employment by the Company under this Agreement will begin on the Effective Date, and will continue until the third anniversary of the Effective Date, unless earlier terminated pursuant to Section 4 hereof; provided, however, that on the third anniversary of the Effective Date and each annual anniversary of such date thereafter, the Agreement shall automatically be extended for one additional year unless either the Company or Executive shall have terminated this automatic extension provision by written notice to the other party at least 60 days prior to the automatic extension date. The term of employment in effect from time to time hereunder is hereinafter called the “Employment Period.” Subject to the terms of this Agreement, Executive's employment is at will, which means that either Executive or the Company may terminate this relationship with or without Cause or notice.

2.Position and Duties.

(a) Position. During the Employment Period, Executive shall serve as the Chief Financial Officer and Treasurer of the Company and shall report to the Board of Directors of the Company (the “Board”) and have the normal duties, responsibilities and authority of an executive serving in such positions, subject to the direction of the Board. Upon the termination of Executive's service for any reason, unless otherwise determined by the Board, Executive shall be deemed to have resigned from any positions held at the Company or any of its subsidiaries or affiliates voluntarily, without any further required action by Executive, as of the cessation of Executive's services, and Executive, at the Board's request, shall execute any documents deemed in the discretion of the Company to be reasonably necessary to reflect his resignation(s).

(b) Obligations. During the Employment Period, Executive shall devote his full business time and efforts to the business and affairs of the Company and its subsidiaries. Notwithstanding the foregoing, during his employment, Executive may devote reasonable time to the supervision of his personal investments and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and other types of activities, to the extent that such other activities are not competitive with the Company or otherwise conflict with the business of the Company or Executive's duties hereunder; provided, however, that before Executive agrees to serve on the board of directors of any for-profit company (whether publicly or privately held), Executive will obtain the approval of the Audit Committee of the Board (or such other committee to which the Board may subsequently delegate this responsibility).

3.Compensation and Benefits.

(a) Base Salary. As compensation for Executive's performance of Executive's duties hereunder, Company shall pay to Executive an initial Base Salary of $375,000 per year, payable in accordance with the normal payroll practices of the Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions. The Base Salary shall be reviewed for increases by the Board in good faith, based

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EXHIBIT 10.4

upon Executive's performance, not less often than annually. The term “Base Salary” shall refer to the Base Salary as so increased by the Board.

(b) Annual Incentive Compensation. During the Employment Period, Executive shall be eligible to receive an annual cash incentive bonus determined by the Compensation Committee of the Board (the “Committee”) in its sole discretion, as a percentage of Executive's Base Salary, with a target bonus of not less than 50% of Executive's Base Salary, and based upon Executive's and/or the Company's achievement of annual performance goals or objectives established by the Committee, in its sole discretion. Payment of any annual cash incentive bonus earned shall be made on or before March 15th of each calendar year immediately following the year in which such compensation is earned.

(c) Other Benefits.

(i)Savings and Retirement Plans. Executive shall be entitled to participate in all qualified and non-qualified savings and retirement plans applicable generally to other senior executives of the Company, in accordance with the terms of the plans, as may be amended from time to time.

(ii)Welfare Benefit Plans. Executive and/or his eligible dependents shall be eligible to participate in and shall receive all benefits under the Company's welfare benefit plans and programs applicable generally to other senior executives of the Company, in accordance with the terms of the plans, as may be amended from time to time.

(iii)Fringe Benefits. During the Employment Period, Executive shall be entitled to such fringe benefits as may be available generally to other senior executives of the Company.

(iv)Vacation. Executive shall be entitled to accrue paid vacation time consistent with the applicable policies of the Company as in effect from time to time, but in no event shall Executive be eligible to accrue less than five weeks of such vacation per year.

(v)Business Expenses. Subject to Section 16 and compliance with applicable Company policies (including any requirements for acceptable documentation), Executive shall be reimbursed for all reasonable travel and other expenses incurred in the performance of Executive's duties on behalf of the Company.

4.Termination of Employment.

(a) The Employment Period shall end upon the first to occur of: (i) the expiration of the term of this Agreement pursuant to Section 1 hereof; (ii) termination of Executive's employment by the Company on account of Executive's inability to perform the essential functions of Executive's position, with or without reasonable accommodation, due to a physical or mental disability (as determined by the Board in good faith), for a period of more than six consecutive months (“Termination for Disability”); (iii) termination of Executive's employment by the Company for Cause (as defined in Exhibit A attached hereto) (“Termination for Cause”); (iv) termination of Executive's employment by the Company other than a Termination for Disability or a Termination for Cause (“Termination Without Cause”); (v) Executive's death; (vi) termination of Executive's employment by Executive for Good Reason (as defined in

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EXHIBIT 10.4

Exhibit A attached hereto) (“Termination for Good Reason”); or (vii) termination of Executive's employment by Executive for any reason other than Good Reason.

(b) If the Employment Period ends for any reason set forth in Section 4(a), except as otherwise provided in this Section 4, Executive shall cease to have any rights to salary, bonus (if any) or benefits hereunder, other than (i) payment of unpaid Base Salary through and including the date of termination or resignation (which in the case of a termination by the Company shall be paid on the final day of employment, and in the case of a resignation shall be paid out on the final day of employment or within seventy-two hours after the resignation, whichever occurs later), (ii) Executive's business expenses that are reimbursable pursuant to Section 3(d) but have not been reimbursed by the Company as of the date of termination, (iii) Executive's annual bonus for the fiscal year immediately preceding the fiscal year in which the date of termination occurs, if such bonus has been earned, but has not been paid as of the date of termination, (iv) any accrued vacation pay to the extent not theretofore paid, and (v) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company (“Accrued Compensation and Benefits”).

(c) If the Employment Period ends on account of Termination Without Cause or Termination for Good Reason, Executive shall receive a severance payment (the “Severance Payment”) in an amount equal to onetimes the sum of (A) Executive's Base Salary at the time of termination (or, in the event of a Termination for Good Reason, the Base Salary prior to the event constituting Good Reason if such Base Salary is higher than the Base Salary at the time of termination) plus (B) Executive's target annual bonus for the year in which Executive's employment terminates. In addition, if the Employment Period ends on account of death, Termination Without Cause, Termination for Good Reason or Termination for Disability, the Company shall pay Executive after such termination of employment (or to Executive's family in the event of his death), on a monthly basis, an amount equal to the monthly amount of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) continuation coverage premium for such month, at the same level and cost to Executive (or Executive's family in the event of his death) as immediately preceding the date of termination, under the Company group medical plan in which Executive participated immediately preceding the date of termination, less the amount of Executive's portion of such monthly premium as in effect immediately preceding the date of termination, until the earlier of (A) 12 months after the date of termination; and (B) the date on which Executive and his family have obtained other substantially similar healthcare coverage or become entitled to Medicare coverage. Subject to Section 16, the Severance Payment shall be paid in a lump sum payment on the sixtieth day following the termination date. As a condition to Executive's receipt of the post-employment payments and benefits set forth in this Section 4(c), Executive must execute, return, not rescind and comply with a commercially reasonable written release agreement in a form prescribed by the Company (the “Release”).

(d) If, during the two year period following a Change in Control (as defined in Exhibit A attached hereto), Executive's employment is terminated due to a Termination Without Cause or a Termination for Good Reason, Executive shall receive the benefits set forth in Section 4(c), except that (1) in lieu of the Severance Payment described in Section 4(c), Executive shall receive two times the sum of (A) Executive's Base Salary at the time of such termination or Change in Control, whichever Base Salary level is greater, plus (B) the average of Executive's annual bonuses for the three most recently completed years prior to Executive's termination of employment or Change in Control, whichever average is greater or, if Executive has not

3

EXHIBIT 10.4

been employed for at least three full years, the average of Executive's annual bonuses for all completed years prior to Executive's termination of employment or Change in Control, whichever is greater (the “CIC Severance Payment”). Subject to Section 16, the CIC Severance Payment shall be paid in a lump sum payment on the sixtieth day following the termination date. As a condition to Executive's receipt of the post-employment payments and benefits set forth in this Section 4(d), Executive must execute, return, not rescind and comply with a Release.

(e) Notwithstanding the foregoing, if the payment required to be paid under Section 4(d), when considered either alone or with other payments paid or imputed to Executive (the “Total Payments”) from the Company that would be deemed “excess parachute payments” under Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), is determined by the Company, with the assistance of a nationally recognized accounting firm acceptable to Executive, to be a “parachute payment” under Section 280G(b)(2) of the Code, then the Total Payments shall be automatically reduced to an amount equal to $1.00 less than three times (3x) the “base amount” (as defined in Section 280G(3) of the Code) (the “Reduced Amount”); provided, however, such reduction shall not apply if the sum of (A) the Total Payments less (B) the amount of excise tax payable by the Executive under Section 4999 of the Code with respect to the Total Payments, is greater than the Reduced Amount. Any such reduction shall occur in the following order: (i) by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); (ii) by reducing the CIC Severance Payment and any other cash payments not subject to Section 409A of the Code; (iii) by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (iv), by reducing any cash payments that are subject to Section 409A of the Code (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (v) by reducing the payments of any restricted stock, restricted stock units, performance awards or similar equity-based awards that have been awarded to Executive by the Company that are subject to performance-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); (vi) by reducing the payments of any restricted stock, restricted stock units, performance awards or similar equity-based awards that have been awarded to Executive by the Company that are subject to time-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and (vii) by reducing the acceleration of vesting of any stock options that are not described in (i), above.

5.Confidential Information. Executive acknowledges that the information, observations and data obtained by him while employed by the Company pursuant to this Agreement, as well as those obtained by him while employed by the Company or any of its subsidiaries prior to the date of this Agreement, concerning the business or affairs of the Company or any of its subsidiaries (“Confidential Information”) are the property of the Company or such subsidiary. Therefore, Executive agrees that during the Employment Period and for three years thereafter that he shall not disclose to any unauthorized person or use for his own account any Confidential Information without the prior written consent of the Board unless and except to the extent that such Confidential Information becomes generally known to and available for use by the public other than as

4

EXHIBIT 10.4

a result of Executive's acts or omissions to act. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the business of the Company or any of its subsidiaries or affiliates which he may then possess or have under his control.

6.Enforcement. Because the services of Executive are unique and Executive has access to confidential information of the Company, the parties hereto agree that the Company would be damaged irreparably in the event the provisions of Section 5 hereof were not performed in accordance with its terms or were otherwise breached and that money damages would be an inadequate remedy for any such nonperformance or breach. Therefore, the Company or its successors or assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security).

7.Indemnification and Insurance. The Company shall indemnify Executive to the full extent provided for in its corporate Bylaws and to the maximum extent that the Company indemnifies any of its other directors and senior executive officers, and he will be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and senior executive officers against all costs, charges, liabilities and expenses incurred or sustained by him in connection with any action, suit or proceeding to which he may be made a party by reason of his being or having been a director, officer or employee of the Company or any of its affiliates or his serving or having served any other enterprise, plan or trust as a director, officer, employee or fiduciary at the request of the Company or any of its affiliates (other than any dispute, claim or controversy arising under or relating to this Agreement (except for this Section 7)). The Company will enter into an indemnification agreement with the Executive in the standard form that it has or will adopt for the benefit of its other directors and senior executive officers.

8.Survival. Sections 5, 6, 7 and 16 hereof shall survive and continue in full force and effect in accordance with their respective terms, notwithstanding any termination of the Employment Period.

9.Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or sent by certified mail, return receipt requested, postage prepaid, addressed (a) if to Executive, to his last known address shown on the payroll records of the Company, and if to the Company, to UCP, Inc., 6489 Camden Avenue, Suite 204, San Jose, CA 95120 attention: Chairman of the Compensation Committee of the Board of Directors, with a copy to the General Counsel of the Company at the same address, or (b) to such other address as either party shall have furnished to the other in accordance with this Section 9.

10.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter hereof.

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EXHIBIT 10.4

12.Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable by Executive and his heirs, executors and personal representatives, and the Company and its successors and assigns. Any successor or assignee of the Company shall assume the liabilities of the Company hereunder.

13.Governing Law. This Agreement shall be governed by the internal laws (as opposed to the conflicts of law provisions) of the State of California.

14.Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

15.Withholding. All payments and benefits under this Agreement are subject to withholding of all applicable taxes.

16.Code Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. The payments to Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for such purposes, each payment to Executive under this Agreement shall be considered a separate payment. In the event the terms of this Agreement would subject Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement. To the extent any amounts under this Agreement are payable by reference to Executive's “termination of employment” such term and similar terms shall be deemed to refer to Executive's “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, to the extent any payments hereunder constitutes nonqualified deferred compensation, within the meaning of Section 409A, and Executive is a specified employee (within the meaning of Section 409A of the Code) as of the date of Executive's separation from service, each such payment that is payable upon Executive's separation from service and would have been paid prior to the six-month anniversary of Executive's separation from service, shall be delayed until the earlier to occur of (i) the first day of the seventh month following Executive's separation from service or (ii) the date of Executive's death. Any reimbursement payable to Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all expense reports reasonably required by Employer under any applicable expense reimbursement policy, and shall be paid to Executive within 30 days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

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EXHIBIT 10.4

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

	UCP, INC.
		By:	/s/ Dustin L. Bogue
		Name:	Dustin L. Bogue
		Title:	Chief Executive Officer & President
EXECUTIVE:				/s/ William J. La Herran
Name:				William J. La Herran

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EXHIBIT 10.4

EXHIBIT A

DEFINITIONS

“Cause” shall mean the occurrence of any of the following conditions:

(i)any act or omission that constitutes a material breach by Executive of any of his material obligations under this Agreement, after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has materially breached such obligations and Executive's failure to cure such alleged breach not later than 30 days following his receipt of such notice;

(ii)conviction or plea of guilty to a charge of commission of a felony;

(iii)the commission of dishonest, fraudulent or deceptive acts or practices in connection with Executive's employment that are materially injurious to the Company, monetarily or otherwise; or

(iv)Executive's ongoing willful refusal to follow the proper and lawful directions of the Board after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has refused to follow its instructions and Executive's failure to cure such refusal not later than 30 days following his receipt of such notice.

For purposes of this definition, no act, or failure to act, on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board or (B) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the conditions set forth in clauses (i), (ii), (iii) or (iv) above have been satisfied, and specifying the particulars thereof in detail.

“Change in Control” shall mean, except as otherwise provided below, the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company. In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, the following provisions shall apply:

(i)A “change in the ownership” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(v). If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of the Company, or to have effective control of the Company within the meaning of clause (ii) of this definition, and such person or group acquires

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EXHIBIT 10.4

additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of the Company.

(ii)A “change in the effective control” of the Company shall occur on either of the following dates:

(A) The date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi). If a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of the Company; or

(B) The date on which a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi).

(iii)A “change in the ownership of a substantial portion of the assets” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)

A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vii)(B).

Notwithstanding the occurrence of any of the foregoing events, an initial public offering or any bona fide primary or secondary public offering following the occurrence of an initial public offering shall not constitute a Change in Control. Additionally, the ownership of stock by Pico Holdings, Inc., or its affiliates, as of and following the initial public offering shall not constitute a Change of Control.

“Good Reason” shall mean any of the following actions, if taken without the express written consent of Executive: (i) a material diminution in Executive's Base Salary; (ii) a material diminution in Executive's authority, duties or responsibilities; (iii) requiring Executive to move his place of employment more than 50 miles from his place of employment prior to such move; or (iv) a material breach by the Company of this Agreement. Executive's employment with the Company may be terminated for Good Reason if (i) Executive provides written notice to Company of the occurrence of the Good Reason event (as described above) within 90 days after Executive has knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which Executive believes constitute Good Reason, (ii)  Company fails to correct the circumstances constituting “Good Reason” within 30 days after such notice; and (iii) Executive resigns within six months after the initial existence of such circumstances.

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EX-10.5

EXHIBIT 10.5

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) between UCP, Inc., a Delaware corporation (the “Company”), and James W. Fletcher (the “Executive”) is entered into as of July 23, 2013 (the “Effective Date”). In consideration of the covenants contained herein, the parties agree as follows:

1. Employment. The term of Executive's employment by the Company under this Agreement will begin on the Effective Date, and will continue until the third anniversary of the Effective Date, unless earlier terminated pursuant to Section 4 hereof; provided, however, that on the third anniversary of the Effective Date and each annual anniversary of such date thereafter, the Agreement shall automatically be extended for one additional year unless either the Company or Executive shall have terminated this automatic extension provision by written notice to the other party at least 60 days prior to the automatic extension date. The term of employment in effect from time to time hereunder is hereinafter called the “Employment Period.” Subject to the terms of this Agreement, Executive's employment is at will, which means that either Executive or the Company may terminate this relationship with or without Cause or notice.

2.Position and Duties.

(a) Position. During the Employment Period, Executive shall serve as the Chief Operating Officer of the Company and shall report to the Board of Directors of the Company (the “Board”) and have the normal duties, responsibilities and authority of an executive serving in such positions, subject to the direction of the Board. Upon the termination of Executive's service for any reason, unless otherwise determined by the Board, Executive shall be deemed to have resigned from any positions held at the Company or any of its subsidiaries or affiliates voluntarily, without any further required action by Executive, as of the cessation of Executive's services, and Executive, at the Board's request, shall execute any documents deemed in the discretion of the Company to be reasonably necessary to reflect his resignation(s).

(b) Obligations. During the Employment Period, Executive shall devote his full business time and efforts to the business and affairs of the Company and its subsidiaries. Notwithstanding the foregoing, during his employment, Executive may devote reasonable time to the supervision of his personal investments and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and other types of activities, to the extent that such other activities are not competitive with the Company or otherwise conflict with the business of the Company or Executive's duties hereunder; provided, however, that before Executive agrees to serve on the board of directors of any for-profit company (whether publicly or privately held), Executive will obtain the approval of the Audit Committee of the Board (or such other committee to which the Board may subsequently delegate this responsibility).

3.Compensation and Benefits.

(a) Base Salary. As compensation for Executive's performance of Executive's duties hereunder, Company shall pay to Executive an initial Base Salary of $325,000 per year, payable in accordance with the normal payroll practices of the Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions. The Base Salary shall be reviewed for increases by the Board in good faith, based

EXHIBIT 10.5

upon Executive's performance, not less often than annually. The term “Base Salary” shall refer to the Base Salary as so increased by the Board.

(b) Annual Incentive Compensation. During the Employment Period, Executive shall be eligible to receive an annual cash incentive bonus determined by the Compensation Committee of the Board (the “Committee”) in its sole discretion, as a percentage of Executive's Base Salary, with a target bonus of not less than 50% of Executive's Base Salary, and based upon Executive's and/or the Company's achievement of annual performance goals or objectives established by the Committee, in its sole discretion. Payment of any annual cash incentive bonus earned shall be made on or before March 15th of each calendar year immediately following the year in which such compensation is earned.

(c) Other Benefits.

(i) Savings and Retirement Plans. Executive shall be entitled to participate in all qualified and non-qualified savings and retirement plans applicable generally to other senior executives of the Company, in accordance with the terms of the plans, as may be amended from time to time.

(ii) Welfare Benefit Plans. Executive and/or his eligible dependents shall be eligible to participate in and shall receive all benefits under the Company's welfare benefit plans and programs applicable generally to other senior executives of the Company, in accordance with the terms of the plans, as may be amended from time to time.

(iii) Fringe Benefits. During the Employment Period, Executive shall be entitled to such fringe benefits as may be available generally to other senior executives of the Company.

(iv) Vacation. Executive shall be entitled to accrue paid vacation time consistent with the applicable policies of the Company as in effect from time to time, but in no event shall Executive be eligible to accrue less than five weeks of such vacation per year.

(v) Business Expenses. Subject to Section 16 and compliance with applicable Company policies (including any requirements for acceptable documentation), Executive shall be reimbursed for all reasonable travel and other expenses incurred in the performance of Executive's duties on behalf of the Company.

4. Termination of Employment.

(a) The Employment Period shall end upon the first to occur of: (i) the expiration of the term of this Agreement pursuant to Section 1 hereof; (ii) termination of Executive's employment by the Company on account of Executive's inability to perform the essential functions of Executive's position, with or without reasonable accommodation, due to a physical or mental disability (as determined by the Board in good faith), for a period of more than six consecutive months (“Termination for Disability”); (iii) termination of Executive's employment by the Company for Cause (as defined in Exhibit A attached hereto) (“Termination for Cause”); (iv) termination of Executive's employment by the Company other than a Termination for Disability or a Termination for Cause (“Termination Without Cause”); (v) Executive's death; (vi) termination of Executive's employment by Executive for Good Reason (as defined in

EXHIBIT 10.5

Exhibit A attached hereto) (“Termination for Good Reason”); or (vii) termination of Executive's employment by Executive for any reason other than Good Reason.

(b) If the Employment Period ends for any reason set forth in Section 4(a), except as otherwise provided in this Section 4, Executive shall cease to have any rights to salary, bonus (if any) or benefits hereunder, other than (i) payment of unpaid Base Salary through and including the date of termination or resignation (which in the case of a termination by the Company shall be paid on the final day of employment, and in the case of a resignation shall be paid out on the final day of employment or within seventy-two hours after the resignation, whichever occurs later), (ii) Executive's business expenses that are reimbursable pursuant to Section 3(d) but have not been reimbursed by the Company as of the date of termination, (iii) Executive's annual bonus for the fiscal year immediately preceding the fiscal year in which the date of termination occurs, if such bonus has been earned, but has not been paid as of the date of termination, (iv) any accrued vacation pay to the extent not theretofore paid, and (v) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company (“Accrued Compensation and Benefits”).

(c) If the Employment Period ends on account of Termination Without Cause or Termination for Good Reason, Executive shall receive a severance payment (the “Severance Payment”) in an amount equal to onetimes the sum of (A) Executive's Base Salary at the time of termination (or, in the event of a Termination for Good Reason, the Base Salary prior to the event constituting Good Reason if such Base Salary is higher than the Base Salary at the time of termination) plus (B) Executive's target annual bonus for the year in which Executive's employment terminates. In addition, if the Employment Period ends on account of death, Termination Without Cause, Termination for Good Reason or Termination for Disability, the Company shall pay Executive after such termination of employment (or to Executive's family in the event of his death), on a monthly basis, an amount equal to the monthly amount of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) continuation coverage premium for such month, at the same level and cost to Executive (or Executive's family in the event of his death) as immediately preceding the date of termination, under the Company group medical plan in which Executive participated immediately preceding the date of termination, less the amount of Executive's portion of such monthly premium as in effect immediately preceding the date of termination, until the earlier of (A) 12 months after the date of termination; and (B) the date on which Executive and his family have obtained other substantially similar healthcare coverage or become entitled to Medicare coverage. Subject to Section 16, the Severance Payment shall be paid in a lump sum payment on the sixtieth day following the termination date. As a condition to Executive's receipt of the post-employment payments and benefits set forth in this Section 4(c), Executive must execute, return, not rescind and comply with a commercially reasonable written release agreement in a form prescribed by the Company (the “Release”).

(d) If, during the two year period following a Change in Control (as defined in Exhibit A attached hereto), Executive's employment is terminated due to a Termination Without Cause or a Termination for Good Reason, Executive shall receive the benefits set forth in Section 4(c), except that (1) in lieu of the Severance Payment described in Section 4(c), Executive shall receive two times the sum of (A) Executive's Base Salary at the time of such termination or Change in Control, whichever Base Salary level is greater, plus (B) the average of Executive's annual bonuses for the three most recently completed years prior to Executive's termination of employment or Change in Control, whichever average is greater or, if Executive has not

EXHIBIT 10.5

been employed for at least three full years, the average of Executive's annual bonuses for all completed years prior to Executive's termination of employment or Change in Control, whichever is greater (the “CIC Severance Payment”). Subject to Section 16, the CIC Severance Payment shall be paid in a lump sum payment on the sixtieth day following the termination date. As a condition to Executive's receipt of the post-employment payments and benefits set forth in this Section 4(d), Executive must execute, return, not rescind and comply with a Release.

(e) Notwithstanding the foregoing, if the payment required to be paid under Section 4(d), when considered either alone or with other payments paid or imputed to Executive (the “Total Payments”) from the Company that would be deemed “excess parachute payments” under Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), is determined by the Company, with the assistance of a nationally recognized accounting firm acceptable to Executive, to be a “parachute payment” under Section 280G(b)(2) of the Code, then the Total Payments shall be automatically reduced to an amount equal to $1.00 less than three times (3x) the “base amount” (as defined in Section 280G(3) of the Code) (the “Reduced Amount”); provided, however, such reduction shall not apply if the sum of (A) the Total Payments less (B) the amount of excise tax payable by the Executive under Section 4999 of the Code with respect to the Total Payments, is greater than the Reduced Amount. Any such reduction shall occur in the following order: (i) by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); (ii) by reducing the CIC Severance Payment and any other cash payments not subject to Section 409A of the Code; (iii) by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (iv), by reducing any cash payments that are subject to Section 409A of the Code (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (v) by reducing the payments of any restricted stock, restricted stock units, performance awards or similar equity-based awards that have been awarded to Executive by the Company that are subject to performance-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); (vi) by reducing the payments of any restricted stock, restricted stock units, performance awards or similar equity-based awards that have been awarded to Executive by the Company that are subject to time-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and (vii) by reducing the acceleration of vesting of any stock options that are not described in (i), above.

5.Confidential Information. Executive acknowledges that the information, observations and data obtained by him while employed by the Company pursuant to this Agreement, as well as those obtained by him while employed by the Company or any of its subsidiaries prior to the date of this Agreement, concerning the business or affairs of the Company or any of its subsidiaries (“Confidential Information”) are the property of the Company or such subsidiary. Therefore, Executive agrees that during the Employment Period and for three years thereafter that he shall not disclose to any unauthorized person or use for his own account any Confidential Information without the prior written consent of the Board unless and except to the extent that such Confidential Information becomes generally known to and available for use by the public other than as

EXHIBIT 10.5

a result of Executive's acts or omissions to act. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the business of the Company or any of its subsidiaries or affiliates which he may then possess or have under his control.

6.Enforcement. Because the services of Executive are unique and Executive has access to confidential information of the Company, the parties hereto agree that the Company would be damaged irreparably in the event the provisions of Section 5 hereof were not performed in accordance with its terms or were otherwise breached and that money damages would be an inadequate remedy for any such nonperformance or breach. Therefore, the Company or its successors or assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security).

7.Indemnification and Insurance. The Company shall indemnify Executive to the full extent provided for in its corporate Bylaws and to the maximum extent that the Company indemnifies any of its other directors and senior executive officers, and he will be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and senior executive officers against all costs, charges, liabilities and expenses incurred or sustained by him in connection with any action, suit or proceeding to which he may be made a party by reason of his being or having been a director, officer or employee of the Company or any of its affiliates or his serving or having served any other enterprise, plan or trust as a director, officer, employee or fiduciary at the request of the Company or any of its affiliates (other than any dispute, claim or controversy arising under or relating to this Agreement (except for this Section 7)). The Company will enter into an indemnification agreement with the Executive in the standard form that it has or will adopt for the benefit of its other directors and senior executive officers.

8.Survival. Sections 5, 6, 7 and 16 hereof shall survive and continue in full force and effect in accordance with their respective terms, notwithstanding any termination of the Employment Period.

9.Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or sent by certified mail, return receipt requested, postage prepaid, addressed (a) if to Executive, to his last known address shown on the payroll records of the Company, and if to the Company, to UCP, Inc., 6489 Camden Avenue, Suite 204, San Jose, CA 95120 attention: Chairman of the Compensation Committee of the Board of Directors, with a copy to the General Counsel of the Company at the same address, or (b) to such other address as either party shall have furnished to the other in accordance with this Section 9.

10.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter hereof.

EXHIBIT 10.5

12.Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable by Executive and his heirs, executors and personal representatives, and the Company and its successors and assigns. Any successor or assignee of the Company shall assume the liabilities of the Company hereunder.

13.Governing Law. This Agreement shall be governed by the internal laws (as opposed to the conflicts of law provisions) of the State of California.

14.Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

15.Withholding. All payments and benefits under this Agreement are subject to withholding of all applicable taxes.

16.Code Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. The payments to Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for such purposes, each payment to Executive under this Agreement shall be considered a separate payment. In the event the terms of this Agreement would subject Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement. To the extent any amounts under this Agreement are payable by reference to Executive's “termination of employment” such term and similar terms shall be deemed to refer to Executive's “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, to the extent any payments hereunder constitutes nonqualified deferred compensation, within the meaning of Section 409A, and Executive is a specified employee (within the meaning of Section 409A of the Code) as of the date of Executive's separation from service, each such payment that is payable upon Executive's separation from service and would have been paid prior to the six-month anniversary of Executive's separation from service, shall be delayed until the earlier to occur of (i) the first day of the seventh month following Executive's separation from service or (ii) the date of Executive's death. Any reimbursement payable to Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all expense reports reasonably required by Employer under any applicable expense reimbursement policy, and shall be paid to Executive within 30 days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

EXHIBIT 10.5

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

	UCP, INC.
		By:	/s/ Dustin L. Bogue
		Name:	Dustin L. Bogue
		Title:	Chief Executive Officer & President
EXECUTIVE:				/s/ James W. Fletcher
Name:				James W. Fletcher

EXHIBIT 10.5

EXHIBIT A

DEFINITIONS

“Cause” shall mean the occurrence of any of the following conditions:

(i)any act or omission that constitutes a material breach by Executive of any of his material obligations under this Agreement, after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has materially breached such obligations and Executive's failure to cure such alleged breach not later than 30 days following his receipt of such notice;

(ii)conviction or plea of guilty to a charge of commission of a felony;

(iii)the commission of dishonest, fraudulent or deceptive acts or practices in connection with Executive's employment that are materially injurious to the Company, monetarily or otherwise; or

(iv)Executive's ongoing willful refusal to follow the proper and lawful directions of the Board after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has refused to follow its instructions and Executive's failure to cure such refusal not later than 30 days following his receipt of such notice.

For purposes of this definition, no act, or failure to act, on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board or (B) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the conditions set forth in clauses (i), (ii), (iii) or (iv) above have been satisfied, and specifying the particulars thereof in detail.

“Change in Control” shall mean, except as otherwise provided below, the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company. In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, the following provisions shall apply:

(i)A “change in the ownership” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(v). If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of the Company, or to have effective control of the Company within the meaning of clause (ii) of this definition, and such person or group acquires

EXHIBIT 10.5

additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of the Company.

(ii)A “change in the effective control” of the Company shall occur on either of the following dates:

(A) The date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi). If a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of the Company; or

(B) The date on which a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi).

(iii)A “change in the ownership of a substantial portion of the assets” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)

(vii). A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vii)(B).

Notwithstanding the occurrence of any of the foregoing events, an initial public offering or any bona fide primary or secondary public offering following the occurrence of an initial public offering shall not constitute a Change in Control. Additionally, the ownership of stock by PICO Holdings, Inc., or its affiliates, as of and following the initial public offering shall not constitute a Change of Control.

“Good Reason” shall mean any of the following actions, if taken without the express written consent of Executive: (i) a material diminution in Executive's Base Salary; (ii) a material diminution in Executive's authority, duties or responsibilities; (iii) requiring Executive to move his place of employment more than 50 miles from his place of employment prior to such move; or (iv) a material breach by the Company of this Agreement. Executive's employment with the Company may be terminated for Good Reason if (i) Executive provides written notice to Company of the occurrence of the Good Reason event (as described above) within 90 days after Executive has knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which Executive believes constitute Good Reason, (ii)  Company fails to correct the circumstances constituting “Good Reason” within 30 days after such notice; and (iii) Executive resigns within six months after the initial existence of such circumstances.

EX-10.7

EXHIBIT 10.7

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT(including the exhibits hereto, the “Agreement”) is entered into as of the 23rd day of July, 2013 (the “Effective Date”), by and between PICO HOLDINGS, INC., a California corporation (“PICO”), and UCP, INC., a Delaware corporation (“UCP”). PICO and UCP may be referred to in this Agreement separately as a “Party” or collectively as the “Parties.”

WITNESSETH:

WHEREAS, prior to the completion of the initial public offering of shares of its common stock (the “Offering”), UCP was a wholly owned subsidiary of PICO;

WHEREAS, upon completion of the Offering, PICO maintains a controlling ownership stake in UCP;

WHEREAS, upon completion of the Offering, notwithstanding PICO's controlling ownership stake in UCP, UCP desires to engage PICO as a third party service provider to provide certain accounting, human resources and information technology services as set forth herein, at UCP's direction and control and subject to the terms and conditions described in this Agreement; and

WHEREAS, in order to assist UCP in its operations, PICO desires to provide such accounting, human resources and information technology services to UCP, at UCP's direction and control and subject to the terms and conditions described in this Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective meanings set forth below:

“Additional Services” has the meaning set forth in Section 2.5.

“Affiliate” shall mean as to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.

“Audit Committee” has the meaning set forth in Section 4.2(a).

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the person controlled, whether through ownership of voting securities, by contract or otherwise.

“Confidential Information” has the meaning set forth in Section 6.1.

“Effective Date” has the meaning set forth in the preamble hereto.

“Guest User” has the meaning set forth in Section 7.1.

“Host” has the meaning set forth in Section 7.1.

“Initial Term” has the meaning set forth in Section 4.1.

“Laws” means all federal, state, regional, provincial, local or foreign laws, including statutes, ordinances, codes, rules, regulations, published guidelines, directives, orders, writs, injunctions, judgments, decrees, arbitration awards, and the common law.

“Losses” means any and all costs, claims, actions, demands, damages, fees, penalties, injuries, expenses (including reasonable attorneys' fees, costs of investigation and court costs), interest and liability.

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“Offering” has the meaning set forth in the first recital hereto.

“Optional Renewal Term” has the meaning set forth in Section 4.1.

“Party” or “Parties” has the meaning set forth in the preamble hereto.

“Person” means any legal entity including a corporation, unincorporated organization, association, limited liability company, partnership, trust, business trust, joint venture, or sole proprietorship, governmental organization or body, or any agency, department or instrumentality thereof, and includes a natural person.

“Personally Identifiable Information” means any and all tangible and intangible information provided or disclosed hereunder about present, former or potential customers, contractors or Representatives of UCP or its Affiliates, including name, address, telephone number, email address, account or policy information, and any list, description, or other grouping of such Persons, and any medical records or other medical information of such Persons and any other type of information deemed “nonpublic” and protected by privacy Laws and any other applicable Law.

“PICO” has the meaning set forth in the preamble hereto.

“Recovery Plans” has the meaning set forth in Section 2.6(c).

“Representatives” has the meaning set forth in Section 6.3.

“Sales Tax” has the meaning set forth in Section 3.3(a).

“Senior Managers” shall mean, Max Webb and John Perri, in the case of PICO, and Dustin Bogue, Allen Bennett and William La Herran, in the case of UCP.

“Service Coordinators” has the meaning set forth in Section 2.2.

“Service Fees” has the meaning set forth in Section 3.1.

“Services” has the meaning set forth in Section 2.1.

“Significant Service Shortfall” has the meaning set forth in Section 2.6(b).

“Systems” has the meaning set forth in Section 7.1.

“Term” has the meaning set forth in Section 4.1.

“Third Party” or “Third Parties” means any Person or Persons other than UCP or PICO, or any of their respective Affiliates.

“UCP” has the meaning set forth in the preamble hereto.

“UCP Indemnified Person” has the meaning set forth in Section 5.3.

“Unauthorized Access” has the meaning set forth in Section 6.1.

ARTICLE II

SERVICES

2.1    Services. Subject to the terms and conditions of this Agreement, PICO agrees to provide or cause to be provided to UCP, for the benefit of UCP, its Controlled Affiliates and designated recipients, the services set forth on Exhibit A, Exhibit B and Exhibit C hereto (collectively, the “Services”). PICO shall provide the Services at UCP's reasonable direction, which direction may include granting PICO certain permissions and authority; provided, however, that notwithstanding the foregoing, and without limiting the generality of Section 2.10, PICO has no authority to bind UCP to any Third Party agreement or to make any filing on behalf of UCP with any governmental authority or under applicable Law.

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2.2    Service Coordinators. Each Party will nominate a representative to act as its primary contact with respect to the provision of the Services (together, the “Service Coordinators”). Unless otherwise agreed, all notices and communications relating to this Agreement shall be directed to the Service Coordinators, other than those day to day communications and billings relating to the actual provision of the Services, which shall be directed to the appropriate personnel of each Party, as directed by the Service Coordinators.

2.3    Direction of PICO Employees. PICO shall be solely responsible for all salary, employment, engagement, payroll, bonuses, fees and other benefits of and liabilities relating to, and compliance with immigration and visa laws and requirements in respect of, its personnel assigned to perform the Services. In performing their respective duties hereunder, all personnel of PICO engaged in providing the Services shall be under the direction, control and supervision of PICO; and PICO shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such PICO personnel. The employees of PICO engaged in providing Services to UCP shall not, by virtue thereof, become employees of UCP. PICO shall provide prompt written notice to UCP upon the departure of any Service Coordinator, or any key employee who is providing a Service.

2.4    Cooperation. UCP shall use its reasonable efforts to (a) cooperate with PICO with respect to the provision of the Services and (b) enable PICO to provide the Services in accordance with this Agreement.

2.5    Additional Services. The Parties each have exerted their commercially reasonable efforts to identify and describe the Services. However, the Parties acknowledge and agree that there may be services useful or necessary to UCP's accounting, human resources or information technology operations which are not identified on Exhibit A, Exhibit B or Exhibit C (collectively, the “Additional Services”). At any time and from time to time during the Term, UCP may provide written notice to PICO requesting Additional Service(s) and setting forth in reasonable detail a description of the requested Additional Service(s), the proposed start date or dates and the proposed termination date or dates. Upon receiving UCP's written request, PICO shall, to the extent it is able to do so without unreasonable adverse consequences to its own operations, provide or cause to be provided such Additional Service subject to the Parties agreement on any adjustment to the Service Fees to the extent of any increased cost of providing the Services. The provision of such Additional Services shall in all respects be subject to the terms of this Agreement, shall be considered added to Exhibit A, Exhibit B or Exhibit C, as applicable, shall constitute an amendment to this Agreement and shall thereafter be considered a Service. Unless otherwise agreed by the Parties, the term for such Additional Services shall be the Term of this Agreement.

2.6    Standard of Services.

(a)General Standard. PICO shall use commercially reasonable efforts to perform or cause to be performed the Services at a level that is not materially less favorable than past practices of PICO in providing or causing to be provided such service to itself, its Affiliates and/or UCP as such practices existed during the twelve (12) months immediately preceding the Offering. UCP understands and agrees that PICO is not in the business of providing transition services to Third Parties, and PICO shall not be held accountable to a higher standard of care than that set forth herein. UCP shall receive the benefit of any and all warranties, guarantees, representations, service level standards and indemnities given to PICO by Third Party service providers in respect of the Services.

(b)Shortfall in Services. If UCP provides PICO with written notice of the occurrence of any Significant Service Shortfall (as defined below) in the Services, as reasonably determined by UCP in good faith, PICO shall use commercially reasonable efforts to rectify such Significant Service Shortfall as soon as reasonably possible. For purposes of this Section 2.6(b), a “Significant Service Shortfall” shall be deemed to have occurred if the timing or quality of performance of one or more Services provided by PICO hereunder falls below the standard required by Section 2.6(a) hereof.

(c)Recovery Plans. For as long as Services are provided hereunder, PICO shall, and shall cause its relevant Affiliates to, maintain backup, business continuation and disaster recovery plans, procedures and policies (collectively, “Recovery Plans”) consistent with past practices as they existed during the twelve (12) months immediately preceding the Offering. PICO shall provide UCP:

(i)Annually, a report describing the details of the then-current Recovery Plans and analyzing PICO's ability to perform the Services in the event such Recovery Plans are invoked;

(ii)At least once per year, the opportunity to review copies of PICO's then-current Recovery Plans; and

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(iii)Without limiting PICO's obligations under Section 6.2, immediately upon notice of any incident that gives cause to invoke any Recovery Plan or which may reasonably affect the Services, Confidential Information or Personally Identifiable Information, a report of the type of incident, potential cause (if known), work being undertaken to recover, estimated time to recover and primary and alternative contact details.

2.7    Subcontracting. PICO may subcontract for the performance of any Service to: (a) any person if the Service to be subcontracted is primarily a routine task or function generally considered ancillary to the Services; (b) an Affiliate of PICO; (c) an existing subcontractor that was providing such Service to PICO or UCP immediately before the Effective Date; or (d) any other person with prior written notice to, and approval (not to be unreasonably withheld or delayed) from, UCP; provided that no such subcontracting shall relieve PICO from any of its obligations or liabilities hereunder, and PICO shall remain responsible for all obligations or liabilities of such subcontractor with respect to the providing of such Service or Services, as if provided by PICO.

2.8    Compliance with Laws; Consents. PICO represents that it shall, and shall cause its Affiliates to, comply at all times during the term of this Agreement with all applicable Laws, including HIPAA, HITECH, Sarbanes Oxley (SOX) Section 404 and other Laws relating in any way to the privacy or data security related to Personally Identifiable Information. PICO shall obtain and maintain all material permits, approvals and licenses necessary or appropriate to perform its duties and obligations (including all Services) under this Agreement and shall at all times comply (or in the case of any providers of Services who are contractors or independent Third Parties, use commercially reasonable efforts to cause them to comply) with the terms and conditions of such permits, approvals and licenses.

2.9    Conflict with Laws. Notwithstanding anything in this Agreement to the contrary, PICO shall not be obligated to provide any Service if the provision of such Service would violate any applicable Law or rules of professional ethics or breach any contract or other agreement, due to the failure to obtain such consent, license or approval or otherwise, notwithstanding PICO's reasonable efforts to obtain such consent, license or approval. If PICO is prevented from providing, or causing to be provided, any Service by reason of the foregoing, PICO shall use commercially reasonable efforts to (a) notify UCP of such prevention as soon as practicable, and (b) provide alternative equivalent services at no additional cost to UCP; provided, however, that under no circumstances shall the performance of such Service require PICO or any of its directors (or persons in similar positions), officers, employees or agents to violate any applicable Law or breach any contract or other agreement.

2.10    Relationship of Parties; No Agency. The relationship of the Parties hereunder are those of independent contractors and nothing contained in this Agreement nor the Parties' performance hereunder creates a fiduciary relationship, partnership, joint venture or relationship of trust or agency between the Parties. Each Party acknowledges that it has entered into this Agreement for independent business reasons. Neither Party shall have any power or authority to negotiate or conclude any agreement, or to make any representation or to give any understanding on behalf of the other Party in any way whatsoever.

2.11    UCP Capabilities. UCP acknowledges that PICO is willing to provide the Services as a short term accommodation to assist UCP in transitioning its operations to those typically seen in independent publicly traded companies. UCP will use commercially reasonable efforts to develop its internal capabilities so that it is able to act on its own behalf in the areas covered by the Services.

ARTICLE III

SERVICE FEES

3.1    Service Fees. UCP shall pay PICO the fees set forth on each of Exhibit A,Exhibit B and Exhibit C (collectively, the “Service Fees”), each of which Service Fees corresponds to the module of Services described on the applicable Exhibit. On a quarterly basis, the Parties will discuss in good faith whether the Service Fees need to be revised in light of the costs, including customary overhead allocation, actually incurred in providing the Services and any changes anticipated as a result of changes in the scope of services or applicable requirements which the Services are intended to address; provided,however, that in no event shall the Parties have a binding obligation to agree to or accept any such revisions to the Services Fees. To the extent that UCP notifies PICO in accordance with Section 4.2 that it requires only a portion of a specific Service to be provided, the Parties will negotiate to determine an appropriate reduction of the Service Fees. The Service Fees include all out-of-pocket charges and costs of performing the Services hereunder, including, license fees, royalties or provider services fees, and any and all compensation for personnel providing the Services hereunder, including compensation, benefits and bonuses.

3.2    Payment. PICO shall invoice UCP on a quarterly basis in arrears for the Services provided hereunder, which invoice shall be adjusted, on a pro rata basis, for any Service that is suspended, reduced, discontinued or otherwise terminated under Section 4.2. Payment in full of the undisputed invoiced amounts shall be made by electronic funds transfer or other method satisfactory to the Parties, within thirty (30) days after the date of receipt of the quarterly invoice.

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3.3    Taxes.

(a)The fees payable by UCP to PICO shall, in each case, be taken to be exclusive of any value added taxes, sales taxes, or similar taxes (“Sales Tax”) properly chargeable in respect of the transactions hereunder, and an amount equal to such taxes so chargeable shall, subject to receipt of a valid Sales Tax receipt or invoice in accordance with Section 3.3(c) below, be paid by UCP to PICO in addition to the fees otherwise payable under this Agreement.

(b)In the event that applicable Law requires that any amount in respect of taxes be withheld from any payment by UCP to PICO under this Agreement, UCP shall withhold the required amounts and pay such withheld amounts over to the applicable governmental authority in accordance with the requirements of applicable Law, and any amount so withheld and paid over shall be treated as having been paid to PICO, and UCP shall not be required to pay any additional amount as a result of or in respect of such withholding. UCP shall provide PICO with documentation evidencing payment to the applicable governmental authority of any amounts so withheld.

(c)In each case where an amount in respect of Sales Tax is payable by UCP in respect of a Service provided by PICO, PICO shall furnish in a timely manner a valid Sales Tax receipt or invoice to UCP in the form and manner required by law to allow UCP to recover such Sales Tax to the extent allowable by Law.

ARTICLE IV

TERM AND TERMINATION

4.1    Term. Unless earlier terminated as set forth herein, this Agreement shall commence as of the Effective Date and remain in force for the following term (the “Term” of this Agreement): (a) one (1) year following the Effective Date (the “Initial Term”); (b) after expiration of the Initial Term, up to two (2) optional, successive ninety (90) day periods (each an “Optional Renewal Term”), each exercisable by UCP in its sole discretion at any time prior to the expiration of the Initial Term or the first Optional Renewal Term, as applicable and upon sixty (60) days prior written notice to PICO; and (c) after the expiration of the Initial Term and any applicable Optional Renewal Terms, this Agreement shall remain in force on a month-to-month basis until canceled by either Party, for any reason or no reason, upon (i) thirty (30) days prior written notice, if UCP is the cancelling Party or (ii) sixty (60) days prior written notice, if PICO is the cancelling Party. Prior to any termination or expiration of this Agreement the Audit Committee shall approve such termination as contemplated by Section 4.2(a).

4.2    Discontinuation or Reduction of Services; Termination.

(a)UCP may, without limiting any of UCP's rights or remedies hereunder (including under Section 4.5), upon not less than thirty (30) days prior written notice, elect to discontinue or partially reduce any Service(s); provided that the Audit Committee of UCP (the “Audit Committee”) shall have approved such discontinuation or reduction in Services provided by PICO and reasonably concluded that, following such discontinuation or partial reduction in Services, UCP would be able to satisfy the information and inspection rights of PICO contained in Article IV of the Investor Rights Agreement of even date herewith among UCP, PICO and the other parties thereto; further provided that PICO may waive the requirement for Audit Committee approval if PICO determines that such discontinuation or partial reduction in Services would not be reasonably expected to materially adversely affect the ability of (or information required for) PICO to carry out its reporting and other legal requirements. In the event of any discontinuation or partial reduction with respect to one or more, but less than all, of the Services, this Agreement shall continue in full force and effect with respect to any other Services. The Parties shall amend Exhibit A, Exhibit B and Exhibit C and the Service Fees set forth therein, as applicable, to reflect the discontinuation or partial reduction of any Service(s).

(b)UCP may, without limiting any of UCP's rights or remedies hereunder (including under Section 4.5), upon not less than thirty (30) days prior written notice, elect to discontinue all of the Services by terminating this Agreement for any reason or no reason; provided, however, that any such termination shall be approved by the Audit Committee as contemplated by Section 4.2(a).

4.3    Suspension of Services for Non-Payment. If UCP fails to pay any fees and/or charges not disputed in good faith within sixty (60) days of the date such fees and/or charges are due, PICO may, upon further written notice to UCP, suspend its provision of Services; provided, however, that PICO shall resume promptly (and in any event within twenty four (24) hours) the provision of Services upon UCP's cure of such failure to pay such undisputed fees and/or charges.

4.4    Records Post-Termination. PICO will maintain records related to the Services, and the provision thereof, that are necessary or advisable for the performance of its obligations under this Agreement. After termination of this Agreement, PICO will maintain all files related to the Services, and the provision thereof, for one year, all of which shall be treated as Confidential Information under this Agreement. During the period in which PICO maintains the files, UCP may request to examine and copy

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the files or direct PICO to provide such files or copies thereof to UCP. Nothing herein shall require PICO to transfer or dispose of any files or records prior to the time when PICO would be permitted to do so in compliance with applicable regulatory requirements and its document retention policy. After one year following termination of this Agreement, PICO may dispose of files and records that it no longer needs for its own regulatory compliance purposes consistent with the manner it uses to dispose of its own confidential information.

4.5    Effect of Termination. Termination or expiration of this Agreement, or suspension or discontinuance of the Services provided under this Agreement, shall not affect any obligations or liability of either Party that accrued prior to the effective date of termination, including any damages or other liability that may arise under or as a result of a Significant Service Shortfall.

4.6    Survival. Article I, Section 2.10, Section 4.4, Section 4.5, this Section 4.6, Article V, Article VI, Article IX, Section 10.1, Section 10.2 and Sections 10.4-10.14 shall survive the termination of this Agreement.

ARTICLE V

LIMITATION ON LIABILITY; DISCLAIMER; INDEMNIFICATION

5.1    Limitation of Liability. The maximum liability of any Party hereto to the other Party and such other Party's Affiliates hereunder shall not exceed the Service Fees payable for the initial twelve (12) months of the Term of this Agreement, calculated as if all Services provided hereunder were provided for such twelve (12) months, except that the foregoing liability cap shall not apply to: (a) claims based on a Party's willful misconduct, gross negligence or fraud; (b) claims based on a breach of Article VI hereunder; or (c) claims for indemnity under Section 5.3 hereunder. Notwithstanding anything else in this Agreement, the Parties waive any claim to any special, indirect, punitive or consequential damages against each other, except to the extent awarded to a Third Party claim that is subject to indemnification under Section 5.3.

5.2    DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, PICO MAKES NO EXPRESS WARRANTIES, AND NO WARRANTY SHALL BE IMPLIED UNDER THIS AGREEMENT OR AT LAW, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

5.3    Indemnification. PICO shall indemnify, defend and hold harmless UCP, its Affiliates and their respective Representatives (each, a “UCP Indemnified Person”), from, against and in respect of, and reimburse any UCP Indemnified Person for, any Third Party Losses imposed, sustained, incurred or suffered by or asserted against any of the UCP Indemnified Persons, relating to, resulting from or arising out of: (a) any fraud, gross negligence or willful misconduct by or on behalf of PICO or any of its Affiliates in providing any of the Services that PICO is obligated to provide hereunder; (b) any claim that any Service, or the provision thereof, infringes or violates any Third Party's intellectual property rights; or (c) any material breach of this Agreement, including any breach of Section 2.8 or Section 6.1.

5.4    Indemnification Procedure. A UCP Indemnified Person shall give PICO prompt notice of any claim, action or suit against it asserting Losses, and PICO shall have the right to defend such action or suit. PICO shall have control over the claim or proceeding, including the right to settle; provided, however, that PICO shall not, absent the prior written consent of the UCP Indemnified Person, consent to the entry of any judgment or enter into any settlement that (a) provides for any relief other than the payment of monetary damages for which PICO shall be solely liable and (b) in which the claimant or plaintiff does not release UCP Indemnified Person from all liability in respect thereof.

ARTICLE VI

CONFIDENTIALITY

6.1    Confidential Information. Each Party covenants that it will (a) accord the Confidential Information (as defined below) of the other Party the same degree of confidential treatment that it accords its similar proprietary and confidential information, (b) not use such Confidential Information for any purpose other than those stated in this Agreement, and (c) not disclose such Confidential Information to any Person unless disclosure to such Person is made in the ordinary course of such Party's conduct of its business and is subject to protections, at least as stringent as those herein, and comparable to those such Party would apply in connection with a comparable disclosure of its own Confidential Information. Notwithstanding any other provision of this Agreement, a Party may disclose Confidential Information of the other Party, without liability for such disclosure, to the extent the disclosing Party demonstrates that such disclosure is (x) required to be made pursuant to applicable law, government authority, duly authorized subpoena, or court order, (y) required to be made to a court or other tribunal in connection with the enforcement of such Party's rights under this Agreement or to contest claims between the Parties, or (z) approved by the prior written consent of the other Party. Each Party will promptly notify the other Party if it receives a subpoena or otherwise becomes aware of events that may legally require it to disclose Confidential Information of the other Party, and will cooperate with the other Party (at the

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other Party's expense) to obtain an order quashing or otherwise modifying the scope of such subpoena or legal requirement, in an effort to prevent the disclosure of such Confidential Information. For purposes of this Agreement, “Confidential Information” means all confidential or proprietary information and documentation of either Party made available to the other Party under this Agreement that is either identified in writing as confidential or which the receiving Party should reasonably have recognized at the time of disclosure as being of a confidential nature; provided, however, that information required to be disclosed in a report or filing under applicable securities Laws shall not be considered Confidential Information. For the avoidance of doubt, any and all data, including Personally Identifiable Information, that is provided to or accessed by PICO in the course of providing the Services, shall be considered UCP's Confidential Information, even if such data is generated by PICO in the course of providing the Services.

6.2    Unauthorized Acts. Each Party shall (a) notify the other Party promptly of any unauthorized possession, use, access to, or knowledge of any Confidential Information by any Person which shall become known to it, any attempt by any Person to gain possession of Confidential Information without authorization or any attempt to use or acquire knowledge of any Confidential Information without authorization (collectively, “Unauthorized Access”), (b) promptly furnish to the other Party full details of the Unauthorized Access and use reasonable efforts to assist the other Party in investigating or preventing the reoccurrence of any Unauthorized Access, (c) cooperate with the other Party in any litigation and investigation against Third Parties deemed necessary by such Party to protect its proprietary rights, and (d) use commercially reasonable efforts to prevent a recurrence of any such Unauthorized Access.

6.3    Insider Trading Policy. Each Party shall instruct its respective Affiliates, officers, directors, controlling Persons, partners, employees, lenders, agents, advisors and representatives (collectively, “Representatives”) that it is a violation of applicable Law for any Representative to purchase or sell securities of the other Party based on non-public information obtained in connection with the performance of this Agreement.

ARTICLE VII

SYSTEM ACCESS

7.1    System Access. If either Party is at any time given access (each in such capacity, a “Guest User”) to the other's computer system(s) or software (collectively, “Systems”) in connection with the performance of this Agreement, such Guest User shall comply with the other Party's (each in such capacity, a “Host”) Systems security policies, procedures and requirements which the Host makes available to the Guest User in writing upon request.

ARTICLE VIII

MUTUAL REPRESENTATIONS AND WARRANTIES

8.1    Mutual Representations and Warranties. Each Party represents and warrants to the other that as of the Effective Date:

(a)it has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is incorporated;

(b)it has full power and authority to execute, deliver and perform its obligations under this Agreement;

(c)this Agreement has been duly and validly authorized, executed and delivered on behalf of such Party and is a valid and binding agreement of such Party, enforceable against such Party in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting such enforcement, and except as enforcement is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law); and

(d)its execution and delivery of this Agreement by such Party and the performance of its obligations hereunder do not violate, or constitute a breach of or default under, its organizational documents or any agreement or instrument by which it is bound, and it has no knowledge that its performance of such obligations will violate, or constitute a breach of or default under, any order, rule, law or regulation applicable to such Party of any court, governmental body, administrative agency or self-regulatory authority having jurisdiction over such Party.

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ARTICLE IX

DISPUTE RESOLUTION

9.1    Prior to the initiation of legal proceedings, the Parties shall first attempt to resolve any dispute arising out of or in connection with this Agreement or the transactions contemplated hereby informally, as follows:

(a)The Parties shall first attempt, through the Service Coordinators, to resolve all disputes and shall attempt to initiate such efforts within two (2) business days after receipt of notice of any such dispute. If the Parties are unable to resolve a dispute in an amount of time that either Party deems reasonable under the circumstances, such Party may refer the dispute for resolution to the Senior Managers pursuant to the provisions of Section 9.1(b).

(b)Within five (5) business days of a notice under Section 9.1(a) referring a dispute for resolution by Senior Managers, each Party shall brief its Senior Managers as to the background of the dispute, along with any appropriate supporting documentation. The designated Senior Managers will confer as often as they deem reasonably necessary in order to gather and exchange information, discuss the dispute and negotiate in good faith, in an effort to resolve the dispute without the need for any formal proceedings.

(c)Legal proceedings may not be initiated until at least ten (10) business days after the receipt by a Party of a notice under Section 9.1(a) referring a dispute to Senior Managers. If there is a dispute between the Parties, each Party shall continue to perform all of its obligations under this Agreement (including the obligations in dispute) until such dispute is resolved by the Parties in accordance with this Article IX or by a court of competent jurisdiction. Without limiting the generality of the preceding sentence, if there is a dispute between the Parties regarding the Service Fee(s) in respect of a particular Service or whether PICO is obligated to engage in a particular task as a Service hereunder, PICO shall provide such Service or engage in such disputed task at UCP's direction as if such Service or disputed task was a Service hereunder, until such dispute is resolved by the Parties in accordance with this Article IX or by a court of competent jurisdiction.

ARTICLE X

MISCELLANEOUS

10.1    Construction Rules. The article and section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Words used in this Agreement in the singular, where the context so permits, shall be deemed to include the plural and vice versa. Words used in the masculine or the feminine, where the context so permits, shall be deemed to mean the other and vice versa. Any reference to a section number in this Agreement shall mean the section number in this Agreement unless otherwise expressly stated. The terms “this Agreement,” “herein,” “hereof,” “hereunder” and similar expressions refer to this Agreement and not to any particular section or other portion of this Agreement. Lists of examples following “including”, “e.g.”, “such as”, or “for example” are interpreted to include “without limitation”, unless qualified by words such as “only” or “solely.” Unless stated or context requires otherwise all internal references are to this Agreement or its Exhibits; “days” means calendar days; “may” means that the applicable Party has a right, but not a concomitant duty; “current” or “currently” means “as of the Effective Date”, but “then-current” means the present time when the applicable right is exercised or performance rendered or measured; “notify” means to give notice as provided in Section 10.2; each Party's choices under this Agreement are in its sole discretion; “or” is not meant to be exclusive; and any reference to any agreement defined herein shall include such agreement as amended, modified or supplemented in accordance with its terms.

10.2    Notices. All notices, requests, consents and other communications hereunder to any Party shall be deemed to be sufficient if contained in a written instrument delivered in Person or sent by facsimile (provided a copy is thereafter promptly delivered as provided in this Section) or nationally recognized overnight courier, addressed to such Party at the address or facsimile number set forth below or such other address or facsimile number as may hereafter be designated in writing by such Party to the other Parties:

To: UCP     UCP, Inc.

6489 Camden Avenue, Suite 204

San Jose, CA 95120

Attention: W. Allen Bennett, General Counsel

Fax: 559-439-4477

Email: allen@unioncommunityllc.com

To: PICO:     PICO Holdings, Inc.

7979 Ivanhoe Avenue, Suite 300

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La Jolla, CA 92037

Attention: Chief Financial Officer

Fax: 858-456-6480

Email: mwebb@picoholdings.com

10.3    Assignment. This Agreement is a personal services agreement and neither this Agreement nor any of the rights or obligations hereunder shall be assigned by PICO (whether by operation of law, by contract, merger, change in Control, sale of subject assets, assumption or otherwise), without, in each instance, the prior written consent of UCP, provided that, the foregoing shall in no way restrict the performance of a Service by an Affiliate of PICO or a Third Party as otherwise allowed under this Agreement in accordance with Section 2.7.

10.4    Benefit of Agreement. This Agreement shall be binding upon the Parties hereto and shall inure to the benefit of such Parties and their permitted assignees.

10.5    Amendment. This Agreement may not be modified or amended in any respect except in a writing signed by both Parties. No waiver shall be deemed to have been granted or created by any course of conduct or acquiescence, and no waiver shall be enforceable against either Party hereto unless in writing and signed by the party against which such waiver is claimed. No amendment, addition to, alteration, modification or waiver of any part of this Agreement shall be of any effect, whether by course of dealing or otherwise, unless explicitly set forth in writing referencing this Agreement and the provision(s) to be amended, altered, modified or waived and executed by the Parties.

10.6    Waiver; Remedies. The waiver by a Party of any breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. The failure of a Party to require strict performance of any provision of this Agreement shall not affect such Party's right to full performance thereof at any time thereafter. No right, remedy or election given by any term of this Agreement or made by a Party shall be deemed exclusive, but shall be cumulative with all other rights, remedies and elections available at law or in equity. The Parties acknowledge that the rights created hereby are unique and recognize and affirm that in the event of a breach of this Agreement irreparable harm would be caused, money damages may be inadequate and an aggrieved Party may have no adequate remedy at law. Accordingly, the Parties agree that the other Party shall have the right, in addition to any other rights and remedies existing in its favor at law or in equity, to enforce such Party's rights and the obligations of the other Party not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief (without posting of a bond or other security).

10.7    Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or entity or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

10.8    Multiple Counterparts. This Agreement may be executed in one or more counterparts, by facsimile or electronic signature, each of which shall be deemed an original and all of which shall, taken together, be considered one and the same agreement, it being understood that both Parties need not sign the same counterpart.

10.9    Further Actions. Each Party shall execute, deliver, acknowledge and file such other documents and take such further actions as may be reasonably requested from time to time by the other Party hereto to give effect to and carry out the transactions contemplated in this Agreement, and to provide the Services.

10.10    Regulations. PICO shall, and shall cause all of its personnel and Third Parties authorized to provide Services, when on the property of UCP, conform to the rules and regulations of UCP concerning safety, health and security which are made known to such Persons in advance in writing. In connection with receiving the Services, UCP shall, and shall cause all of its applicable personnel, when on the property of PICO, conform to the rules and regulations of PICO concerning safety, health and security which are made known to such Persons in advance in writing.

10.11    Entire Agreement. This Agreement and the exhibits constitute the entire agreement of the Parties with respect to the subject matter hereof and supersedes and cancels all prior agreements and understandings, either oral or written, between the Parties with respect to the subject matter hereof.

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10.12    No Drafting Presumption. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

10.13    Governing Law; Venue; Jurisdiction. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. The Parties further agree that any dispute arising out of this Agreement shall be decided by either the state or federal court in Santa Clara County, California. The Parties shall each submit to the jurisdiction of those courts and agree that service of process by certified mail, return receipt requested, shall be sufficient to confer said courts with in personam jurisdiction.

10.14    WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ISSUE TRIABLE BY A JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT NOW OR HEREAFTER EXISTS WITH REGARD TO THIS AGREEMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY THE PARTIES AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY MAY OTHERWISE ACCRUE. THE PARTIES ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.

[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement effective as of the day and year first written above.

PICO Holdings, Inc.,

a California corporation

By: /s/ Maxim C. W. Webb

Name: Maxim C. W. Webb

Title: Chief Financial Officer

UCP, Inc.,

a Delaware corporation

By: /s/ Dustin L. Bogue

Name: Dustin L. Bogue

Title: President and CEO

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EXHIBIT A

Accounting Services

Description of Accounting Services:

PICO will provide, or cause to be provided, the following accounting services (“Accounting Services”):

Provide accounts payable and expense processing, and settlement support.

Provide accounts receivable and cash receipts processing, and settlement support.

Provide investment accounting and investment data entry.

Provide tax compliance support.

Maintain UCP's general ledger, including monthly and quarter-end journal entries and account reconciliations, which ledger shall be provided to UCP for approval.

Consolidate UCP's financial statements and supporting schedules each quarter, with the input and current assistance from UCP staff, which financial statements and supporting schedules shall be provided to UCP for approval.

Conduct and support UCP's financial statement audit as requested by UCP accountants or UCP's auditor.

Provide monthly and quarterly closing schedule and technical accounting support to UCP accountants.

Provide SEC financial reporting compliance consult and support.

Provide budgeting and financial analysis support.

Provide services to support ERP and accounting processing transition.

Provide stock administration.

Provide training of UCP staff in regard to current procedures, policies and schedules.

Provide certain access and authority to use the Oracle operating system, including project module, Expense, AP, budgeting and other modules and functionalities necessary to maintain accounting records and financial statements.

Provide development support for internal controls, internal audits and accounting policies and procedures.

All accounting or related entries or related schedules supporting such entries that are processed by PICO must comply with GAAP and be in accordance with current PICO policies and procedures as defined in internal control processes for Sarbanes-Oxley compliance and shall comply with UCP's financial reporting requirements.

Service Fee for Accounting Services:

PICO will provide, included as part of the fees determined herein, the necessary human resources and related overhead support to provide the activities listed above. The Service Fee for Accounting Services during the Term shall be an amount equal to: $150,000 per quarter, pro rated as required hereunder.

PICO shall bill Third Party charges such as couriers at actual cost and provide documentation for such expenses.

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EXHIBIT B

Human Resources Services

Description of Human Resources Services:

PICO will provide, or cause to be provided, the following human resources services (“HR Services”):

Provide pre-hire processing to include background checks and pre-hire paperwork.

Provide new hire processing and new employee orientation.

Provide employee termination processing.

Manage personnel records and provide human resources reports.

Manage employee relations.

Provide compensation processing.

Maintenance of time off files for Associates

Provide worker's comp claim processing?

Provide performance appraisal/goal management and tracking.

Provide training as necessary to employees.

Interact with auditors and provide documentation necessary for review of payroll, 401(k) and other human resource functions

Provide leave processing.

Provide the following payroll and benefit administration services:

◦ Issue and mail payroll checks and direct deposit confirmations for employees.

◦ Work with Paychex to ensure the preparation and filing of payroll tax reports, including W-2 Forms.

◦ Maintain payroll system and database and provide system security, training and upgrades as necessary in the normal course of business.

◦ Provide direct deposit facility.

◦ Process stop payments and direct deposit reversals.

◦ Process all garnishments as submitted by UCP.

◦ Provide administration services for benefit plans. Specifically, allow each UCP employee and his or her dependents, where applicable and in accordance with the terms of the plans identified below, to be eligible to participate in the following employee benefit plans:

▪ Health & Welfare Plans:

• Medical Plan (currently high deductible health plan with HSA under Anthem Blue Cross)

• Dental PPO Plan (currently under Metlife)

• Vision Plan (currently under Vision Service Providers)

• Life, AD&D, STD, LTD and Dependent Life (currently under UNUM)

• Flexible Spending Plan (currently with eflex)

• HSA Account Maintenance

▪ Supplemental & Executive Benefit Plans:

• Additional Life Insurance for Officers (currently under Reliance)

▪ Retirement Savings Plans:

• PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST

Service Fee for HR Services:

PICO will provide, included as part of the fees determined herein, the necessary human resources and related overhead

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support to provide the activities listed above. The Service Fee for HR Services during the Term shall be an amount equal to: $25,000 per quarter, pro rated as required hereunder.

PICO shall bill Third Party charges such as couriers at actual cost and provide documentation for such expenses.

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EXHIBIT C

Information Technology Services

Description of Information Technology Services:

PICO will provide, or cause to be provided, the following information technology services (“IT Services”):

Support approved corporate mobile devices with the ability to send and receive corporate e-mail, including any corporate mobile devices used by UCP personnel as of the Effective Date or devices of substantially similar kind during the period contemplated herein.

Maintain and assist in the acquisition of end user computing equipment and software, office equipment (copiers, scanners, facsimile machines, etc.) for UCP which adhere to the Service standard set forth in Section 2.6(a) of this Agreement.

As requested by UCP, negotiate overall purchasing agreements with information technology vendors with whom PICO does business and consult with UCP prior to making any decisions regarding standards or vendor changes for UCP. PICO shall have no authority to legally bind UCP.

Manage a service desk which provides a single point of contact for any request for IT Services or issues with services in accordance with PICO's practices as of the date of this Agreement. Ensure that a single phone number can be called to get assistance. In addition, the user can submit less urgent requests via email or website.

Provide vendor management services for any Third Party service providers in accordance with PICO's practices, including license management in respect of IT Services.

Support electronic mail, client email package (Microsoft Outlook), enterprise email infrastructure (Microsoft Exchange), anti-virus and spam filtering Services, and Internet email Gateway Services.

Create, maintain and provide access to shared resources for the enterprise in accordance with PICO's practices as of the date of this Agreement. Specifically, these shared resources shall include secure access to space on servers, printers, electronic mail, intranet and internet portals, Internet connections, networks, database management, storage area networks, failover systems and disaster recovery, firewall, and network administrators, among others.

Detect, troubleshoot and repair the Intranet, LAN, WAN, and Internet when degraded performance or outright failure occurs, including providing for appropriate notification of outages and their expected duration, provision of workarounds, and coordination of efforts of Third Party providers in the resolution in accordance with the Service standard set forth in Section 2.6(a) of this Agreement.

Monitor and manage network and other resources to ensure that the services are available and meeting the needs of UCP and the user community.

Administrative services shall be made available to assist in the appropriate use and setup of the services in accordance with the Service standard set forth in Section 2.6(a) of this Agreement.

Provide telecom services in accordance with the Service standard set forth in Section 2.6(a) of this Agreement.

Service Fee for IT Services:

PICO will provide, included as part of the fees determined herein, the necessary human resources and related overhead support to provide the activities listed above. The Service Fee for IT Services during the Term shall be an amount equal to: $24,000 per quarter, pro rated as required hereunder.

PICO shall bill Third Party charges such as couriers at actual cost and provide documentation for such expenses.

15

EX-10.8

TAX RECEIVABLE AGREEMENT

among

UCP, INC.

UCP, LLC

and

PICO HOLDINGS, INC

Dated as of July 23, 2013

	ARTICLE 1	PAGE
	DEFINITIONS
Section 1.01.	Definitions	4
Section 1.02.	Other Definitional and Interpretative Provisions	10
	ARTICLE 2
	DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT
Section 2.01.	Exchange Basis Schedule	11
Section 2.02.	Tax Benefit Schedule	11
Section 2.03.	Procedures, Amendments	11
	ARTICLE 3
	TAX BENEFIT PAYMENTS
Section 3.01.	Payments	13
Section 3.02.	No Duplicative Payments	13
Section 3.03.	Pro Rate Payments	13
Section 3.04.	Sufficient Funds	13
	ARTICLE 4
	TERMINATION
Section 4.01.	Early Termination and Breach of Agreement	14
Section 4.02.	Early Termination Notice	15
Section 4.03.	Payment upon Early Termination	15
	ARTICLE 5
	SUBORDINATION AND LATE PAYMENTS
Section 5.01.	Subordination	16
Section 5.02.	Late Payments by UCP	16
	ARTICLE 6
	NO DISPUTES; CONSISTENCY; COOPERATION
Section 6.01.	PICO's Participation in UCP's and the Company's Tax Matters	17
Section 6.02.	Consistency	17
Section 6.03.	Cooperation	17
Section 6.04.	Section 754 Elections	18
	ARTICLE 7
	MISCELLANEOUS
Section 7.01.	Notices	19
Section 7.02.	Counterparts	19
Section 7.03.	Entire Agreement; No Third Party Beneficiaries	19
Section 7.04.	Governing Law	19
Section 7.05.	Severability	19
Section 7.06.	Successors; Assignment; Amendments; Waivers	20
Section 7.07.	Titles and Subtitles	20
Section 7.08.	Consent to Jurisdiction	20

Section 7.09.	Reconciliation	20
Section 7.10.	Withholding	21
Section 7.11.	Admission of UCP into a Consolidated Group; Transfers of Corporate Assets	21
Section 7.12.	Confidentiality	21
Section 7.13.	LLC Agreement	22
Section 7.14.	Change in Tax Law	22
Section 7.15.	WAIVER OF JURY TRIAL	22

TAX RECEIVABLE AGREEMENT

among

UCP, INC.

UCP, LLC

and

PICO HOLDINGS, INC.

TAX RECEIVABLE AGREEMENT, dated as of July 23, 2013 (this “Agreement”), among UCP, Inc., a Delaware corporation (“UCP, Inc.”), UCP, LLC, a Delaware limited liability company (the “Company”), and PICO Holdings, Inc., a California corporation (“PICO”). Capitalized terms used but not otherwise defined are defined in or by reference to Section 1.01.

W I T N E S S E T H:

WHEREAS, PICO holds membership interests (“PICO Membership Interests”) in the Company, which is treated as a partnership for United States federal income tax purposes;

WHEREAS, UCP, Inc. is the managing member of, and holds and will hold membership interests (“UCP, Inc. Membership Interests”) in, the Company;

WHEREAS, as a result of PICO's eventual Exchanges (as defined below) of PICO Membership Interests (rather than transferring all of its PICO Membership Interests in exchange for Class A Shares (as defined below)), UCP, Inc. expects to incur significantly lower tax liabilities on an ongoing basis with respect to the operations of the Company and its direct and indirect subsidiaries;

WHEREAS, PICO may sell certain of its Membership Interests to UCP, Inc. in exchange for cash raised by UCP, Inc. in the IPO (the “IPO Sale”);

WHEREAS, upon admission of UCP, Inc., the Company will be treated as a partnership for United States federal income tax purposes and will have in effect a Section 754 Election, for each Taxable Year in which an exchange of PICO Membership Interests for Class A Shares occurs, which election is intended to result in an adjustment to the Tax basis of the assets owned by the Company and such subsidiaries (solely to the extent allocated to UCP, Inc.) at the time (each such time, an “Exchange Date”) of an exchange of PICO Membership Interests for Class A Shares or any other deemed or actual acquisition of PICO Membership Interests by UCP, Inc. for cash or otherwise, including the IPO Sale, if applicable, (each such exchange or acquisition, an “Exchange”) by reason of such Exchange and the payments under this Agreement;

WHEREAS, the income, gain, loss, expense and other Tax items of UCP, Inc., as a member of the Company (and in respect of each of the Company's direct and indirect subsidiaries treated as a disregarded entity or a partnership for U.S. federal income tax purposes) may be affected by the Basis Adjustment, and the income, gain, loss, expense and other Tax items of UCP, Inc. may be affected by the Imputed Interest; and

WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Basis Adjustment and the Imputed Interest on the liability for Taxes of UCP, Inc.;

NOW, THEREFORE, the parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01.    Definitions. As used in this Agreement, the following terms have the following meanings:

“Advisory Firm” means Deloitte & Touche LLP or any other law or accounting firm that is a nationally recognized as being expert in Tax matters and that is appointed by the Board.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

“Agreed Rate” means LIBOR plus 100 basis points.

“Agreement” is defined in the preamble.

“Amended Schedule” is defined in Section 2.03(b) of this Agreement.

“Applicable Law” means, to the extent applicable to UCP, Inc., the Company or their activities or PICO, as applicable: (a) all U.S. federal and state statutes and laws and all statutes and laws of foreign countries; (b) all rules and regulations (including interpretations thereof) of all regulatory agencies, organizations and bodies; and (c) all rules and regulations (including interpretations thereof) of all self-regulatory agencies, organizations and bodies now or hereafter in effect.

“Basis Adjustment” means the adjustment to the Tax basis of an Exchange Asset as a result of (x) an Exchange or (y) the payments made pursuant to this Agreement, in each case, under, or under the principles of, Sections 732(b) and 1012 of the Code (in situations where, as a result of one or more Exchanges, the Company becomes an entity that is disregarded as separate from its owner for U.S. federal income tax purposes), or Sections 743(b) and 754 of the Code (including in situations where, following an Exchange, the Company remains in existence as an entity for U.S. federal income tax purposes) and, in each case, comparable sections of state and local tax laws. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment (a “Basis Adjustment Amount”) resulting from an Exchange of PICO Membership Interests shall be determined without regard to any Pre-Exchange Transfer of such PICO Membership Interests and as if any such Pre-Exchange Transfer had not occurred. For the avoidance of doubt, payments under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as Imputed Interest.

A “Beneficial Owner” means, with respect to a security, any Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose of, or to direct the disposition of, such security. The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

“Board” means the board of directors of UCP, Inc..

“Business Day” means any day, other than a Saturday or Sunday, on which federally chartered banks in the United States are open for business.

“Change in Tax Law” is defined in Section 7.14 of this Agreement.

“Change of Control” means the occurrence of any of the following events:

(i) any Person, or any group of Persons acting together that would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934 or any successor provisions thereto, becomes the Beneficial Owner, directly or indirectly, of securities of UCP, Inc. representing more than fifty percent (50%) of the combined voting power of UCP, Inc.'s then-outstanding voting securities; or

(ii) the following people cease for any reason to constitute a majority of the number of directors of UCP, Inc. then serving: people who, on the date of the consummation of the IPO, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to an election of directors of UCP, Inc.) whose appointment or election by the Board or nomination for election by UCP, Inc.'s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date of the consummation of the IPO or whose appointment, election or nomination for election was previously so approved or recommended by the directors referred to in this clause (ii); or

(iii) there is consummated a merger or consolidation of UCP, Inc. with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (x) members of the Board immediately prior to the merger or consolidation do not constitute at least a majority of the board of directors of the company surviving the merger or, if the surviving company is a subsidiary, the ultimate parent thereof, or (y) all of the Persons who were the respective Beneficial Owners of the voting securities of UCP, Inc. immediately prior to such merger or consolidation do not Beneficially Own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of the Person resulting from such merger or consolidation; or

(iv) the stockholders of UCP, Inc. approve a plan of complete liquidation or dissolution of UCP or there is consummated an agreement or series of related agreements for the sale or other disposition, directly, or indirectly, by UCP, Inc. of all or substantially all of UCP, Inc.'s assets, other than such sale or other disposition by UCP, Inc. of all or substantially all of UCP, Inc.'s assets to an entity, at least fifty percent (50%) of the combined voting power of which is owned by stockholders of UCP, Inc. in substantially the same proportions as their voting power of UCP, Inc. immediately prior to such sale.

Notwithstanding the foregoing, except with respect to clause (ii) and clause (iii)(x) above, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of capital stock of UCP, Inc. immediately prior to such transaction or series of transactions continue to have substantially the same proportionate voting power in an entity which owns all or substantially all of the assets of UCP, Inc. immediately following such transaction or series of transactions.

“Change Notice” is defined in Section 6.01(b) of this Agreement.

“Class A Shares” means Class A shares of common stock of UCP, Inc.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” is defined in the Preamble of this Agreement.

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“Corporation Return” means the U.S. federal and/or state and/or local Tax Return, as applicable, of UCP, Inc. filed with respect to Taxes for any Taxable Year.

“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount (but not less than zero) of Realized Tax Benefits for all Taxable Years of UCP, Inc., up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination.

“Default Rate” means LIBOR plus 300 basis points.

“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state and local Tax law, as applicable, or any other event (including the execution of an IRS Form 870-AD or similar state or local form) that finally and conclusively establishes the amount of any liability for Tax.

“Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

“Early Termination Notice” is defined in Section 4.02 of this Agreement.

“Early Termination Payment” is defined in Section 4.03(b) of this Agreement.

“Early Termination Rate” means LIBOR plus 100 basis points.

“Early Termination Schedule” is defined in Section 4.02 of this Agreement.

“Excess Payment” is defined in Section 3.01(c) of this Agreement.

“Exchange” is defined in the recitals; “Exchanged” and “Exchanging” shall have correlative meanings.

“Exchange Asset” means each asset that is held by the Company, or by any of its direct or indirect subsidiaries treated as a partnership or disregarded entity for purposes of the applicable Tax, at the time of an Exchange.

“Exchange Basis Schedule” is defined in Section 2.01 of this Agreement.

“Exchange Date” is defined in the recitals.

“Exchange Payment” is defined in Section 5.01 of this Agreement.

“Expert” is defined in Section 7.09 of this Agreement.

“Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability for income Taxes of UCP, Inc. or any consolidated group of which UCP, Inc. is a member (or, without duplication, the Company, but only with respect to UCP, Inc.'s pro rata share of the Company's income Tax liability for such Taxable Year determined using the same methods, elections, conventions and similar practices used on the Corporation Return for such Taxable Year) as would be shown on its Tax Return (including any consolidated return in which UCP, Inc. joins) but determined (i) using the Non-Stepped Up Tax Basis of the Exchange Assets as reflected on the Exchange Basis Schedule, including amendments thereto, for the Taxable Year instead of the Tax basis of the Exchange Assets reflecting the Basis Adjustments and (ii) excluding any deduction attributable to Imputed Interest for the Taxable Year. Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to any Basis Adjustment or to the Imputed Interest.

“Imputed Interest” shall mean any interest imputed under Section 1272, Section 1274 or Section 483 or other provision of the Code and any similar provision of state and local Tax law applicable with respect to UCP, Inc.'s payment obligations under this Agreement.

“Interest Amount” is defined in Section 3.01(b) of this Agreement.

“IPO” means the initial public offering of Class A Shares by UCP, Inc.

“IPO Sale” is defined in the recitals.

“IRS” means the U.S. Internal Revenue Service.

“LIBOR” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two calendar days prior to the first day of such month, on Reuters Screen LIBOR01 Page (or if such screen shall cease to be publicly available, as reported by any other publicly available source of such market rate) for London interbank offered rates for United States dollar deposits for such month (or portion thereof).

“LLC Agreement” means the Second Amended and Restated Limited Liability Company Operating Agreement of the Company dated as of July 23, 2013, as amended.

“Market Value” means, with respect to the Class A Shares, on any given date: (i) if the Class A Shares are listed for trading on the NYSE, the closing sale price per share of the Class A Shares on the NYSE, on that date (or, if no closing sale price is reported, the last reported sale price), (ii) if the Class A Shares are not listed for trading on the NYSE, the closing sale price (or, if no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to Section 6(g) of the Exchange Act, on which the Class A Shares are listed, (iii) if the Class A Shares are not so listed on a national securities exchange, the last quoted bid price for the Class A Shares on that date in the over-the-counter market as reported by OTC Markets Group or a similar organization, or (iv) if the Class A Shares are not so quoted by OTC Markets Group or a similar organization such value as the Board, in its sole discretion, shall determine in good faith.

“Net Tax Benefit” is defined in Section 3.01(b).

“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax basis that such asset would have had at such time if no Basis Adjustments had been made with respect to such asset.

“Notice” is defined in Section 7.01.

“NYSE” means the New York Stock Exchange.

“Objection Notice” is defined in Section 2.03(a).

“Payment Limitation” is defined in Section 3.03.

“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

“PICO” is defined in the Preamble of the Agreement.

“PICO Membership Interests” is defined in the recitals.

“Pre-Exchange Transfer” means any transfer of one or more PICO Membership Interests (i) that occurs prior to an Exchange of such PICO Membership Interests, and (ii) to which Section 743(b) of the Code applies.

“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the actual liability for income Taxes of UCP, Inc. (or, without duplication, the Company, but only with respect to UCP, Inc.'s pro rata share of the Company's income Tax liability for such Taxable Year determined using the same methods, elections, conventions and similar practices used on the Corporation Return for such Taxable Year). If the actual liability for such Taxes for the Taxable Year is adjusted as a result of an audit by a Taxing Authority of such Taxable Year or any other Taxable Year, such adjustment shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

“Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the actual liability for income Taxes of UCP, Inc. (or, without duplication, the Company, but only with respect to UCP, Inc.'s pro rata share of the Company's income Tax liability for such Taxable Year determined using the same methods, elections, conventions and similar practices used on the Corporation Return for such Taxable Year) over the Hypothetical Tax Liability for such Taxable Year. If the actual liability for such Taxes for the Taxable Year is adjusted as a result of an audit by a Taxing Authority of such Taxable Year or any other Taxable Year, such adjustment shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

“Reconciliation Dispute” is defined in Section 7.09 of this Agreement.

“Reconciliation Procedures” shall mean those procedures set forth in Section 7.09 of this Agreement.

“Schedule” means any of (i) an Exchange Basis Schedule, (ii) a Tax Benefit Schedule or (iii) an Early Termination Schedule.

“Section 754 Election” means an election under Section 754 of the Code and any comparable election under applicable state or local income tax laws.

“Senior Obligations” is defined in Section 5.01 of this Agreement.

“Shortfall” is defined in Section 3.01(c) of this Agreement.

“Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting power or other similar interests (including the general partner interests or managing member or similar interests) of such Person.

“Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.

“Tax Benefit Schedule” is defined in Section 2.02 of this Agreement.

“Tax Return” means any return, declaration, report or similar statement filed or required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

“Taxable Year” means a taxable year of UCP, Inc. as defined in Section 441(b) of the Code or comparable section of state or local Tax law, as applicable (and, therefore, may include a period of less than 12 months for which a Corporation Return is prepared) in which there is a Basis Adjustment or increased depreciation, amortization or interest deductions attributable to an Exchange.

“Taxes” means any and all U.S. federal, state and local taxes, assessments or similar charges that are based on or measured with respect to net income or profits and any interest related to such taxes.

“Taxing Authority” shall mean any domestic, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

“Treasury Regulations” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

“UCP, Inc.” is defined in the Preamble of this Agreement.

“UCP, Inc. Membership Interests” is defined in the recitals.

“Valuation Assumptions” shall mean, as of an Early Termination Date, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, UCP, Inc. will have sufficient taxable income to utilize fully the deductions arising from the Basis Adjustments and the Imputed Interest, (2) the U.S. federal income Tax rates and state and local income Tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other applicable laws as in effect on the Early Termination Date, (3) any loss carryovers attributable to any Basis Adjustment or Imputed Interest and available as of the date of the Early Termination Schedule will be utilized by UCP, Inc. on a pro rata basis from the date of the Early Termination Schedule through the date that is the scheduled expiration date of such loss carryovers, (4) any non-amortizable assets will be disposed of on the fifteenth anniversary of the earlier of (x) the Basis Adjustment and (y) the Early Termination Date and (5) if, at the Early Termination Date, there are PICO Membership Interests that have not been Exchanged,

then each such PICO Membership Interest shall be deemed to be Exchanged for the Market Value of the Class A Shares and the amount of the cash payment to which PICO would be entitled under this Agreement if the Exchange occurred on the Early Termination Date.

Section 1.02.    Other Definitional and Interpretative Provisions. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to Articles and Sections are to Articles and Sections of this Agreement unless otherwise specified. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law,” “laws” or to a particular statute or law shall be deemed also to include any and all Applicable Laws.

ARTICLE 2

DETERMINATIONOF CUMULATIVE REALIZED TAX BENEFIT

Section 2.01.    Exchange Basis Schedule. Within 60 calendar days after the filing of the U.S. federal income Corporation Return for each Taxable Year, UCP, Inc. shall deliver to PICO a schedule (the “Exchange Basis Schedule”) that shows in reasonable detail (i) the Non-Stepped Up Tax Basis of the Exchange Assets as of each applicable Exchange Date, (ii) the Basis Adjustment Amount with respect to the Exchanges effected in such Taxable Year, calculated in the aggregate, (iii) the period or periods, if any, over which the Exchange Assets are amortizable and/or depreciable and (iv) the period or periods, if any, over which each Basis Adjustment Amount is amortizable and/or depreciable (which, for non-amortizable assets, shall be based on the Valuation Assumptions).

Section 2.02.    Tax Benefit Schedule.

(a) Within 60 calendar days after the filing of the U.S. federal income Corporation Return for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, UCP, Inc. shall provide to PICO a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit Schedule”). On no more than a quarterly basis, UCP, Inc. agrees to confirm, at the request of PICO, the Market Value of the applicable Class A Shares with respect to any Exchanges in the prior calendar quarter. The Tax Benefit Schedule will become final as provided in Section 2.03(a) and may be amended as provided in Section 2.03(b) (subject to the procedures set forth in Section 2.03(b)).

(b) Applicable Principles. Subject to Section 3.03, the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of UCP, Inc. for such Taxable Year attributable to the Basis Adjustments and Imputed Interest. The actual liability for Taxes will take into account the deduction of the portion of the Tax Benefit Payment that must be accounted for as interest under the Code based upon the characterization of Tax Benefit Payments as additional consideration payable by UCP, Inc. for the PICO Membership Interests acquired in an Exchange. Carryovers or carrybacks of any Tax item attributable to the Basis Adjustments and the Imputed Interest shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local income and franchise tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to the Basis Adjustment or the Imputed Interest and another portion that is not, such portions shall be considered to be used in accordance with the “with and without” methodology. All Tax Benefit Payments (other than amounts accounted for as interest under the Code) will (A) be treated as subsequent upward purchase price adjustments that give rise to further Basis Adjustments to Exchange Assets for UCP, Inc. and (B) have the effect of creating additional Basis Adjustments to Exchange Assets for UCP, Inc. in the year of payment, and, as a result, such additional Basis Adjustments will be incorporated into the current year calculation and into future year calculations, as appropriate.

Section 2.03.    Procedures, Amendments.

(a) Procedures. Each time UCP, Inc. delivers to PICO an applicable Schedule under this Agreement, including any Amended Schedule, but excluding any Early Termination Schedule or amended Early Termination Schedule, UCP, Inc. also shall (x) deliver to PICO the Corporation Return, along with schedules and work papers, as determined by UCP, Inc. or requested by PICO, providing reasonable detail regarding the preparation of such Schedule and (y) allow PICO reasonable access to the appropriate

representatives of UCP, Inc. and the Advisory Firm in connection with a review of such Schedule. Each party shall bear its own expenses associated with such review and investigation. The applicable Schedule shall become final and binding on all parties unless PICO, within 30 calendar days after an Exchange Basis Schedule or amendment thereto or a Tax Benefit Schedule or amendment thereto was provided to PICO, provides UCP, Inc. with notice of a material objection to such Schedule (“Objection Notice”) made in good faith. If UCP, Inc. and PICO are unable to resolve the issues raised in such notice within 30 calendar days of receipt by UCP, Inc. of an Objection Notice with respect to such Exchange Basis Schedule or Tax Benefit Schedule, UCP, Inc. and PICO shall employ the reconciliation procedures as provided for in Section 7.09 of this Agreement (the “Reconciliation Procedures”).

(b) Amended Schedule. The applicable Schedule for any Taxable Year shall be amended from time to time by UCP, Inc. (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information that was not previously taken into account, (iii) to comply with the Expert's determination under the Reconciliation Procedures, (iv) to reflect a material change (relative to the amounts in the original Tax Benefit Schedule) in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other Tax item to such Taxable Year, (v) to reflect a material change (relative to the amounts in the original Tax Benefit Schedule) in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year, or (vi) to adjust the Exchange Basis Schedule to take into account payments made pursuant to this Agreement (any such Schedule, an “Amended Schedule”).

ARTICLE 3

TAX BENEFIT PAYMENTS

Section 3.01.    Payments.

(a) Payments. Within five (5) Business Days of a Tax Benefit Schedule that was delivered to PICO becoming final in accordance with Section 2.03(a), UCP, Inc. shall pay to PICO the applicable Tax Benefit Payment determined pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account designated by PICO; provided that no Tax Benefit Payment shall be made in respect of estimated Tax payments, including, without limitation, estimated U.S. federal income Tax payments.

(b) A “Tax Benefit Payment” means an amount, not less than zero, equal to the Net Tax Benefit and the Interest Amount. For the avoidance of doubt, for Tax purposes, the Interest Amount shall not be treated as interest but instead shall be treated as additional consideration for PICO Membership Interests in Exchanges. The “Net Tax Benefit” for a Taxable Year shall be an amount equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of Tax Benefit Payments with respect to Net Tax Benefits previously made under this Section 3.01; provided, however , that PICO shall not be required to return any portion of any previously received Tax Benefit Payment under any circumstances. The “Interest Amount” for a Taxable Year shall equal the interest on the Net Tax Benefit for such Taxable Year calculated at the Agreed Rate from the due date (without extensions) for the filing of the Corporation Return with respect to Taxes for such Taxable Year until the date of payment. The Net Tax Benefit shall be determined separately with respect to each separate Exchange on an individual basis by reference to the amount realized by PICO on the Exchange of PICO Membership Interests and the resulting Basis Adjustments to UCP, Inc. (as determined pursuant to Section 2.02(b)).

(c) Increase or Decrease in Future Payments. (i) Within five (5) Business Days after the delivery of an Amended Schedule to PICO for any Taxable Year, the Company shall pay to PICO an amount equal to the excess, if any, of (x) the amount PICO is entitled to receive under this Agreement in respect of the relevant Taxable Year (based on such Amended Schedule) over (y) the cumulative amount PICO actually received in respect of such Taxable Year pursuant to this Agreement.

(ii) In the event that an Amended Schedule reflects a decrease in the Realized Tax Benefit for such year (including, without limitation, by reason of net operating loss carryovers or carrybacks) and payments have previously been made based on the higher Realized Tax Benefit reflected in any prior Schedule (either such excess, an “Excess Payment”), future payments, if any, to be made under this Section 3.01 shall be reduced by the amount of the Excess Payment until such Excess Payment has effectively been repaid. For the avoidance of doubt, if future payments are insufficient to repay any Excess Payment (a “Shortfall”), PICO shall have no obligation to repay to the Company or any other Person any such Shortfall.

Section 3.02.    No Duplicative Payments. It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement, subject to Article 4 and Section 7.14, will result in 85% of UCP, Inc.'s Cumulative Net Realized Tax Benefit being paid to PICO pursuant to this Agreement. The provisions of this Agreement shall be construed in the appropriate manner to ensure such intentions are realized.

Section 3.03.    Pro Rata Payments. Notwithstanding anything in Section 3.01 to the contrary, to the extent that (i) UCP, Inc.'s aggregate Tax benefit with respect to any Basis Adjustment or Imputed Interest is limited in a particular Taxable Year because UCP, Inc. does not have sufficient Taxable income or (ii) UCP, Inc. has insufficient funds to make a payment hereunder as a result of (x) applicable limitations imposed by credit agreements or similar arrangements in respect of indebtedness for borrowed money to which the Company is a party (including, without limitation, limitations on the ability of the Company and its direct and indirect Subsidiaries to make distributions or payments to UCP, Inc.), (y) a determination by the Board in good faith that making such payments would result in a default under any such credit agreement or similar arrangement or (z) a determination by the Board in good faith that (A) such payments could be set aside as fraudulent transfers or conveyances or similar actions under fraudulent transfer laws or (B) such payments could cause UCP, Inc. to be undercapitalized (each of (x), (y) and (z), a “Payment Limitation”), the limitation on the Tax benefit or the Tax Benefit Payments that may be made, as the case may be, shall be taken into account in the same proportion as Tax Benefit Payments would have been made absent the limitations in clauses (i) and (ii) of this paragraph, as applicable.

Section 3.04.    Sufficient Funds. UCP, Inc. shall use good faith efforts to ensure that it has sufficient funds to make all payments due under this Agreement.

ARTICLE 4

TERMINATION

Section 4.01. Early Termination, Change of Control and Breach of Agreement.

(a)     UCP, Inc. may terminate this Agreement with respect to all of the PICO Membership Interests held (or previously Exchanged) by PICO at any time by paying to PICO the Early Termination Payment; provided, however , that this Agreement shall terminate only upon the receipt of the Early Termination Payment by PICO, and provided, further , that UCP, Inc. may withdraw any Early Termination Notice prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payment by UCP, Inc., neither PICO nor UCP, Inc. shall have any further payment obligations under this Agreement, other than for any (x) Tax Benefit Payment agreed to by UCP, Inc. and PICO, acting in good faith, to be due and payable but unpaid as of the Early Termination Notice and (y) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in this clause (y) is included in the Early Termination Payment). If an Exchange occurs after UCP, Inc. makes the Early Termination Payments with respect to PICO, UCP, Inc. shall have no obligations under this Agreement with respect to such Exchange, and its only obligation under this Agreement in such case shall be its obligations under Section 4.03(a).

(b)     Upon a Change of Control or if UCP, Inc. breaches any of its material obligations under this Agreement, then all of UCP's obligations hereunder shall be accelerated and calculated as if an Early Termination Notice had been delivered on the date of such Change of Control or breach and such obligations shall include, but shall not be limited to, (1) the Early Termination Payment calculated as if an Early Termination Notice had been delivered on the date of such acceleration, (2) any Tax Benefit Payment agreed to by UCP, Inc. and PICO acting in good faith, to be due and payable but unpaid as of the date of such acceleration and (3) any Tax Benefit Payment due for the Taxable Year ending with or including the date of such acceleration (except to the extent that the amount described in this clause (3) is included in the amount described in clause (1)). Notwithstanding the foregoing, in the event that UCP, Inc. breaches this Agreement, PICO shall be entitled to elect to receive the amounts set forth in clauses (1), (2) and (3) above or to seek specific performance of the terms hereof. The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement; provided that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due; provided further that UCP, Inc. shall be deemed not to be in breach of a material obligation by reason of the failure to make a payment under this Agreement until the later of (x) three months after the date such payment was originally due and (y) the thirtieth (30 ^th ) calendar day after UCP, Inc. received a written notice from PICO specifying the amount due. Notwithstanding anything in this Agreement to the contrary, it shall not be a breach of this Agreement if UCP, Inc. fails to make any Tax Benefit Payment when due because, and to the extent, of a Payment Limitation (but only for so long as such Payment Limitation continues); provided that the interest provisions of Section 5.02 shall apply to any such late payment (but the Default Rate shall be replaced by the Agreed Rate).

(c)     UCP, Inc., the Company and PICO hereby acknowledge and agree that, as of the date of this Agreement and as of the date of each Exchange, the aggregate value of the Tax Benefit Payments cannot reasonably be ascertained for U.S. federal income Tax or other applicable Tax purposes.

Section 4.02.    Early Termination Notice. If UCP, Inc. exercises its right of early termination under Section 4.01, UCP, Inc. shall deliver to PICO notice of such intention to exercise such right (“Early Termination Notice”) and a schedule (the “Early Termination Schedule”) specifying UCP, Inc.'s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment. At the time UCP, Inc. delivers the Early Termination Notice to PICO, UCP, Inc. shall (a) deliver to PICO schedules and work papers, as determined by UCP, Inc. or requested by PICO, providing reasonable detail regarding the calculation of the Early Termination Payment and (b) allow PICO reasonable access to the appropriate representatives of UCP, Inc. and the Advisory Firm in connection with its review of such calculation. Each party shall bear its own expenses associated with such review. The Early Termination Payment shall become final and binding on the parties unless PICO provides UCP, Inc. with notice of a material objection to the calculation of the Early Termination Payment made in good faith within 30 calendar days after the Early Termination Schedule was provided to PICO (or such shorter period as may be mutually agreed in writing by the parties). If PICO provides UCP with written notice of its objection to the calculation of the Early Termination Payment, and PICO and UCP, Inc., for any reason, cannot agree upon the amount of the Early Termination Payment within 30 calendar days following UCP, Inc.'s receipt of PICO's objection, UCP, Inc. and PICO shall employ the Reconciliation Procedures as described in Section 7.09 of this Agreement.

Section 4.03.    Payment upon Early Termination.

(a) Within five (5) Business Days after the Early Termination Schedule has become final and binding, UCP, Inc. shall pay to PICO an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to the bank account designated by PICO.

(b) The “Early Termination Payment” as of the date of the delivery of an Early Termination Schedule shall equal, with respect to PICO, the present value, discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would be required to be paid by UCP, Inc. to PICO beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied.

ARTICLE 5

SUBORDINATIONAND LATE PAYMENTS

Section 5.01.    Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by UCP, Inc. to PICO under this Agreement (an “Exchange Payment”) shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of all obligations in respect of indebtedness of UCP, Inc. (“Senior Obligations”) and shall rank pari passu with all current or future unsecured obligations of UCP, Inc. that are not Senior Obligations.

Section 5.02.    Late Payments by UCP, Inc.. Except as otherwise noted in this Agreement, the amount of all or any portion of any Exchange Payment not made to PICO when due (without regard to Section 5.01) under the terms of this Agreement shall be payable together with interest thereon, computed at the Default Rate and commencing from the date on which such Exchange Payment was due and payable.

ARTICLE 6

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.01.    PICO Participation in UCP, Inc.'s and the Company's Tax Matters.

(a) Except as otherwise provided herein, UCP, Inc. shall have full responsibility for, and sole discretion over, all Tax matters concerning UCP, Inc. and the Company, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, UCP, Inc. shall notify PICO of any audit of UCP, Inc. and the Company by a Taxing Authority the outcome of which is reasonably expected to affect PICO's rights and obligations under this Agreement, and shall provide to PICO reasonable opportunity to provide information and other input to UCP, Inc., the Company, and their respective advisors concerning the conduct of any such portion of such audit; PICO shall have the right to attend in person or by telephone (but not participate in) any audit of UCP, Inc. or the Company the outcome of which could reasonably be expected to affect the amount of net payments that PICO are expected to receive under this Agreement; provided, however , that UCP, Inc. and the Company shall not be required to take any action that is inconsistent with any provision of the LLC Agreement. UCP, Inc. shall not settle or fail to contest any issue pertaining to taxes that is reasonably expected to affect PICO' rights and obligations under this Agreement without the consent of PICO, such consent not to be unreasonably withheld or delayed.

(b) If UCP, Inc., the Company, or any of their respective Subsidiaries receives a 30-day letter, a final audit report, a statutory notice of deficiency or similar written notice from any Taxing Authority with respect to the Tax treatment of any Exchange (a “Change Notice”), which, if sustained, would result in (i) a reduction in the amount of Realized Tax Benefit with respect to a Taxable Year preceding the taxable year in which the Change Notice is received or (ii) a reduction in the amount of Tax Benefit Payments UCP, Inc. will be required to pay to PICO with respect to Taxable Years after and including the taxable year in which the Change Notice is received, UCP, Inc. shall deliver prompt written notice of such Change Notice to PICO.

Section 6.02.    Consistency.

(i) Except upon the written advice of the Advisory Firm to UCP, Inc., UCP, Inc. and PICO agree to report and cause to be reported for all purposes, including U.S. federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including without limitation items arising from the Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that specified by UCP, Inc. in any Schedule provided by or on behalf of UCP, Inc. under this Agreement. Any dispute concerning such advice shall be subject to Section 7.09.

(ii) In the event that the Advisory Firm is replaced by UCP, Inc., such replacement Advisory Firm shall be required to perform its services under this Agreement using procedures and methodologies consistent with those used by the previous Advisory Firm, unless (a) otherwise required by law or (b) UCP, Inc. and PICO agree to the use of other procedures and methodologies.

Section 6.03.    Cooperation. PICO shall (a) furnish to UCP, Inc. in a timely manner such information, documents and other materials as UCP, Inc. may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to UCP, Inc. and its representatives to provide explanations of documents and materials and such other information as UCP, Inc. or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter described in clause (a) above. UCP, Inc. shall reimburse PICO for any

reasonable third-party costs and expenses incurred pursuant to this Section 6.03.

Section 6.04.    Section 754 Elections. If at any point the Company or any of its direct or indirect Subsidiaries that is a partnership for U.S. federal income tax purposes does not have a Section 754 Election in effect, UCP, Inc. shall cause the Company or such Subsidiary, as applicable, to make a Section 754 Election at the time that the Company or such Subsidiary, as applicable, files its next U.S. federal income Tax Return.

ARTICLE 7

MISCELLANEOUS

Section 7.01.    Notices. All notices, requests, consents and other communications hereunder (each, a “Notice”) to any party shall be in writing and shall be delivered in person or sent by facsimile (provided a copy is thereafter promptly delivered as provided in this Section 7.01) or nationally recognized overnight courier, addressed to such party at the address or facsimile number set forth below or such other address or facsimile number as may hereafter be designated in writing by such party to the other parties:

If to the Company or UCP, Inc., to:

6489 Camden Avenue, Suite 204

San Jose, CA 95120

Attention: President

Fax: 408-323-1114

If to PICO, to:

7979 Ivanhoe Avenue, Suite 300

La Jolla, CA 92037

Attention: President

Fax: 858-456-6480

Each Notice shall be deemed received on the date sent to the recipient thereof in accordance with this Section 7.01, if sent prior to 5:00 p.m. in the place of receipt and such day is a Business Day; otherwise, such Notice shall be deemed not to have been received until the next succeeding Business Day.

Section 7.02.    Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

Section 7.03.    Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.04.    Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to the conflicts of law principles thereof.

Section 7.05.    Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 7.06.    Successors; Assignment; Amendments; Waivers. PICO may not assign this Agreement to any person without the prior written consent of UCP, Inc.; provided, however , that (i) to the extent PICO Membership Interests are effectively transferred in accordance with the terms of the LLC Agreement, PICO may assign to the transferee of such PICO Membership Interests PICO's rights under this Agreement with respect to such transferred PICO Membership Interests and (ii) PICO shall be entitled to assign its rights under this Agreement to (x) a direct or indirect beneficial owner or Affiliate of PICO, in connection with a liquidation, dissolution, winding up or other termination of PICO, and, in either case (i) or (ii), such transferee shall have executed and delivered, or, in connection with such transfer, execute and deliver, a joinder to this Agreement in form and substance reasonably satisfactory to UCP, Inc.), agreeing to become a party for all purposes of this Agreement, except as otherwise provided in such joinder.

No provision of this Agreement may be amended unless such amendment is approved in writing by each of UCP, Inc., the Company and PICO. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

Except as otherwise specifically provided herein, all of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. UCP, Inc. shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of UCP, Inc., by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that UCP, Inc. would be required to perform if no such succession had taken place.

Section 7.07.    Titles and Subtitles. The titles of the articles, sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.08    Consent to Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought and maintained exclusively in the United States District Court for the Northern District of California or the Superior Court of the State of California located in the County of Santa Clara. Each of the parties irrevocably consents to submit to the personal jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding. Process in any such suit, action or proceeding in such courts may be served, and shall be effective, on any party anywhere in the world, whether within or without the jurisdiction of any such court, by any of the methods specified for the giving of Notices pursuant to Section 7.01. Each of the parties irrevocably waives, to the fullest extent permitted by law, any objection or defense that it may now or hereafter have based on venue, inconvenience of forum, the lack of personal jurisdiction and the adequacy of service of process (as long as the party was provided Notice in accordance with the methods specified in Section 7.01) in any suit, action or proceeding brought in such courts.

Section 7.09.    Reconciliation. In the event that UCP, Inc. and PICO are unable to resolve a disagreement with respect to a matter governed by Section 2.03, Section 4.02, or Section 6.02 within the relevant period designated in this Agreement (“Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, unless otherwise agreed by UCP, Inc. and PICO have any material relationship with either UCP, Inc. or PICO. If the parties are unable to agree on an Expert within thirty (30) calendar days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert

shall be appointed by the American Arbitration Association. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30) calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days or as soon thereafter as is reasonably practicable, in each case, after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on such date and such Tax Return may be filed as prepared by UCP, Inc., subject to adjustment or amendment upon resolution. In the event that this reconciliation provision is utilized, the fees of the Expert shall be paid in proportion to the manner in which the dispute is resolved, such that, for example, if the entire dispute is resolved in favor of one party, the other party shall pay all of the fees, or if the items in dispute are resolved 50% in favor of UCP, Inc. and 50% in favor of PICO, each of UCP, Inc. and PICO shall pay 50% of the fees of the Expert. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall be (i) final and may be enforced as if it were the award of an arbitrator issued under and pursuant to the rules of the American Arbitration Association and (ii) binding on UCP, Inc. and PICO and may be entered and enforced in any court having competent jurisdiction.

Section 7.10.    Withholding. UCP, Inc. shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as UCP, Inc. is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by UCP, Inc., such withheld amounts shall be treated for all purposes of this Agreement as having been paid to PICO.

Section 7.11.    Admission of UCP, Inc. into a Consolidated Group; Transfers of Corporate Assets.

(a) If UCP, Inc. becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Section 1501 et seq . of the Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated taxable income of the group as a whole.

(b) If any entity that is obligated to make an Exchange Payment hereunder transfers one or more assets to a corporation with which such entity does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Exchange Payment ( e.g. , calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset, plus (i) the amount of debt to which such asset is subject, in the case of a contribution of an encumbered asset or (ii) the amount of debt allocated to such asset, in the case of a contribution of a partnership interest.

Section 7.12.    Confidentiality. PICO acknowledges and agrees that the information of UCP, Inc. and of its Affiliates is confidential and, except in the course of performing any duties as necessary for UCP, Inc. and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of UCP, Inc. and its Affiliates and successors,

concerning the Company and its Affiliates and successors learned by PICO heretofore or hereafter. This Section 7.12 shall not apply to (i) any information that has been made publicly available by UCP, Inc. or any of its Subsidiaries, becomes public knowledge (except as a result of an act of PICO in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for PICO to prepare and file its Tax Returns, to respond to any inquiries regarding the sale from any Taxing authority or to prosecute or defend any action, proceeding or audit by any Taxing authority with respect to such returns. Notwithstanding anything to the contrary herein, PICO (and each employee, representative or other agent of PICO or assignee, as applicable) may disclose to any and all Persons, without limitation of any kind, the Tax treatment and Tax structure of UCP, Inc., the Company, PICO and their Affiliates, and any of their transactions, and all materials of any kind (including opinions or other Tax analyses) that are provided to PICO relating to such Tax treatment and Tax structure.

Section 7.13.    LLC Agreement. This Agreement shall be treated as part of the partnership agreement of the Company as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.

Section 7.14.    Change in Tax Law. Notwithstanding anything herein to the contrary, if, in connection with an actual or proposed change in law, PICO reasonably believes that the existence of this Agreement could cause income (other than income arising from receipt of a payment under this Agreement) recognized by PICO (or direct or indirect equity holders in such member) upon the IPO or any Exchange to be treated as ordinary income rather than capital gain (or otherwise taxed at ordinary income rates) for U.S. federal income Tax purposes or would have other material adverse Tax consequences to PICO (a “Change in Tax Law”), then (i) at the election of PICO and to the extent specified by PICO, this Agreement shall not apply with respect to an Exchange by PICO occurring after a date specified by PICO, (ii) at the election of PICO, this Agreement shall otherwise be amended in a manner determined by UCP, Inc. and PICO, acting jointly, provided that such amendment shall not result in an increase in payments under this Agreement at any time as compared to the amounts and times of payments that would have been due in the absence of such amendment or (iii) at the election of PICO, this Agreement shall cease to have further effect. For the avoidance of doubt, any election pursuant to this Section 7.14 shall not be considered a breach of this Agreement and shall not trigger an Early Termination Payment under Section 4.01.

Section 7.15.    WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized representatives as of the day and year first above written.

UCP, Inc.

By: /s/ Dustin L. Bogue

Name: Dustin L. Bogue

Title: President and Chief Executive Officer

UCP, LLC.

By: /s/ John R. Hart

Name: John R. Hart    

Title: Chairman    

PICO HOLDINGS, INC

By: Maxim C. W. Webb

Name: Maxim C. W. Webb    

Title: Chief Financial Officer    

EX-10.9

EXHIBIT 10.9

EXCHANGE AGREEMENT

by and among

UCP, INC.

UCP, LLC

and

PICO Holdings, Inc.

Dated as of July 23, 2013

1

This EXCHANGE AGREEMENT (the “Agreement”) is entered into as of July 23, 2013, by and among UCP, Inc., a Delaware corporation (“UCP ”), UCP, LLC, a Delaware limited liability company (the “ Company ”), and PICO Holdings, Inc., a California corporation (together with its subsidiaries other than the Company, “PICO”), with respect to the following facts:

WHEREAS, prior to the closing of its initial public offering of Class A Shares (the “IPO”), UCP and PICO intend to amend and restate the LLC Agreement of the Company, amend the Certificate of Incorporation of UCP, Inc., and consummate other related transactions, as described in the Registration Statement on Form S-1 originally filed with the Commission on April 4, 2013, as amended (Registration No. 333-187735);

WHEREAS, immediately prior to the closing of the IPO, the existing ownership interests in the Company held by PICO will be converted into PICO Membership Interests in the Company, and the existing shares of common stock of UCP will be converted into Class B Shares of UCP;

WHEREAS, the parties hereto desire to provide for the possible future exchange following the IPO of PICO Membership Interests in the Company for Class A Shares of UCP, on the terms and subject to the conditions set forth herein;

WHEREAS, UCP and the Company desire to grant PICO the right to exchange any or all of its PICO Membership Interests; provided, that UCP and the Company shall have no obligation to acquire from PICO any PICO Membership Interests unless PICO exercises its Exchange Right with respect to such PICO Membership Interests in accordance herewith; and

WHEREAS, the parties intend that an exchange consummated hereunder be treated for U.S. federal income tax purposes, to the extent permitted by law, as a taxable sale of PICO Membership Interests.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

Section 1.1    Certain Definitions. Except as otherwise expressly provided herein, the following terms and phrases have the meanings as set forth below:

“Agreement” is defined in the preamble.

“Business Combination” is defined in the Amended and Restated Certificate of Incorporation of UCP.

“Business Day” means any day, other than a Saturday or Sunday, on which federally chartered banks in the United States are open for business.

“Class A Shares” means shares of Class A common stock, par value $0.01 per share, of UCP.

“Class B Shares” means shares of Class B common stock, par value $0.01 per share, of UCP.

“Closing” means the closing of an Exchange pursuant to Section 2.1 of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the U.S. Securities and Exchange Commission or any successor thereto.

“Company” is defined in the preamble.

“Exchange” means an exchange by PICO of one or more PICO Membership Interests for Class A Shares pursuant to Section 2.1 of this Agreement.

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“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Exchange Rate” means the number of Class A Shares for which a PICO Membership Interest is entitled to be exchanged, as provided in Section 2.2.

“Exchange Request” means a written notice to UCP, delivered at least 20 days in advance of any Exchange, setting forth the number of PICO Membership Interests to be exchanged for Class A Shares, as described in Section 2.1(a).

“Exchange Right” means the right of PICO to exchange from time to time one or more PICO Membership Interests for Class A Shares pursuant to Section 2.1.

“Fiscal Quarter” means each fiscal quarter ending on the last day of each of March, June, September and December of any Fiscal Year.

“Fiscal Year” means a period commencing January 1 and ending December 31 of each year.

“Governmental Entity” means any court, administrative agency, regulatory body, commission, or other governmental authority, board, bureau, or instrumentality, domestic or foreign, and any subdivision thereof.

“IPO” is defined in the recitals.

“Liens” means any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements, or other restrictions on title or transfer of any nature whatsoever.

“LLC Agreement” means the Second Amended and Restated Limited Liability Company Operating Agreement of the Company dated as of July 23, 2013, as such agreement may be amended from time to time.

“Notice” is defined in Section 4.2.

“Permitted Transferee” means a permitted transferee of PICO Membership Interests under Section 7.1 of the LLC Agreement.

“Person” means any natural person, corporation, limited partnership, general partnership, limited liability company, joint stock company, joint venture, association, company, estate, trust, bank trust company, land trust, business trust, or other organization, whether or not a legal entity, custodian, trustee-executor, administrator, nominee, or entity in a representative capacity, and any government or agency or political subdivision thereof.

“PICO” is defined in the preamble.

“PICO Membership Interests” means the Series A Units held by PICO as designated in the LLC Agreement.

“Registration Rights Agreement” means the Registration Rights Agreement dated as of July 23, 2013 among UCP and the other parties thereto.

“Restricted Class A Shares” is defined in Section 3.1.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Secretary” is defined in Section 2.1(d)(i).

“UCP” is defined in the preamble.

Section 1.2    Other Definitional and Interpretative Provisions. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The headings and captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles and Sections are to Articles and Sections of this Agreement unless otherwise specified. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the

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singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, restated, modified or supplemented from time to time in accordance with the terms thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

ARTICLE II

EXCHANGE RIGHT

Section 2.1    Exchanges.

(a)Permissible Exchanges. (i) Upon the terms and subject to the conditions of this Article 2, PICO may, at any time and from time to time, elect to Exchange in one or more Exchanges up to one hundred percent (100%) of its PICO Membership Interests by delivering an Exchange Request to UCP.

(i)Upon delivery to UCP, no Exchange Request may be revoked less than five Business Days prior to the scheduled Closing of the applicable Exchange (and UCP shall have received notice of such revocation no later than such fifth Business Day) unless PICO reimburses all out-of-pocket costs incurred by UCP or the Company with respect to such requested Exchange; provided, however, that PICO shall be entitled without reimbursing such costs either (x) to revoke such Exchange Request at any time prior to the Closing of the applicable Exchange or (y) to delay the Closing of the requested Exchange pursuant to this Section 2.1(a)(ii), in each case, after the occurrence of one or more of the following events (the date of such Closing to be determined pursuant to Section 2.1(b)(i)): (A) any registration statement pursuant to which the Class A Shares were to be registered for PICO at or immediately following the Closing shall have ceased to be effective pursuant to any action or inaction by the Commission; (B) UCP shall have failed to cause any related prospectus to be supplemented by any required prospectus supplement necessary to effect such sale; (C) UCP shall have exercised its right to defer, delay or suspend the filing or effectiveness of a registration statement (whether pursuant to the Registration Rights Agreement or otherwise), and such deferral, delay or suspension shall affect the ability of PICO to have its Class A Shares registered at or immediately following the Closing; (D) at such time when a representative of PICO is not serving on the Board of Directors of UCP, UCP shall have disclosed to PICO any material non-public information concerning UCP, the receipt of which results in PICO being prohibited or restricted from selling Class A Shares at or immediately following the Closing without disclosure of such information (and UCP does not permit or make such disclosure); (E) the Commission shall have issued a stop order relating to the registration statement pursuant to which the Class A Shares were to be registered on behalf of PICO at or immediately following the Closing; (F) the Closing, or the closing of the registered offering or the effectiveness of any registration, shall have been delayed due to any facts or circumstances; (G) there shall have occurred a material disruption in the securities markets generally or in the market or markets in which the Class A Shares are then traded; (H) there shall be in effect an injunction, a restraining order or a decree of any nature of any Governmental Entity that restrains or prohibits the exchange of PICO Membership Interests for Class A Shares or the registration or sale of any Class A Shares pursuant to a registration statement; or (I) UCP shall have failed to comply in all material respects with its obligations under the Registration Rights Agreement, and such failure shall have affected the ability of PICO to consummate the sale of Class A Shares in a manner not expressly contemplated in clauses (A) through (H) above; provided further, however, that in no event shall PICO have controlled or intentionally influenced any facts, circumstances, or persons in connection therewith (except in the good faith performance such Person’s duties as an officer or director of UCP) in order to provide PICO with a basis for such delay or revocation.

(ii)Each Exchange Request shall set forth the number of PICO Membership Interests PICO wishes to Exchange for Class A Shares at the applicable Closing. If any Exchange Request is made in connection with a contemplated underwritten offering of Class A Shares and such underwritten offering includes any option being granted to the underwriters or any other Person to acquire an additional number of Class A Shares in connection with such offering, then (A) each Exchange Request related to PICO Membership Interests to be exchanged for Class A Shares that will be included in such underwritten offering shall also specify the maximum number of additional PICO Membership Interests that PICO desires to have exchanged in the event that such option is exercised (it being understood that (x) the party exercising such option may have the right to do so in part, in which case the additional PICO Membership Interests exchanged in connection with such offering will be limited to the amount necessary to fulfill the delivery obligation with respect to the Class A Shares that are actually to be acquired upon exercise of such option, and (y) the allocation of Class A Shares to be acquired pursuant to an exercise of any such option among the Persons participating in such offering may not be known at the time of the delivery of the original Exchange Request, in which case the number of additional PICO Membership Interests potentially to be exchanged will be communicated to UCP pursuant to a supplement to the Exchange Request delivered promptly following the time at

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which such determination is made, which supplement to the Exchange Request need not be delivered 20 days in advance of the applicable exchange) and (B) the Closing of the exchange of any additional PICO Membership Interests to fulfill a PICO Member’s delivery obligation with respect to the Class A Shares that are to be acquired upon exercise of any such option will occur immediately prior to the time that delivery of the Class A Shares is to be made.

(iii)PICO shall represent in the Exchange Request that it owns the PICO Membership Interests to be delivered at the applicable Closing pursuant to Section 2.1(d)(i) and Section 2.1(d)(ii), free and clear of all Liens, except as set forth therein and other than transfer restrictions imposed by or under applicable securities laws and this Agreement and the LLC Agreement, and, if there are any Liens identified in the Exchange Request, PICO shall covenant that it will deliver at the applicable Closing evidence reasonably satisfactory to UCP that all such Liens (other than transfer restrictions imposed by or under applicable securities laws, this Agreement, or the LLC Agreement) have been released.

(iv)Notwithstanding anything to the contrary herein, no exchange shall be permitted (and, if attempted, shall be void ab initio) if, in the good faith determination of the Company, such exchange would pose a material risk that the Company would be taxable as a corporation as a result of being characterized as a “publicly traded partnership” as defined in Section 7704 of the Code.

(v)Each exchange pursuant to this Section 2.1(a) shall be at the Exchange Rate and Share Exchange Rate in effect at the applicable Closing.

(b)Closing. (i) If an Exchange Request has been delivered pursuant to Section 2.1(a)(i), then (subject to Sections  2.1(a)(ii) and 2.1(a)(iii)) the Closing of such Exchange shall occur on the date that is the later of (x) (1) for an Exchange Request applying to the lower of (I) one tenth of one percent (.1%) of the PICO Membership Interests held by PICO on the date of this Agreement, or (II) that would result in the issuance of Class A shares having a market value (based on the closing price on the date of the Exchange Request) of at least $100,000, the fifth Business Day following the date on which the Exchange Request has been delivered, and (2) for any other Exchange Request, the fifth Business Day following the last Business Day of the month during which such Exchange Request has been delivered and (y) the fifth Business Day following the date on which the conditions giving rise to any delay pursuant to Section 2.01(a)(ii) cease to exist. Subject to the immediately preceding sentence, the parties shall effect the Closing at such time, at such place, and in such manner, as UCP shall reasonably specify.

(ii)    If UCP enters into an agreement to consummate a Business Combination, UCP shall give PICO at least 20 Business Days’ notice of the closing thereof, if practicable, and UCP shall cause such agreement to provide that, at PICO’s request, PICO shall be entitled to Exchange its PICO Membership Interests for Class A Shares immediately prior to the closing of the Business Combination in order for PICO to be able to receive the amount and type of consideration payable pursuant to such Business Combination to holders of Class A Shares, and such agreement shall provide that PICO shall be entitled to revoke such request on up to two Business Days’ notice to UCP prior to the closing thereof. If any Person commences a tender offer or exchange offer for any of the outstanding shares of UCP’s stock, UCP shall use reasonable efforts to cause such Person to provide that the terms of such offer shall entitle PICO to exchange its PICO Membership Interests for Class A Shares immediately prior to the consummation of such tender offer or exchange offer in order for PICO to participate in such tender offer or exchange offer, and to permit PICO to revoke such request on up to two Business Days’ notice to such Person prior to the closing thereof. The Closing for any Exchange occurring pursuant to this Section 2.1(b)(ii) shall occur immediately prior to, but remain subject to the consummation immediately after of, the Business Combination, tender offer or exchange offer, as applicable, and such Exchange shall be reversed immediately if such Business Combination, tender offer or exchange offer, as applicable, shall fail to be consummated after such Exchange.

(iii)    Upon the Closing, (A) all rights of PICO as holder of the PICO Membership Interests being exchanged shall terminate, (B) the PICO Membership Interests delivered at the Closing shall automatically be cancelled on the books and records of the Company and shall no longer be deemed to be issued and outstanding membership interests of the Company, and (C) PICO shall be treated for all purposes as the holder of the Class A Shares delivered at the Closing.

(c)Closing Conditions. (i) The obligation of any of the parties to consummate an exchange pursuant to this Section 2.1 shall be subject to the condition that there shall be no injunction, restraining order or decree of any nature of any Governmental Entity that is then in effect that restrains or prohibits the Exchange of PICO Membership Interests for Class A Shares.

(ii)    The obligation of UCP to consummate an exchange pursuant to this Section 2.1 shall be subject to (A) the delivery by PICO of the items specified in clauses (i), (ii) and (iii) of Section 2.1(d) and (B) the good faith determination by UCP that such exchange would not violate any contract, commitment, agreement, instrument, arrangement, understanding, obligation, or undertaking to which UCP is subject.

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(d)Closing Deliveries. At or prior to each Closing:

(i)to the extent that PICO’s PICO Membership Interests are certificated, PICO shall deliver to UCP one or more certificates representing the number of PICO Membership Interests specified in the applicable Exchange Request (or an affidavit of loss in lieu thereof in customary form, but without any requirement to post a bond or furnish any other security), accompanied by security transfer powers, in form reasonably satisfactory to the corporate secretary of UCP (the “Secretary ”), duly executed in blank by PICO or PICO’s duly authorized attorney, to be exchanged for Class A Shares based on the Exchange Rate in effect at the applicable Closing;

(ii)PICO shall represent in writing, and at UCP’s reasonable request deliver confirmatory evidence reasonably satisfactory to UCP, that no Liens exist on the PICO Membership Interests delivered pursuant to Sections 2.1(d)(i) (other than transfer restrictions imposed by or under applicable securities laws, the LLC Agreement or this Agreement), or that such Liens have been released;

(iii)if PICO delivers to UCP, pursuant to Section 2.1(d)(i), a certificate representing a number of PICO Membership Interests that is greater than the number of PICO Membership Interests specified in the applicable Exchange Request, UCP will deliver (or cause the Company to deliver) to PICO certificates representing the excess PICO Membership Interests; and

(iv)UCP shall deliver or cause to be delivered to PICO, for credit to the account or at the address specified by PICO in the Exchange Request, the number of Class A Shares that PICO is entitled to receive for PICO Membership Interests in the Exchange. If no account or address is specified in the Exchange Request, the Class A Shares shall be delivered to PICO at the then-acting registrar and transfer agent of the Class A Shares or, if there is no then-acting registrar and transfer agent of the Class A Shares, at the principal executive offices of UCP.

Section 2.2    Adjustment. On the date hereof, the Exchange Rate shall be 1 for 1. The Exchange Rate shall be adjusted accordingly if there is: (i) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the PICO Membership Interests that is not accompanied by an identical subdivision or combination of the Class A Shares; or (ii) any subdivision (by any stock split, stock dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock split, reclassification, reorganization, recapitalization or otherwise) of the Class A Shares that is not accompanied by an identical subdivision or combination of the PICO Membership Interests. If there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Shares are converted or changed into another security, securities or other property, then upon any subsequent exchange, PICO shall be entitled to receive the amount of such security, securities or other property that PICO would have received if such exchange had occurred immediately prior to the effective date of such reclassification, reorganization, recapitalization or other similar transaction, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction. For the avoidance of doubt, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Shares are converted or changed into another security, securities or other property, this Section 2.2 shall continue to be applicable, mutatis mutandis, with respect to such security or other property.

Section 2.3    Expiration. In the event that the Company is dissolved, liquidated or wound up pursuant to the LLC Agreement or otherwise, any Exchange Right shall expire upon final distribution of the assets of the Company pursuant to the terms and conditions of the LLC Agreement.

Section 2.4    Reservation of Class A Shares; Listing. UCP shall at all times reserve and keep available out of its authorized but unissued Class A Shares, solely for the purpose of issuance upon an Exchange, such number of Class A Shares as shall be issuable upon any such Exchange; provided that nothing contained herein shall be construed to preclude UCP from satisfying its obligations in respect of any such Exchange by delivery of Class A Shares it has purchased (which may or may not be held in the treasury of UCP). UCP shall deliver Class A Shares that have been registered under the Securities Act with respect to any exchange to the extent a registration statement is effective and available for such shares. If any Class A Shares require registration with or approval of any Governmental Entity under any federal or state law before such Class A Shares may be issued upon an exchange, UCP shall cause such Class A Shares to be duly registered or approved, as the case may be. UCP shall use its commercially reasonable efforts to list the Class A Shares required to be delivered upon any such exchange prior to such delivery upon each national securities exchange upon which the outstanding Class A Shares are listed at the time of such

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exchange (it being understood that any such shares may be subject to transfer restrictions under applicable securities laws). UCP covenants that all Class A Shares issued upon an exchange will, upon issuance, be validly issued, fully paid and non-assessable. UCP also covenants that, without the written consent of PICO, it will not enter into any contract, commitment, agreement, instrument, arrangement, understanding, obligation or undertaking that would restrict the ability of PICO to exercise its Exchange Rights hereunder.

Section 2.5    Recapitalization. This Agreement shall apply to the PICO Membership Interests held by the PICO and its Permitted Transferees as of the date hereof, as well as any PICO Membership Interests hereafter acquired by PICO and its Permitted Transferees. This Agreement shall apply to, mutatis mutandis , and all references to “PICO Membership Interests” shall be deemed to include, any security, securities or other property of the Company that may be issued in respect of, in exchange for or in substitution of PICO Membership Interests, by reason of any distribution or dividend, split, reverse split, combination, reclassification, reorganization, recapitalization, merger, exchange (other than an Exchange) or other transaction.

ARTICLE III

TRANSFER RESTRICTIONS

Section 3.1    General Restrictions on Transfer. (a) PICO understands and agrees that the Class A Shares received by such PICO in any exchange (any such Class A Shares, “ Restricted Class A Shares”) may not be transferred except in compliance with registration requirements of the Securities Act or exemptions therefrom.

(a)PICO understands and agrees that, until registered under the Securities Act, the Restricted Class A Shares are restricted securities under the Securities Act and the rules and regulations promulgated thereunder. PICO agrees that it shall not transfer any Restricted Class A Shares (or solicit any offers in respect of any transfer of any Restricted Class A Shares), except in compliance with the Securities Act, any other applicable securities or “blue sky” laws, and the terms and conditions of this Agreement.

(b)Any attempt to transfer any Restricted Class A Shares not in compliance with this Agreement shall be void ab initio, and UCP shall not, and shall cause any transfer agent not to, give any effect in UCP’s stock records to such attempted transfer.

Section 1.2Legends. (a) In addition to any other legend that may be required, subject to Section 3.2(b), each certificate for Restricted Class A Shares issued to PICO (or any of its Permitted Transferees) shall bear a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACTOF 1933, AS AMENDED, OR ANY NON -U.S. OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE EXCHANGE AGREEMENT DATED AS OF JULY 23, 2013 AS THE SAME MAY BE AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM THE CORPORATE SECRETARY OF UCP, INC. OR ANY SUCCESSOR THERETO.

(b)If any Restricted Class A Share is eligible to be sold pursuant to Rule 144(b)(1) under the Securities Act (or any successor provision), upon the written request of the holder thereof, accompanied (if UCP shall so request) by an opinion of counsel reasonably acceptable to UCP, UCP shall issue to such holder a new certificate evidencing such Restricted Class A Share without the first sentence of the legend required by Section 3.2(a) endorsed thereon. If any Restricted Class A Share ceases to be subject to any and all restrictions on transfer set forth in this Article 3, then UCP, upon the written request of the holder thereof, shall issue to such holder a new certificate evidencing such Restricted Class A Share without the second sentence of the legend required by Section 3.2(a) endorsed thereon.

Section 3.3    Permitted Transferees. Subject to this Article III, PICO may at any time transfer any or all of its Restricted Class A Shares to one or more of its Permitted Transferees or to any other Person in a transaction not in contravention of, and in accordance with, the LLC Agreement, so long as (a) such transferee shall have agreed in writing to be bound by the terms of this Agreement as provided in Section 4.3 and (b) the transfer to such transferee is in compliance with the Securities Act and any other applicable securities or “blue sky” laws.

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ARTICLE IV

OTHER AGREEMENTS; MISCELLANEOUS

Section 4.1    Expenses. Each party hereto shall bear its own expenses in connection with the consummation of any of the transactions contemplated hereby, whether or not any such transaction is ultimately consummated, except that UCP shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Exchange and UCP shall promptly cooperate in all filings required to be made under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, in connection with any Exchange (but UCP shall not be obligated to bear, and shall be reimbursed by PICO for, the expenses of any such filing or of any information request from any Governmental Entity relating thereto); provided, however, that if any certificate is to be issued pursuant to Section 2.1(d)(v) in a name other than that of PICO, then the Person or Persons requesting the issuance thereof shall pay to UCP the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Exchange or shall establish to the reasonable satisfaction of UCP that such tax has been paid or is not payable.

Section 4.2    Notices. All notices, requests, consents and other communications hereunder (each, a “Notice”) to any party shall be in writing and shall be delivered in person or sent by facsimile (provided a copy is thereafter promptly delivered as provided in this Section 4.2) or nationally recognized overnight courier, addressed to such party at the address or facsimile number set forth below, or such other address or facsimile number as may hereafter be designated in writing by such party to the other parties:

If to UCP or the Company, to:

6489 Camden Avenue, Suite 204

San Jose, CA, 95120

Telephone: (408) 323-1113

Facsimile: (408) 323-1114

Attention: Dustin L. Bogue

with a copy (which shall not constitute notice to UCP or the Company) to:

UCP, Inc.

Attention: W. Allen Bennett

6489 Camden Avenue, Suite 204

San Jose, CA, 95120

Telephone: (408) 323-1113

Facsimile: (408) 323-1114

If to PICO, to:

7979 Ivanhoe Avenue, Suite 300

La Jolla, CA 92037

Attention: President

Fax: 858-456-6480

with a copy (which shall not constitute notice to PICO) to:

DLA Piper LLP (US)

Attention: Douglas J. Rein

4365 Executive Drive, Suite 1100

San Diego, CA 92121

Telephone: 858-677-1443

Facsimile: 858-677-1401

Each Notice shall be deemed received on the date sent to the recipient thereof in accordance with this Section 4.2, if sent prior to 5:00 p.m. in the place of receipt and such day is a Business Day; otherwise, such Notice shall be deemed not to have been received until the next succeeding Business Day.

Section 4.3    Permitted Transferees. To the extent that PICO (or an applicable Permitted Transferee of PICO) validly transfers after the date hereof any or all of its PICO Membership Interests to a Permitted Transferee of such Person or to any other Person in a transaction not in contravention of, and in accordance with, the LLC Agreement, then the transferee thereof shall have the right to execute and deliver a joinder to this Agreement, in form and substance reasonably satisfactory to UCP. Upon execution of any such joinder, such transferee shall, with respect to such transferred PICO Membership Interests,

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be entitled to all of the rights and bound by each of the obligations applicable to the relevant transferor hereunder; provided that the transferor shall remain entitled to all of the rights and bound by each of the obligations with respect to PICO Membership Interests that were not so transferred.

Section 4.4    Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or entity or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 4.5    Counterparts. This Agreement may be executed (including by facsimile transmission with counterpart pages) in one or more counterparts, each of which shall be deemed an original and all of which shall, taken together, be considered one and the same agreement, it being understood that both parties need not sign the same counterpart.

Section 4.6    Entire Agreement; No Third Party Beneficiaries. This Agreement (a) constitutes the entire agreement and supersedes all other prior agreements, both written and oral, among the parties with respect to the subject matter hereof and (b) is not intended to confer upon any Person, other than the parties hereto and their Permitted Transferees, any rights or remedies hereunder.

Section 4.7    Further Assurances. Each party hereto shall execute, deliver, acknowledge and file such other documents and take such further actions as may be reasonably requested from time to time by any other party hereto to give effect to and carry out the transactions contemplated herein.

Section 4.8    Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without regard to conflicts of law principles thereof.

Section 4.9    Consent to Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought and maintained exclusively in the United States District Court for the Northern District of California or the Superior Court of the State of California located in the County of Santa Clara. Each of the parties irrevocably consents to submit to the personal jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding. Process in any such suit, action or proceeding in such courts may be served, and shall be effective, on any party anywhere in the world, whether within or without the jurisdiction of any such court, by any of the methods specified for the giving of Notices pursuant to Section 4.2. Each of the parties irrevocably waives, to the fullest extent permitted by law, any objection or defense that it may now or hereafter have based on venue, inconvenience of forum, the lack of personal jurisdiction and the adequacy of service of process (as long as the party was provided Notice in accordance with the methods specified in Section 4.2) in any suit, action or proceeding brought in such courts.

Section 4.10    Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 4.11    Amendments; Waivers. (a) No provision of this Agreement may be amended or waived unless such amendment or waiver is approved in writing by UCP, the Company and PICO and any Permitted Transferees holding at least sixty-six and two-thirds percent (66-2/3%) of the outstanding PICO Membership Interests.

(b)    No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 4.12    Assignment. Except as contemplated by Section 4.3 and except that the rights to have a legend removed from a certificate representing Restricted Class A Shares in accordance with Section 3.2(b) shall be deemed automatically assigned in connection with any transfer not prohibited hereunder, neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties.

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Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors, assigns and Permitted Transferees.

Section 4.13    Tax Treatment. The parties to this Agreement intend that this Agreement shall be treated as part of the partnership agreement of the Company pursuant to Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations promulgated thereunder. Except as otherwise required by applicable law: (a) the parties shall report each Exchange consummated hereunder as a taxable sale of PICO Membership Interests by PICO to UCP; and (b) no party shall take a contrary position on any income tax return, amendment thereof or communication with a taxing authority (unless a final determination requires a different tax treatment).

Section 4.14    Effective Date. This Agreement shall become effective upon the IPO and shall be of no force and effect prior to the IPO.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized representatives as of the day and year first above written.

UCP, INC.

By: /s/ Dustin L. Bogue

Name: Dustin L. Bogue

Title: President and Chief Executive Officer

UCP, LLC

By: /s/ John R. Hart

Name: John R. Hart

Title: Chairman

PICO HOLDINGS, INC.

By: /s/ Maxim C. W. Webb

Name: Maxim C. W. Webb

Title: Chief Financial Officer

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EX-10.10

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

UCP, LLC

EFFECTIVE AS OF JULY 23, 2013

Table Of Contents
		Page
Article I	DEFINITIONS	4
Section 1.1	Definitions	4
Section 1.2	Usage Generally; Interpretation	11
Article II	ORGANIZATIONAL AND OTHER MATTERS; MEMBERSHIP	12
Section 2.1	Formation; Admission	12
Section 2.2	Name	12
Section 2.3	Business Purpose/Operation	12
Section 2.4	Offices	12
Section 2.5	Term	12
Section 2.6	Members	12
Section 2.7	Fiduciary Duties; Outside Activities of the Members	12
Section 2.8	Place of Members' Meetings	13
Section 2.9	Meetings	14
Section 2.10	Telephonic Meetings	14
Section 2.11	Notice of Meetings	14
Section 2.12	Waivers	14
Article III	MANAGING MEMBER; POWERS	15
Section 3.1	Managing Member	15
Section 3.2	Compensation	16
Article IV	OFFICERS	17
Section 4.1	Officers	17
Article V	FINANCE AND CAPITAL	18
Section 5.1	Capital Contributions	18
Section 5.2	Additional Capital Contributions	18
Section 5.3	Members' Capital Accounts	18
Section 5.4	Allocations	19
Section 5.5	Banking; Investments	20
Section 5.6	Distributions	20
Section 5.7	Return of Contribution	21
Article VI	ACCOUNTING; TAX MATTERS	23
Section 6.1	Books; Fiscal Year	23
Section 6.2	Reports	23
Section 6.3	Company Information	23
Section 6.4	Records	23
Section 6.5	Tax Characterization	23
Section 6.6	Tax Returns	24
Section 6.7	Tax Matters Partner	24
Section 6.8	Tax Elections	25
Section 6.9	Withholding	25
Article VII	TRANSFERS	26
Section 7.1	Transfers of Membership Units	26
Section 7.2	Admission as a Member	26
Section 7.3	Prohibited Transfers	26
Section 7.4	Effect of Transfer Not in Compliance with this Article	26

Table Of Contents
Article VIII	LIMITED LIABILITY; INDEMNIFICATION	27
Section 8.1	Limited Liability	27
Section 8.2	Indemnification	27
Section 8.3	Exculpation	28
Article IX	DISSOLUTION and LIQUIDATION	29
Section 9.1	Dissolution	29
Section 9.2	Withdrawal Of Members	29
Section 9.3	Distribution Upon Dissolution	29
Section 9.4	Time for Liquidation	30
Section 9.5	Winding Up and Filing Articles of Cancellation	30
Article X	MEMBERSHIP UNITS; CERTIFICATES	31
Section 10.1	Certificates	31
Section 10.2	Lost of Destroyed Certificates	31
Section 10.3	Transfer of Membership Units	31
Section 10.4	Splits And Reclassifications	31
Section 10.5	Incentive Plans; Registered and Private Offerings	32
Section 10.6	Regulations	32
Section 10.7	Registered Members	32
Article XI	MISCELLANEOUS	33
Section 11.1	Severability	33
Section 11.2	Notices	33
Section 11.3	Captions	33
Section 11.4	Entire Agreement	33
Section 11.5	Counterparts	33
Section 11.6	Amendments; Waiver	33
Section 11.7	Further Assurances	34
Section 11.8	Governing Law	34
Section 11.9	Third Party Beneficiary	34
Section 11.10	Assignment	34
Section 11.11	Successors and Assigns	34
Section 11.12	Relationships	34
Section 11.13	Consent to Jurisdiction	34
Section 11.14	Equitable Remedies	35
Section 11.15	Fees and Expenses	35
Section 11.16	Waiver of Jury Trial	35
Section 11.17	Confidentiality	35

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

UCP, LLC

THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Agreement”) of UCP, LLC, a Delaware limited liability company (the “Company”), is made and entered into, effective as of July 23, 2013, by and between PICO Holdings, Inc., a corporation organized and existing under the laws of California, with its principal place of business at 7979 Ivanhoe Avenue, Suite 300, La Jolla, CA 92037 (“PICO”), and UCP, Inc., a corporation organized and existing under the laws of Delaware, with its principal place of business at 6489 Camden Avenue, Suite 204, San Jose, CA 95120 (“UCP, Inc.”).

WHEREAS, the Company was formed as a limited liability company pursuant to the Delaware Limited Liability Company Act (6 Del. C. Section 18-101, et seq., as it may be amended from time to time, or any successor statute (the “LLCA”)) by the filing of a Certificate of Formation with the Office of the Secretary of State of the State of Delaware on October 26, 2007, as amended on January 10, 2008.

WHEREAS, the Company and the initial sole member, PICO, entered into an Amended and Restated Operating Agreement as of July, 21, 2008 (the “Old Agreement”).

WHEREAS, the parties hereto desire to amend and restate the Old Agreement to reflect the addition of UCP, Inc. as a member and the Managing Member of the Company pursuant to the terms and subject to the conditions hereof.

NOW, THEREFORE, in consideration of the conditions and provisions contained herein, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1    Definitions. The following terms shall, for the purposes of this Agreement and the Schedules hereto, have the following meanings (terms defined in the singular or the plural include the plural or the singular, as the case may be):

“Additional Members” shall have the meaning ascribed thereto in Section 2.6.

“Adjusted Capital Account Deficit” means with respect to any Capital Account as of the end of any Tax Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, such Member's Capital Account balance shall be (a) reduced for any items described in Treasury Regulation Sections 1.704‑1(b)(2)(ii)(d)(5) (relating to adjustments that, as of the end of that Tax Year, reasonably are expected to be made to such Member's Capital Account for allocations of loss or deduction), and 1.704‑1(b)(2)(ii)(d)(6) (relating to adjustments that, as of the end of that Tax Year, reasonably are expected to be made to such Member's Capital Account for certain distributions), and (b) increased for any amount such Member is obligated to contribute or is treated as being obligated

to contribute to the Company pursuant to Treasury Regulation Section 1.704‑1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704‑2(g)(1) and 1.704-2(i) (relating to Minimum Gain).

“Affiliate” of any Person shall mean any other Person that, directly or indirectly, controls, is under common control with or is controlled by that Person. For purposes of this definition, “control” (including, with its correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Agreement” shall have the meaning given to that term in the first paragraph of this Agreement.

“Back-to-Back Debt” shall have the meaning ascribed thereto in Section 10.5(c) hereof.

“Business” shall mean the acquisition, development and entitlement of real estate for residential construction and sale, and the construction and sale of residential housing. Without limiting the foregoing, the Company shall (a) serve as a member, manager, partner or stockholder, as the case may be, of its subsidiaries and, in connection therewith, exercise all the rights and powers conferred upon the Company as a member, manager, partner or stockholder, as the case may be, of such entities, (b) engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that any subsidiaries are permitted to engage in or that their subsidiaries are permitted to engage in by their organizational documents or agreements and, in connection therewith, exercise all of the rights and powers conferred upon the Company pursuant to the agreements relating to such business activity, (c) engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that is approved by the Managing Member and that lawfully may be conducted by a limited liability company organized pursuant to the LLCA and, in connection therewith, exercise all of the rights and powers conferred upon the Company pursuant to the agreements relating to such business activity; and (d) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to any subsidiary or any corporation, partnership, joint venture, limited liability company or other arrangement entered into or formed, as contemplated by (b) or (c) above.

“Business Day” shall mean any day, other than a Saturday or Sunday, on which federally chartered banks in the United States are open for business.

“Bylaws” shall mean the Bylaws of UCP, Inc. as in effect from time to time.

“Capital Account” shall have the meaning ascribed thereto in Section 5.3.

“Certificate of Formation” shall mean the Certificate of Formation of the Company filed on October 26, 2007, as amended on January 10, 2008, with the Secretary of State of the State of Delaware pursuant to the LLCA.

“Certificate of Incorporation” shall mean the Certificate of Incorporation of UCP, Inc. dated May 7, 2013, and as hereafter amended from time to time, as filed with the Secretary of State of the State of Delaware pursuant to the Delaware General Corporation Law.

“Closing Events” shall mean the following events, which to the extent they have not heretofore occurred, shall occur on the date hereof: (i) the Offering; and (ii) the contribution of the proceeds of the Offering by UCP, Inc. to the Company.

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any corresponding provisions of succeeding law.

“Company” shall have the meaning given to that term in the first paragraph of this Agreement.

“Common Stock” shall mean the Class A shares of common stock, par value $0.01 per share, of UCP, Inc.

“Contingencies” shall have the meaning ascribed thereto in Section 9.3(a) hereof.

“Convertible Debt” shall have the meaning ascribed thereto in Section 10.5(c) hereof.

“Depreciation” shall mean for any fiscal year or portion thereof of the Company, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such period for federal income tax purposes, except that with respect to any asset the Gross Asset Value of which differs from its adjusted tax basis for federal income tax purposes at the beginning of such period, Depreciation shall (1) be computed by reference to the Gross Asset Value, and (2) be an amount that bears the same relationship to such beginning Gross Asset Value as the depreciation, amortization or cost recovery deduction in such period for federal income tax purposes bears to such beginning adjusted tax basis; provided, however, that if the adjusted tax basis for federal income tax purposes of an asset at the beginning of such period is zero but the Gross Asset Value of the asset is not, Depreciation shall be determined with reference to such Gross Asset Value using any reasonable method selected by the Managing Member.

“Dissolution Event” shall have the meaning ascribed thereto in Section 9.1.

“Distributable Cash” shall mean cash available for distribution to the Members (after taking into account (1) the Company's working capital needs, anticipated capital expenditures, debt service requirements and other reserves, including with respect to contingencies or commitments, and (2) any restrictions on distributions under applicable law or any loan agreement, indenture, security agreement, mortgage debt instrument or other agreement or other obligation to which the Company is a party or by which it is bound or its assets are subject), as determined by the Managing Member.

“Encumbrance” shall mean any mortgage, pledge, security interest, lien, restriction on use or transfer (other than those imposed by law), voting agreement, adverse claim or encumbrance or charge of any kind (including any agreement to give any of the foregoing), any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of, or any agreement to give, any financing statement under the Uniform Commercial Code or similar law of any jurisdiction.

“Exchange Agreement” shall mean the Exchange Agreement, dated as of the date hereof, between UCP, Inc. and PICO relating to PICO's right to exchange, at any time and from time to time, any or all of its Membership Units for shares of Common Stock.

“Fiscal Year” of the Company shall mean each twelve (12) month period ending on December 31st.

“GAAP” shall mean generally accepted accounting principles as in effect from time to time, consistently applied, with respect to the jurisdiction to which it refers.

“Governmental Body” shall mean any domestic or foreign national, state or municipal or other local government or multi-national body (including, but not limited to, the European Union), any subdivision, agency, commission or authority thereof, or any quasi-governmental or private body exercising any regulatory authority thereunder and any corporation, partnership or other entity directly or indirectly owned by or subject to the control of any of the foregoing.

“Gross Asset Value” shall mean, with respect to any Company asset, such asset's adjusted basis for federal income tax purposes, except as follows:

(i)The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset as reasonably determined by the Managing Member.

(ii)The Gross Asset Value of the Company's assets shall be adjusted to equal their respective gross fair market values (taking Code Section 7701(g) into account), as determined by the Managing Member, as of the following times: (a) the acquisition of additional Membership Units by any new or existing Member (other than by transfer of existing Units, provided that, for the avoidance of doubt, the exchange by PICO of Membership Units for Common Stock shall be treated as a transfer of such Membership Units to UCP, Inc.); (b) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for the purchase or redemption by the Company of any Membership Units; and (c) the liquidation of the Company, provided, that (i) in the case of an adjustment pursuant to clause (a) by virtue of the issuance of additional Units to UCP, Inc. on account of the contribution by UCP, Inc. of the proceeds of an offering (including a private placement) of Common Stock, the determination of the gross fair market value of the Company's assets shall reflect the price at which the Common Stock is sold in such offering; and (ii) in the case of an issuance of additional Units to UCP, Inc. pursuant to Section 10.5(a), the determination of the gross fair market value of the Company's assets shall reflect the closing sale price of the Common Stock reported on the principal exchange on which the Common Stock is traded on the day of such issuance.

(iii)The Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross fair market value (taking Code Section 7701(g) into account) of such asset on the date of distribution as determined by the Managing Member; and

(iv)The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), provided, however, that Gross Asset Values shall not be adjusted pursuant to this paragraph (iv) to the extent the Managing Member determines that an adjustment pursuant to paragraph (ii) above is necessary or appropriate in connection with a transaction or event that would otherwise result in an adjustment pursuant to this paragraph (iv).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to paragraphs (i), (ii) or (iv) above, such Gross Asset Value thereafter shall be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Profits and Net Losses.

“Incentive Plan” shall mean the 2013 Long-Term Incentive Plan of UCP, Inc. or any other incentive plan adopted by UCP, Inc.

“Liquidation Agent” shall have the meaning ascribed thereto in Section 9.3(a).

“LLCA” shall have the meaning set forth in the above preamble.

“Managing Member” shall mean UCP, Inc. or any successor thereto pursuant to this Agreement.

“Member” shall mean, at any time, UCP, Inc. and PICO if, at such time, they own Membership Units in the Company and any other Person who at such time owns Membership Units in the Company.

“Member-Funded Debt” shall mean any non-recourse debt of the Company which is loaned or guaranteed by any Member and/or is treated as “partner non-recourse debt” under Section 1.704-2(b)(4) of the Treasury Regulations.

“Members' Meeting” shall have the meaning ascribed thereto in Section 2.8.

“Membership Unit” or “Units” shall mean the units representing a Member's interest in the Company, including such Member's (i) ownership interest in the Company, and (ii) right to share in any Net Profits, Net Losses and any distributions of the Company. Units shall be designated as Series A Units or Series B Units. Series A Units shall be issued to PICO and Series B Units shall be issued to UCP, Inc. The Series A Units and Series B Units rank pari passu with each other, and have all the same rights (including the rights to share in Net Profits and Net Losses) and obligations, except that UCP, Inc. as the Managing Member and holder of the Series B Units shall have the exclusive authority to manage the business, property and affairs of the Company in accordance with the terms and provisions of this Agreement.

“Minimum Gain” shall mean an amount equal to the excess of the principal amount of debt, for which no Member is liable (“non-recourse debt”), secured by any property of the Company over the adjusted basis of such Property, which represents the minimum taxable gain which would be recognized by the Company if the non-recourse debt were foreclosed upon and the property were transferred to the creditor in satisfaction thereof, and which is referred to as “minimum gain” in Section 1.704-2(b)(2) of the Treasury Regulations. A Member's share of Minimum Gain shall be determined pursuant to the above-cited Treasury Regulations.

“Net Profits” and “Net Losses” shall mean the net income or net loss of the Company (including capital gains and losses) as determined in accordance with the accounting methods followed by the Company for federal income tax purposes including income exempt from tax and described in Code Section 705(a)(1)(B) and treating as deductions items of expenditure described in, or under Code Section 705(a)(2)(B). For purposes of computing Net Profits and Net Losses, gain or loss resulting from the disposition of property, which gain or loss is recognized for federal income tax purposes, shall be computed by reference to the Gross Asset Value of such property rather than its adjusted tax basis. In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing taxable income or loss for federal income tax purposes, there shall be taken into account Depreciation.

In addition: (i) subject to Section 10.5(c), in the event the Gross Asset Value of any Company asset 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 asset) or an item of loss (if the adjustment decreases the Gross Asset Value of the asset) from the disposition of such asset and shall be taken into account for purposes of computing Net Profit or Net Losses; and (ii) notwithstanding any other provision of this definition, any items which are specially allocated pursuant to sections 5.4(f) (g), (h), (i), and (j) hereof shall not be taken into account for purposes of computing Net Profits or Net Losses. The amounts of the items of Company income, gain, loss or deduction available to be specially allocated pursuant to sections 5.4(g), (h), (i), and (j) hereof shall be determined by applying rules analogous to those set forth in this definition of “Net Profits” and “Net Losses.”

“Non-Recourse Deductions” shall have the meaning set forth in Section 1.704-2(b)(1) of the Treasury Regulations.

“Notice” shall have the meaning ascribed thereto under Section 11.2.

“Offering” shall mean the initial public offering by UCP, Inc. of its Common Stock, the closing of which is occurring on the date hereof.

“Offering Expenses” shall mean all of the costs and expenses of the Offering incurred by UCP, Inc., including but not limited to the underwriting discount and the expenses listed in Item 13 of UCP, Inc.'s registration statement on Form S-1, as filed with the Securities and Exchange Commission on April 4, 2013, as subsequently amended, and declared effective by the Commission.

“Officers” shall have the meaning ascribed thereto under Section 4.1.

“Old Agreement” shall have the meaning set forth in the above preamble.

“Percentage Interest” shall mean a Member's aggregate economic percentage interest in the Company as determined by dividing the number of Membership Units owned by such Member by the number of Membership Units then owned by all Members, each as set forth on Schedule I, as such schedule may be amended from time to time.

“Person” shall mean an individual, sole proprietorship, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, mutual company, joint stock company, estate, union, employee organization, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, or a Governmental Body.

“PICO” shall have the meaning given such term in the first paragraph of this Agreement.

“Regulatory Allocations” shall have the meaning ascribed thereto in Section 5.4(j).

“Required Allocation” shall have the meaning ascribed thereto in Section 5.4.

“Section 754 Election” shall have the meaning ascribed thereto under Section 6.8(b).

“Securities Act” shall have the meaning ascribed thereto in Section 10.1.

“Shortfall Interest Rate” shall mean LIBOR plus 300 basis points.

“Tax Amount” means, with respect to any Member for any Tax Year, an amount for such Tax Year that is attributable to the taxable income of the Company allocated to such Member, calculated based on the tax returns filed by the Company for such Tax Year, and applying the methodology and assumptions set forth in the definition of “Tax Liability.”

“Tax Distributions” shall have the meaning ascribed thereto in Section 5.6(b) hereof.

“Tax Liability” of a Member shall mean the aggregate federal, state and local tax liabilities, including estimated taxes, payable by such Member that are attributable to the taxable income of the Company, calculated by assuming a combined federal, state and local tax rate of 41% or such other rate determined by the Managing Member to be the highest marginal effective rate of federal, state and local income tax applicable to corporations doing business in California (or such other jurisdictions in which the Company is doing business) and assuming such Member has no income or losses other than its share of the Company's income or losses. For purposes of such calculation, (i) the effect of any adjustments pursuant to Section 743(b) of the Code shall not be taken into account, and (ii) items of income, gain, deduction or loss which are computed separately by a Member shall be taken into account in determining the taxable income of the Company allocated to such Member. For the avoidance of doubt, the assumed tax rate used to calculate Tax Liability shall be the same for all Members. “Tax Return” shall have the meaning ascribed thereto in Section 6.6(b) hereof.

“Tax Receivable Agreement” means the Tax Receivable Agreement among UCP, Inc., the Company and PICO dated as of the date hereof.

“Tax Year” shall mean the twelve (12) month period ending on December 31.

“Transfer” shall mean, whether directly or indirectly, by merger, operation of law or otherwise, any sale, assignment, conveyance, transfer, donation, distribution or other disposition of, or pledge, hypothecation, encumbrance, the creation of a security interest or other similar limitation in any manner whatsoever, of any interest in the Company (including, without limitation, of Membership Units, allocations, distributions or voting, consent or approval rights).

“Treasury Regulations” means the regulations promulgated by the U.S. Department of the Treasury under the Code.

“True-Up Amount” means, in respect of a Member for a particular Tax Year, an amount, which may be positive or negative, equal to (1) the aggregate quarterly distributions actually made to such Member in respect of such Tax Year under Section 5.6(b)(ii), without taking into account any adjustments to such distributions made with respect to any other Tax Year (including any adjustment to take into account a True-Up Amount for the immediately preceding Tax Year) minus (2) the Tax Amount of such Member in respect of such Tax Year; provided, however, that if there is an audit or other adjustment with respect to a return filed by the Company (including a filing of any amended return), upon a final determination or resolution of such audit or other adjustment, the True-Up Amount shall be redetermined for the relevant Tax Year, and the difference (positive or negative, as the case may be) shall be treated as an additional True-Up Amount which shall be applied as provided in Section 5.6(b)(ii).

“UCP, Inc.” shall have the meaning given to that term in the first paragraph of this Agreement.

“Waiver” shall have the meaning ascribed thereto in Section 12.6.

Section 1.2    Usage Generally; Interpretation. Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. All references herein to Articles, Sections and Schedules shall be deemed to be references to Articles, Sections and Schedules of this Agreement unless the context otherwise requires. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular

provision of this Agreement. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Except to the extent a provision of this Agreement expressly incorporates federal income tax rules by reference to sections of the Code or Treasury Regulations or is expressly prohibited or ineffective under the LLCA, this Agreement shall govern, even when inconsistent with, or different from, the provisions of the LLCA or any other law or rule. To the extent any provision of this Agreement is prohibited or ineffective under the LLCA, this Agreement shall be deemed to be amended to the least extent necessary in order to make this Agreement effective under the LLCA. In the event the LLCA is subsequently amended or interpreted in such a way to make any provision of this Agreement that was formerly invalid valid, such provision shall be considered to be valid from the effective date of such interpretation or amendment.

ARTICLE II

ORGANIZATIONAL AND OTHER MATTERS; MEMBERSHIP

Section 2.1    Formation; Admission. The Company was formed as a limited liability company under the provisions of the LLCA by the filing on October 26, 2007, of the Certificate of Formation with the Secretary of State of the State of Delaware. The Certificate of Formation was amended on January 10, 2008, to change the name of the Company. Each of the Persons listed on Schedule I, by virtue of the execution of this Agreement, is a Member of the Company. The rights and liabilities of the Members shall be as provided in the LLCA, except as is otherwise expressly provided herein. This Agreement hereby amends and restates the Old Agreement in its entirety.

Section 2.2    Name. The name of the Company shall be, and the business of the Company shall be conducted under the name of, UCP, LLC. The Company's business may be conducted under any other name or names as may be determined by the Managing Member. The words “Limited Liability Company,” “LLC” or similar words or letters shall be included in the Company's name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The Managing Member may change the name of the Company at any time and from time to time and shall notify the Members of such change.

Section 2.3    Business Purpose/Operation. The purposes of the Company are to engage in (i) the Business, and (ii) such other activities, investments or businesses permitted under the LLCA as determined from time to time by the Managing Member.

Section 2.4    Offices. Unless and until changed by the Managing Member, the registered office in the State of Delaware shall be Corporation Service Company, 2711 Centerville Road, Wilmington, Delaware 19808 and the registered agent for service of process on the Company in the State of Delaware at such registered office shall be Corporation Service Company. The Company's principal office shall be located at 6489 Camden Avenue, Suite 204, San Jose, CA 95120. The Company may have other offices at such other places within or without the State of Delaware as the Managing Member from time to time may select.

Section 2.5    Term. The Company commenced on the date of the filing of the Certificate of Formation and the term of the Company shall be perpetual, unless and until the dissolution of the Company in accordance with the provisions of Article IX or as otherwise provided by law.

Section 2.6    Members. The Members of the Company, the initial capital accounts of each Member and the number of Membership Units owned by and Percentage Interest of each Member are listed on Schedule I. Units held by PICO which are issued and outstanding prior to the date hereof are hereby reclassified into the number of Series A Units listed on Schedule I. One or more persons may be admitted to the Company from time to time as additional members (“Additional Members”), as may be determined by the unanimous consent of the Members (except as provided with respect to Transfers of Membership Units in accordance with Article VII); provided, however, that (except as provided in Article VII) each such new Member shall execute an appropriate agreement or supplement to this Agreement pursuant to which the new Member agrees to be bound by the terms and conditions of this Agreement, as it may be amended from time to time. Admission of a new Member shall not be cause for the dissolution of the Company. Upon admission of a new Member, the Managing Member shall issue one or more Certificates in the name of such Member evidencing the number of Units being issued and amend Schedule I to provide for such admission, including, without limitation to state the number of Units issued and the initial Capital Account.

Section 2.7    Fiduciary Duties; Outside Activities of the Members.

(a)To the greatest extent permitted by law, no Member or any Affiliate of a Member and none of their respective officers, directors, partners, employees or agents shall owe any fiduciary duty to, nor shall any such Person be liable for breach of duty, including breach of duty of loyalty, if any, to the Company, any subsidiary thereof or any holder of Membership Units or Affiliate of such holder (or any of their respective stockholders, partners or members). In taking any action, making any decision or exercising any discretion with respect to the Company or any of its subsidiaries, each Member and each Affiliate of a Member and their respective officers, directors, partners, employees or agents shall be entitled to consider such interests and factors as it desires, including the interests of such Member or Affiliate of a Member and those of other Affiliates of such Member, and shall have no duty or obligation (1) to give any consideration to the interests of or factors affecting the Company or any Affiliate thereof or (2) to abstain from participating in any vote or action of the Company, any Affiliate thereof, including the Managing Member, or of any board of directors (or committee) or similar body of any of the foregoing. No Member, affiliate of a Member (or any officer, director, partner, employee or agent thereof) shall violate a duty or obligation to the Company, any Affiliate, or any holder of Membership Units (or any of their respective stockholders, partners or members) merely because such Person's conduct furthers such Person's own interests. Such Persons may lend money to and transact other business with the Company and any of its subsidiaries. The rights and obligations of any such Person who lends money to, contracts with, borrows from or transacts business with the Company or any subsidiary thereof shall be the same as those of a Person not involved with the Company. No transaction with the Company or any of its subsidiaries shall be void or voidable because any such Person has a direct or indirect interest in the transaction.

(b)Except as provided in this Agreement (1) any Member shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities in direct competition therewith or in the same or similar activities or lines of business as the Company, including interests and activities arising or acquired after the date hereof and (2) no Member shall have any duty to refrain from any such interests or activities or from doing business with any client, customer or vendor of the Company or any of its Affiliates. Neither the Company nor any of the other Members shall have any rights by virtue of this Agreement or otherwise in any business interests or activities of any Member, whether existing as of the date hereof or arising or acquired after the date hereof. If a Member, any of its Affiliates or any officer, director, partner, employee or agent thereof acquires knowledge of any potential transaction or matter that may be in the same or similar activities or lines of business as or otherwise appropriate for the Company or any of its Affiliates, the Company and the other Members shall have no interest therein or expectation that such opportunity be offered to the Company, any such interest or expectancy being hereby renounced and any claim that such opportunity should have been presented to the Company being hereby waived.

(c)Any Person purchasing or otherwise acquiring any Membership Unit or any Common Stock shall be deemed to have notice of and to have consented to the provisions of this Section.

(d)Neither the alteration, amendment, termination, expiration or repeal of this Section, the adoption of any provision of this Agreement inconsistent with this Section nor any amendment to the LLCA shall eliminate or reduce the effect of this Section in respect of any matter occurring, or any cause of action, suit or claim that, but for this Section would accrue or arise, prior to such alteration, amendment, termination, expiration, repeal or adoption.

Section 2.8    Place of Members' Meetings. Meetings of the Members (each, a “Members' Meeting”) shall be held at the principal office of the Company, or at such other place as the Members shall mutually agree.

Section 2.9    Meetings. A Members' Meeting may be called by any Member for any matter which is appropriate for consideration thereat. Members' Meetings shall be chaired by the Chairman of the Board of Directors of the Managing Member, or in the absence of the Chairman, the Managing Member's President, and the Secretary of the Meeting shall be appointed by the Chairman or, in the absence of the Chairman, the Managing Member's President.

Section 2.10    Telephonic Meetings. Members' Meetings may be held through the use of conference telephone or similar communications equipment so long as all Persons participating in such Members' Meetings can hear one another at the time of such Members' Meeting. Participation in a Members' Meeting by conference telephone or similar communications equipment in accordance with the preceding sentence constitutes presence in person at the Members' Meeting.

Section 2.11    Notice of Meetings. Written notice of each Members' Meeting shall state the place, date and hour of such Members' Meeting, and the general nature of the business to be transacted. Notice shall be given in the manner prescribed in Section 11.2 not fewer than ten (10) days nor more than sixty (60) days before the date thereof.

Section 2.12    Waivers. Notice of a Members' Meeting need not be given to any Member who signs a waiver of notice, in person or by proxy, whether before or after the Members' Meeting. The attendance of any Member at a Members' Meeting, in person or by proxy, without protesting prior to the conclusion of such Members' Meeting the lack of notice of such Members' Meeting, shall constitute a waiver of notice by such Member, provided that such Member has been given an adequate opportunity at the meeting to protest such lack of notice.

ARTICLE III

MANAGING MEMBER; POWERS

Section 3.1    Managing Member.

(a)The business, property and affairs of the Company shall be managed under the sole, absolute and exclusive direction of the Managing Member. Without limiting the foregoing, the Managing Member shall have the sole power to manage or cause the management of the Company, including, without limitation, the power and authority to effectuate the sale, lease, transfer, exchange or other disposition of any, all or substantially all of the assets of the Company (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Company) or the merger, consolidation, reorganization or other combination of the Company with or into another entity.

(b)Except as otherwise expressly set forth in this Agreement, the Managing Member shall have the general power to manage or cause the management of the Company within the scope of the business purpose set forth in Section 2.3, including the following powers which may, subject to any limitations set forth in this Agreement, be delegated to the officers or other authorized representatives (which may include employees or agents) of the Managing Member:

(i)to have developed and prepared a business plan each year which will set forth the operating goals and plans for the Company;

(ii)to execute and deliver or to authorize the execution and delivery of contracts, deeds, leases, licenses, instruments of transfer and other documents, instruments or agreements in the ordinary course of business on behalf of the Company;

(iii)to employ, retain, consult with and dismiss such personnel, agents or representatives as may be required for accomplishment of the business purpose set forth in Section 2.3;

(iv)to establish and enforce limits of authority and internal controls with respect to all personnel and functions;

(v)to engage attorneys, consultants and accountants for the Company;

(vi)to develop or cause to be developed, accounting procedures for the maintenance of the Company's books of account;

(vii)to appoint auditors; (except if there is an audit committee of the Managing Member, in which case such audit committee shall appoint the auditors of the Company);

(viii)to make any expenditures, lend or borrow money, assume or guarantee, or otherwise contract for indebtedness and other liabilities, issue evidences of indebtedness in the name of the Company and incur other obligations;

(ix)to acquire, dispose of, mortgage, pledge, encumber, buy or exchange assets of the Company;

(x)to use the assets of the Company (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Company and its subsidiaries, lending funds to other Persons, repaying of obligations of the Company and its subsidiaries and capital contributions to any subsidiary;

(xi)to distribute Distributable Cash;

(xii)to maintain insurance, including for the benefit of the Managing Member, Members and their respective directors, officers, partners, employees and agents;

(xiii)to form or acquire an interest in, and contribute property and make loans to, any limited or general partnerships, joint ventures, corporations or limited liability companies;

(xiv)to control any matters affecting the rights and obligations of the Company, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or remediation proceedings, and the incurring of legal expenses and the settlement of claims and litigation or arbitrations;

(xv)to indemnify any Person against liabilities and contingencies to the extent permitted by law and this Agreement: and

(xvi)to do all such other acts as shall not be prohibited by or in violation of this Agreement.

Section 3.2    Compensation. The Managing Member shall not be entitled to compensation for services rendered to the Company in its capacity as Managing Member; provided, however, that nothing contained herein shall prohibit or restrict the payment of compensation to UCP, Inc. for services rendered to the Company.

ARTICLE IV

OFFICERS

Section 4.1    Officers. The officers of the Company (the “Officers”) shall at all times be identical to the then officers of the Managing Member. Any changes in the officers of the Managing Member, whether by election, resignation, removal, death or otherwise, shall automatically and concurrently take effect with respect to the Officers of the Company. No Officer of the Company may resign unless such Officer concurrently resigns as an officer of the Managing Member. Any resignation by an Officer of the Managing Member shall constitute such Officer's concurrent resignation from the Company.

ARTICLE V

FINANCE AND CAPITAL

Section 5.1    Capital Contributions. On or prior to the date hereof, the Members have made capital contributions and have acquired the number of Membership Units specified opposite their respective names on Schedule I.

Section 5.2    Additional Capital Contributions. Except as set forth in Section 10.5, no Member shall be required or permitted to make additional capital contributions to the Company without the consent of all of the Members.

Section 5.3    Members' Capital Accounts. No Member shall have any right to withdraw any portion of its Capital Account, except as otherwise provided herein. For purposes hereof, “Capital Account” shall mean the separate capital account maintained for each Member in accordance with the principles of Section 1.704-1(b) of the Treasury Regulations, as of any particular date, except as provided herein. Immediately following the Closing Events, the Capital Account balance of each Member shall be the product of (i) such Member's Percentage Interest and (ii) the net equity value of the Company, which shall be determined as (x) the product of the price to public of the shares of Common Stock sold in the Offering and the number of Units outstanding immediately after the closing of the Offering, less (y) the Offering Expenses.

The Members agree that the amount of each Member's initial Capital Account, as so determined, is as set forth on Schedule I. Thereafter, such Capital Accounts shall be adjusted as follows:

(a)The Capital Account of each Member shall be increased by:

i)The amount of any Net Profits (and any items of income or gain), allocated on or after the date hereof to such Member;

ii)The amount, if any, of any Company liabilities assumed by such Member or taken subject to or in connection with the distribution of property to such Member by the Company on or after the date hereof;

iii)The amount of any cash contributed by such Member to the Company; and

iv)The fair market value of property (which shall include any Persons) contributed to the Company by such Member on or after the date hereof.

(b)The Capital Account of each Member shall be decreased by:

i)The amount of cash distributed to such Member by the Company on or after the date hereof;

ii)The amount of any Net Losses (and, without duplication, any items of deduction or loss) allocated to such Member on or after the date hereof;

iii)The fair market value of any property distributed to such Member by the Company on or after the date hereof; and

iv)The amount of any liabilities of such Member assumed by the Company or taken subject to or in connection with the contribution of property by such Member to the Company on or after the date hereof.

(c)The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations under Section 704(b) of the Code and, to the extent not inconsistent with the provisions of this Agreement, shall be interpreted and applied in a manner consistent with such Treasury Regulations.

(d)No interest shall be paid by the Company on capital contributions, balances in Member's Capital Accounts or any other funds contributed to the Company or distributed or distributable by the Company under this Agreement.

(e)No adjustment shall be made to any Member's Capital Account pursuant to Subsections (a) or (b) of this Section 5.3 on account of any of the Closing Events.

Section 5.4    Allocations.

(a)Net Profits. Net Profits shall be allocated among the Members in proportion to their respective Percentage Interests.

(b)Net Losses. Net Losses shall be allocated among the Members in proportion to their respective Percentage Interests.

(c)Whenever a proportionate part of the Net Profits or Net Losses is allocated to a Member, every item of income, gain, loss, deduction or credit entering into the computation of such Net Profits or Net Losses or arising from the transactions with respect to which such Net Profits or Net Losses were realized, shall be credited or charged, as the case may be, to such Member in the same proportion; provided, however, that “recapture income,” if any, shall be allocated to the Members who were allocated the corresponding Depreciation deductions.

(d)When the Gross Asset Value of a Company asset differs from its basis for federal income tax purposes, solely for tax purposes and not for purposes of computing Capital Account balances, income, gain, loss, deduction and credit with respect to such asset shall be allocated among the Members in accordance with the principles of Section 704(c) of the Code and the Treasury Regulations thereunder. For purposes of this Section 5.4(d), Code Section 704(c) (or the principles of Code Section 704(c)) shall be applied using the traditional method unless the Managing Member shall determine to use another method that is permissible under Treasury Regulations; provided, however, that so long as PICO and its Affiliates collectively hold a ten percent (10%) or greater Percentage Interest in the Company, such determination shall be with the prior written consent of PICO.

(e)All matters concerning the allocation of Net Profits and Net Losses (and items of income, gain, loss and deduction) among the Members and accounting procedures not expressly and specifically provided by the terms of this Agreement, shall be determined in good faith by the Managing Member on a basis which is in conformity with the requirements imposed under Code Section 704 and the Treasury Regulations thereunder as equitably applied among the Members.

(f)Notwithstanding any provision of Section 5.4, if there is a net decrease in Minimum Gain during a taxable year of the Company (including any Minimum Gain attributable to Member-Funded Debt),

each Member at the end of such year shall be allocated, before any other allocations of Net Profits or Net Losses for such year, items of income and gain for such year (and, if necessary, subsequent years) in the amount and in the proportions described in Section 1.704-2(f) (or Section 1.704-2(i)(4)) of the Treasury Regulations.

(g)If any Member unexpectedly receives any adjustment, allocation or distribution described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, the Members shall be allocated items of income and gain in an amount and manner to eliminate any Adjusted Capital Account Deficit attributable to such adjustment, allocation or distribution as quickly as possible.

(h)Notwithstanding the allocations provided for in Section 5.4(a), (b), (d), (i) or (j), if there is a net increase in Minimum Gain during a taxable year of the Company that is attributable to Member-Funded Debt then, first depreciation, to the extent the increase in such Minimum Gain is allocable to depreciable property, and then a proportionate part of other deductions and expenditures described in Section 705(a)(2)(B) of the Code, shall be allocated to the lending or guaranteeing Members, provided that, the total amount of deductions so allocated for any year shall not exceed the increase in Minimum Gain attributable to such Member-Funded Debt in such year.

(i)Non-Recourse Deductions shall be allocated among the Members in proportion to their Percentage Interests.

(j)The allocations set forth in Sections 5.4(f), (g), (h) and (i) (the “Regulatory Allocations”) are intended to comply with certain requirements of Section 1.704-1(b) of the Treasury Regulations. The Regulatory Allocations shall be taken into account in allocating other Net Profits and Net Losses and items of income, gain, loss and deduction so that, to the extent possible, the net amount of such other allocations and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to such Member if the Regulatory Allocations had not been made.

(k)If any Member Transfers all or any portion of its Membership Units during any Fiscal Year, Net Profits and Net Losses attributable to such transferred Membership Units for such Fiscal Year shall be apportioned between the transferor and the transferee or computed as to such Members on the basis of an interim closing of the books and records of the Company deeming a Transfer to have occurred (i) at the beginning of the first day of the month in which the Transfer occurred, if the Transfer actually occurred prior to the 16^th day of such month, or (ii) at the end of the last day of such month if the transfer actually occurred on or after the 16^th day of such month, unless the Managing Member shall reasonably determine to use another method that is permissible under the Code and applicable regulations thereunder.

Section 5.5    Banking; Investments. All funds of the Company shall be deposited in such bank account or accounts, or invested, and withdrawals from any such bank account shall be made upon such signature or signatures, as shall be established and designated by the Managing Member.

Section 5.6    Distributions.

(a)Except as otherwise required by law or as provided in this Agreement, no Member shall have any right to withdraw any portion of its Capital Account or receive any distributions from the Company, except as expressly provided herein.

(b)The Company shall distribute Distributable Cash, subject to any restrictive covenants or similar provisions under agreements by which the Company is bound, to each Member in accordance with the following:

(i)To the Members pro rata in proportion to their respective Percentage Interests at the time or times determined by the Managing Member; provided, however, that the Managing Member shall have the obligation to make distributions as set forth in Sections 5.6(b)(ii) and 9.3(a). In furtherance of the foregoing, it is intended that the Managing Member shall, to the extent permitted by applicable law and hereunder, have the right in its sole discretion to make distributions to the Members pro rata in proportion to their respective Percentage Interests pursuant to this Section 5.6(b)(i) in such amounts as shall enable UCP, Inc. to meet its obligations pursuant to the Tax Receivable Agreement.

(ii)The Company shall make a distribution to each Member of cash in an amount equal to such Member's Tax Liabilities (“Tax Distributions”) as reasonably determined by the Managing Member. Tax Distributions shall be made at such times so as to allow the Members to make payments of their estimated or income tax (as applicable) and shall be made at least 10 days, but no earlier than 20 days, prior to the due date (without extensions) for each such payment that would apply to the Company if it were a Delaware corporation. Within thirty 30 days after (i) the filing by the Company of its annual federal tax return, and (ii) final resolution of any audit or other adjustment to any federal, state, local or other tax returns filed by the Company, the Company shall determine each Member's True-Up Amount, based on the Company's federal income tax returns. If a Member's True-Up Amount is negative, the Company shall make an additional Tax Distribution to such Member in an amount equal to the True-Up Amount. If a Member's True-Up Amount is positive, such amount shall be applied to reduce future Tax Distributions under this Section 5.6(b)(ii) until such True-Up Amount is entirely applied. Except as provided in the following sentence, to the extent that at the time of any Tax Distribution, a Member would otherwise be entitled to receive less than its Percentage Interest of the aggregate Tax Distributions to be paid on such date, the Tax Distributions to such Member shall be increased to ensure that all distributions to be made pursuant to this Section 5.6(b)(ii) as of any such date shall be made on a pro rata basis in accordance with the Members' respective Percentage Interests (any such increased amount of a Member's Tax Distributions, a “Shortfall Amount”). If at the time of any Tax Distribution there is not sufficient Distributable Cash on hand to distribute to each Member the full amount of such Member's Tax Liability and such Member's Shortfall Amount, (i) distributions at such time shall be made to the extent of the available Distributable Cash (a) first, to the Members in proportion to each Member's aggregate unpaid Tax Liability, until the full amount of the Members' aggregate Tax Liabilities are paid and (b) second, to the Members in proportion to each Member's aggregate unpaid Shortfall Amount, until the full amount of the Members' aggregate Shortfall Amounts are paid; and (ii) the Company shall make future distributions as soon as funds become available (a) first, to the Members in proportion to each Member's aggregate unpaid Tax Liability, until the full amount of the Members' aggregate Tax Liabilities are paid and (b) second, to the Members in proportion to each Member's aggregate unpaid Shortfall Amount, together with interest on such unpaid Shortfall Amount at the Shortfall Interest Rate, until the full amount of the Members' aggregate Shortfall Amounts and any interest thereon are paid.

Section 5.7    Return of Contribution. Except as required by the LLCA, no Member shall be personally liable for the return of any capital contribution, or any portion thereof, or the return of any additions to the Capital Accounts of the other Members, or any portion thereof, it being agreed that any return of capital as may be made at any time, or from time to time, shall be made solely from the assets of the Company, and only in accordance with the terms hereof.

ARTICLE VI

ACCOUNTING; TAX MATTERS

Section 6.1    Books; Fiscal Year. The Company shall maintain complete and accurate books of account of the Company's affairs at the Company's principal place of business. Such books shall be kept in accordance with U.S. GAAP. The Company's accounting period for tax purposes shall be the Fiscal Year. The Company's accounting year for all other purposes shall be the Fiscal Year.

Section 6.2    Reports. The Company shall close the books of account after the close of each quarter in each Fiscal Year. The Company shall prepare and distribute to each Member a quarterly statement of such Member's distributive share of income and expense for federal income tax reporting purposes, as well as a quarterly report on sales, income, expenses and other reports as are normally prepared for PICO and UCP, Inc. and in sufficient detail to permit each of PICO and UCP, Inc. to report its respective share of income, expense, and such other GAAP items as each of PICO and UCP, Inc. may reasonably request from time to time. Such information shall be made available to each such Member no later than twenty five (25) days after the end of each calendar quarter and no later than sixty (60) days after the end of each Fiscal Year in respect of the prior Fiscal Year. As soon as practicable after the end of each Fiscal Year, the Company shall send to each Member a report indicating such information with respect to the Member as is necessary for purposes of reporting such amounts for federal, state and local income tax purposes. For the avoidance of doubt, any information under this Section 6.2 shall be subject to the provisions of Section 11.17.

Section 6.3    Company Information. Upon reasonable request, the Company shall supply to PICO and its Affiliates, so long as they collectively hold at least a ten percent (10%) Percentage Interest in the Companyinformation regarding the Company, its sales, receipts, payments, all accounting information and records as well as all activities of the Company. PICO, UCP, Inc. and their respective Affiliates and representatives shall have free access during normal business hours to discuss the operations and business of the Company with employees or agents of the Company, and to inspect, audit or make copies of all books, records and other information relative to the operations and business of the Company at their own expense, provided, however, that each such Member shall preserve the confidentiality of such information. For the avoidance of doubt, information provided under this Section 6.3 shall be subject to the provisions of Section 11.17.

Section 6.4    Records. The Company shall keep or cause to be kept appropriate books and records in accordance with the LLCA with respect to the Company's business, which books and records shall at all times be kept at the principal office of the Company. Without limiting the foregoing, the Company shall keep at its principal office the following:

(a)a current list of the full name and the last known street address of each Member;

(b)a copy of the Certificate of Formation and this Agreement and all amendments thereto;

(c)copies of the Company's federal, state and local income tax returns and reports, if any, for the six most recent Fiscal Years;

(d)copies of any financial statements of the Company for the six most recent Fiscal Years; and

(e)such other documents with respect to the Company's business as may reasonably be required from time to time by the Managing Member.

Section 6.5    Tax Characterization. It is intended that the Company be characterized and treated

as a partnership for, and solely for, U.S. federal, state and local income tax purposes, and neither the Company nor any Member shall take any action inconsistent with such characterization. For such purpose, (i) the Company shall be subject to all the provisions of Subchapter K of Chapter 1 of Subtitle A of the Code, and (ii) all references to a “Partner,” to “Partners” and to the “Partnership” in the provisions of the Code and Treasury Regulations cited in this Agreement shall be deemed to refer to a Member, Members and the Company, respectively.

Section 6.6    Tax Returns.

(a)Subject to the provisions of Section 6.6(b), the Managing Member shall file, or cause to be filed, the Company's tax returns and statements. The Managing Member may request reasonable extensions to file any tax return or statement without the written consent of the other Members but shall provide written notice to the Members of any such request for extension not later than ten (10) days before the date on which any tax return or statement for which an extension is requested is required to be filed. The Managing Member shall use commercially reasonable efforts to prepare and furnish, or cause to be prepared and furnished, to the Members within sixty (60) calendar days after the close of each Tax Year, the Schedule K-1s to the Company's Federal partnership income tax return for the Tax Year.

(b)For each Tax Year, (i) the Managing Member shall provide PICO, UCP, Inc. and their respective Affiliates with a copy of their draft Schedule K-1s at least thirty (30) calendar days prior to the date such Schedule K-1s are required to be furnished to such Members, and (ii) the Managing Member shall provide each such Member with a copy of the Company's draft Tax Return at least thirty (30) calendar days prior to the earlier of (x) the date of filing of the Company's Federal partnership income tax return for the Tax Year (“Tax Return”), or (y) the date by which the Tax Return is required to be filed (taking into account extensions as permitted under Section 6.6(a)). So long as PICO and its Affiliates collectively hold at least a ten percent (10%) Percentage Interest in the Company, the Tax Return shall not be filed (or caused to be filed) and final Schedule K-1s shall not be furnished to the Members pursuant to Section 6.6(a) without PICO's prior consent, which consent shall not unreasonably be withheld or delayed. For the avoidance of doubt, any information provided under this Section 6.6(b) shall be subject to this provisions of Section 11.17.

Section 6.7    Tax Matters Partner. For purposes of Code Section 6231(a)(7)(A), the Managing Member shall be the “Tax Matters Partner” of the Company for all purposes of the Code and any corresponding state or local statute. Each Member consents to such designation and agrees to take such further action as may be required, by regulation or otherwise, or as may be requested by any Member, to effectuate such designation. The Tax Matters Partner shall cooperate with the other Members and shall promptly provide the other Members with copies of notices or other materials from, and inform the other Members of discussions engaged in with, any taxing authority and shall provide the other Members with notice of all scheduled administrative proceedings, including meetings with agents, technical advice conferences and appellate hearings, as soon as possible after receiving notice of the scheduling of such proceedings. The Tax Matters Partner will schedule such proceedings only after consulting the other Members with a view to accommodating the reasonable convenience of both the Tax Matters Partner and the other Members. As long as PICO and its Affiliates collectively hold at least a ten percent (10%) Percentage Interest in the Company, the Tax Matters Partner shall not agree to extend the period of limitations for assessments; file a petition or complaint in any court; file a request for an administrative adjustment of partnership items after any return has been filed; or enter into any settlement agreement with respect to Company items of income, gain, loss or deduction without the prior consent of PICO, which consent shall not unreasonably be withheld or delayed.

Section 6.8    Tax Elections.

(a)The Managing Member shall, subject to the terms of this Agreement, determine whether to make any available tax election; provided, however, that so long as PICO and its Affiliates collectively hold at least a ten percent (10%) Percentage Interest in the Company, such determination shall be subject to the prior consent of PICO, which consent shall not unreasonably be withheld or delayed.

(b)Effective for its first taxable year ending after the date hereof (or, if such election is not permitted for such taxable year, for its first taxable year for which it is permitted), the Company shall file with its tax return a written statement (the “Section 754 Election”), signed by the Managing Member, setting forth (i) the name and address of the Company, (ii) a declaration that the Company elects under Code Section 754 to apply the provisions of Code Sections 734(b) and 743(b) and (iii) such other information as may be required under Treas. Reg. Section 1.754-1. The Company shall allocate such special basis adjustments under Code Sections 734(b) and 743(b) pursuant to Code Section 755.

(c)The Company shall pay all costs incurred by the Company in connection with any special basis adjustments arising from any Transfers or distributions, including reasonable attorneys' and accountants' fees. In addition, both the transferor and the transferees of an ownership interest Transfer (or the transferee of any Company distribution) permitted hereunder shall (within sixty (60) days of such permitted Transfer or distribution) provide the Company with complete and accurate information regarding such Transfer (or distribution) to enable the Company to make special basis adjustments and other computations in connection therewith.

Section 6.9    Withholding. Each Member hereby authorizes the Company to withhold from or pay on behalf of or with respect to such Member any amount of federal, state, local or foreign taxes that the Managing Member determines that the Company is required to withhold or pay with respect to any amount distributable or allocable to such Member pursuant to this Agreement, including any taxes required to be withheld by the Company pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any amounts so withheld shall be treated as having been distributed to such Member.

ARTICLE VII

TRANSFERS

Section 7.1    Transfers of Membership Units. No Member nor any transferee of Membership Units initially held by such Member may Transfer its Membership Units to any Person without the prior written consent of the Managing Member in its sole discretion; provided, however, the following Transfers shall not require the consent of the Managing Member: (i) Transfers pursuant to PICO's exercise of exchange rights pursuant to the Exchange Agreement and any such Transfers pursuant to the Exchange Agreement shall be deemed a Transfer hereunder, and (ii) Transfers by PICO or UCP, Inc., to any of their respective Affiliates provided, however, that if any such Affiliate subsequently ceases to be an Affiliate of such Member, the Membership Units so transferred must first be Transferred back to the original Member. Any Transfers of Membership Units under this Section 7.1 shall comply with applicable federal and state securities laws.

Section 7.2    Admission as a Member. A transferee pursuant to Section 7.1 shall become a Member, and shall be listed as a Member on Schedule I hereto, and shall be deemed to receive the Membership Units being Transferred at such time as such transferee executes and delivers to the Company an agreement or supplement to this Agreement in which the transferee agrees (or, with respect to any Transfer by PICO that is a distribution or dividend by PICO to holders of its securities or the exchange by PICO of Membership Units for any of its securities, as a stated condition to any such Transfer, is deemed to agree, without executing and delivering to the Company an agreement or supplement to this Agreement) to be admitted as a Member and bound by the terms and conditions of this Agreement as it may be amended from time to time; provided, however that for purposes of this Section 7.2, the Encumbrance of Membership Units shall not be deemed a Transfer.

Section 7.3    Prohibited Transfers. Notwithstanding any contrary provision in this Agreement, no Transfer shall be permitted (and if attempted shall be void ab initio) if, in the reasonable determination of the Managing Member, such Transfer would pose a material risk that the Company would be treated as a “publicly traded partnership” within the meaning of Section 7704 of the Code and the regulations promulgated thereunder.

Section 7.4    Effect of Transfer Not in Compliance with this Article. Any purported Transfer of Membership Units that is not in compliance with this Article VII shall be void and of no effect.

ARTICLE VIII

LIMITED LIABILITY; INDEMNIFICATION

Section 8.1    Limited Liability. Except as otherwise provided under the LLCA, 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 Managing Member shall be obligated or liable for any such debt, obligation or liability of the Company. Except as otherwise provided by the laws of the State of Delaware, the debts, obligations and liabilities of any Member, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liability of such Member and neither any Member, the Managing Member (in its capacity as such) nor the Company shall be obligated or liable for any such debt, obligation or liability of such Member.

Section 8.2    Indemnification.

(a)The Company shall indemnify, defend and hold harmless any Member, the Managing Member (and any of their respective officers, directors, managers, employees and agents) and any officer, director, manager, employee or agent of the Company, 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 Company) by reason of the fact that he, she or it is or was a Member, the Managing Member, or an officer, director, manager, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, manager, employee, agent or tax matters partner of another corporation, partnership, joint venture, trust or other enterprise (each an “Indemnitee”), from and against expenses (including attorneys' fees and expenses), judgments, damages, penalties, interest, liabilities, fines and amounts paid in settlement actually and reasonably incurred by such Person in connection with such claim, action, suit or proceeding if such Person acted in good faith and in a manner such Person reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal sanction or proceeding, had no reasonable cause to believe that his, her or its 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, she or it reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his, her or its conduct was unlawful.

(b)Expenses (including attorneys' fees and expenses) incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding and in advance of any final determination that such Indemnitee is not entitled to be indemnified, upon receipt of an undertaking by or on behalf of any Indemnitee to repay such amount if it shall be ultimately determined by a court of competent jurisdiction from which no further appeal may be taken or the time for appeal has lapsed that such Person is not entitled to be indemnified by the Company pursuant to the terms and conditions of this Section 8.2.

(c)The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 8.2 shall continue as to a Person who has ceased to be a Member, the Managing Member, or any officer, director, manager, employee or agent of the Company, the Managing Member or any Member, and shall inure to the benefit of the heirs, executors, administrators and other legal successors of such Person.

(d)The indemnification provided by this Section 8.2 shall not be deemed exclusive of any other rights to indemnification to which those seeking indemnification may be entitled under any agreement, determination of Members or otherwise.

(e)Any indemnification hereunder shall be satisfied only out of the assets of the Company (including insurance and any agreements pursuant to which the Company and indemnified Persons are entitled to indemnification), and the Members shall not be subject to personal liability by reason of these indemnification provisions and shall have no obligation to contribute or loan any monies or property to the Company to enable it to effectuate such indemnification.

(f)No Person shall be denied indemnification in whole or in part under this Section 8.2 because such Person had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

(g)The indemnification, advancement of expenses and other provisions of this Article VIII are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

(h)Except to the extent otherwise provided in this Article VIII, the right to be indemnified and to receive advancement of expenses in this Article VIII shall be a contract right. No amendment, modification or repeal of this Article VIII or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Company, nor the obligations of the Company to indemnify any such Indemnitee under and in accordance with the provisions of Article VIII as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

(i)If any provision or provisions of this Section 8.2 shall be held invalid, illegal or enforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Section 8.2 (including, without limitation, each portion, if any, of this Section 8.2 containing any such provisions held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Section 8.2 (including, without limitation, each such portion of any subsection of this Section 8.2 containing any such provision held to be invalid, illegal or unenforceable) shall be construed as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable

Section 8.3    Exculpation. A Member shall not be personally liable to the Company or its Members for monetary damages for breach of fiduciary duty, except to the extent such exemption from liability or limitation is not permitted under the LLCA as the same exists or may hereafter be amended. Any repeal or modification of the immediately preceding sentence or any amendment to the LLCA shall not adversely affect the right or protection of any Member existing hereunder with respect to any act or omission occurring prior to such repeal, modification or amendment.

ARTICLE IX

DISSOLUTION and LIQUIDATION

Section 9.1    Dissolution. The Company shall be dissolved and its affairs wound up, upon the first to occur of any of the following events (each of which shall constitute a “Dissolution Event”):

(a)The election of the Managing Member with the consent of PICO if PICO and its Affiliates collectively hold a ten percent (10%) or greater Percentage Interest in the Company;

(b)The sale, disposition or transfer of all or substantially all of the assets of the Company; or

(c)The entry of a decree of judicial dissolution under Section 802 of the LLCA with respect to the Company.

Section 9.2    Withdrawal Of Members. No Member shall have the right to voluntarily withdraw as a Member of the Company other than following the Transfer or, with respect to PICO, the exchange of all Membership Units owned by such Member, which Transfer shall be in accordance with Article VII. No Member shall seek a decree of judicial dissolution with respect to the Company.

Section 9.3    Distribution Upon Dissolution.

(a)Upon dissolution, the Company shall not be terminated and shall continue until the winding up of the affairs of the Company is completed and a certificate of cancellation has been issued by the Secretary of State of Delaware. Upon the winding up of the Company, the Managing Member, or any other Person designated by the Managing Member (the “Liquidation Agent”), shall take full account of the assets and liabilities of the Company and shall, unless the Members agree otherwise, liquidate the assets of the Company as promptly as is consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:

(i)First, to the payment of indebtedness and liabilities of the Company (including payment of all indebtedness and liabilities to Members and/or their Affiliates) and the expenses of liquidation;

(ii)Second, to the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company (“Contingencies”). Such reserve may be paid over by the Liquidation Agent to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.3;

(iii)Third, to the Members in proportion to the amounts required to be made to such Members pursuant to the last sentence of Section 5.6(b)(ii); and

(iv)Thereafter, to the Members in accordance with their respective Percentage Interests.

(b)It is the intent of the Members that the allocations provided in Section 5.4 hereof result in the distributions required pursuant to Section 9.3 being in accordance with positive capital accounts as provided for in the Treasury Regulations under Section 704(b) of the Code. However, if after giving hypothetical effect to the allocations required by Section 5.4, the Capital Accounts of the Members are in such ratios or balances that distributions pursuant to Section 9.3 would not be in accordance with the positive capital

accounts of the Members as required by Treasury Regulations under Section 704(b) of the Code, such failure shall not affect or alter the distributions required by Section 9.3. Rather, the Managing Member will have the authority to make other allocations of Net Profits or Net Losses, or items of income, gain, loss or deduction among the Members which, to the extent possible, will result in the capital accounts of each Member having a balance prior to the distribution equal to the amount of the distributions to be received by each Member pursuant to Section 9.3; provided, however, that so long as PICO and its Affiliates collectively hold at least a 10 percent (10%) Percentage Interest in the Company, such other allocations shall be made with the prior consent of PICO not to be unreasonably withheld or delayed.

Section 9.4    Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.

Section 9.5    Winding Up and Filing Articles of Cancellation. Upon the commencement of the winding up of the Company, articles of cancellation shall be delivered by the Company to the Secretary of State of Delaware for filing. The articles of cancellation shall set forth the information required by the LLCA. The winding up of the Company shall be completed when all debts, liabilities, and obligations of the Company have been paid and discharged or reasonably adequate provision therefor has been made and all the remaining assets of the Company have been distributed to the Members.

ARTICLE X

MEMBERSHIP UNITS; CERTIFICATES

Section 10.1    Certificates. At the request of PICO or UCP, Inc., Membership Units shall be represented by a certificate or certificates, setting forth upon the face thereof that the Company is a limited liability company formed under the laws of the State of Delaware, the name of the Member to which it is issued and the number of Membership Units which such certificate represents. Such certificates shall be entered in the books of the Company as they are issued, and shall be signed by the Chairman or the Chief Executive Officer of the Company and may be sealed with the Company's seal or a facsimile thereof. Upon any Transfer permitted under this Agreement, the transferring Member shall surrender to the Company the Certificates representing Membership Units owned by such Member and the Company shall issue to the transferring Member certificates representing the remaining Membership Units, if any, held by such transferring Member after taking into account such Transfer. All certificates representing Membership Units (unless registered under the Securities Act of 1933, as amended (the “Securities Act”)), shall bear the following legend:

THE MEMBERSHIP UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, ENCUMBERED, TRANSFERRED, GRANTED AN OPTION WITH RESPECT TO OR OTHERWISE DISPOSED OF, (I) UNLESS AND UNTIL THEY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR SUCH SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE, TRANSFER, OPTION GRANT OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND (II) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF THE COMPANY, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY

Section 10.2    Lost or Destroyed Certificates. The Company may issue a new certificate for Membership Units in place of any certificate or certificates theretofore issued by it, alleged to have been lost or destroyed, upon the making of an affidavit of that fact, and providing an indemnity in form and substance reasonably satisfactory to the Managing Member, by the Person claiming the certificate to be lost or destroyed.

Section 10.3    Transfer of Membership Units. Except for Transfers duly made in accordance with Article VII, no Transfer of Membership Units shall be valid as against the Company. Upon any such Transfer, the Member Transferring Membership Units shall surrender certificate therefor, accompanied by an instrument of assignment or transfer by the Member duly executed with signature guarantees, and otherwise complying with such requirements as the Managing Member may impose.

Section 10.4    Splits And Reclassifications. The Company shall not in any manner subdivide (by any unit split, unit distribution, reclassification, recapitalization or otherwise) or combine (by reverse unit split, reclassification, recapitalization or otherwise) the outstanding Membership Units unless an identical event is occurring with respect to the Common Stock, in which event the Membership Units shall be combined or subdivided concurrently with and in the same manner as the Common Stock so that the Series AUnits shall at all times be exchangeable pursuant to the Exchange Agreement into shares of Class ACommon Stock on a one-for-one basis.

Section 10.5    Incentive Plans; Registered and Private Offerings.

(a)At any time UCP, Inc. issues a share of Common Stock pursuant to an Incentive Plan (whether pursuant to the exercise of a stock option or otherwise), the following shall occur: (1) UCP, Inc. shall be deemed to contribute to the capital of the Company an amount of cash equal to the current per share market price of a share of Common Stock on the date such share is issued (or, if earlier, the date the related option is exercised); (2) the net proceeds (including the amount of any payments made on a loan with respect to a stock purchase award) received by UCP, Inc. with respect to such share, if any, shall be concurrently transferred to the Company (and such net proceeds so transferred shall not constitute a capital contribution); and (3) the Company shall issue to UCP, Inc. one (1) Series B Unit registered in the name of UCP, Inc.

(b)At any time UCP, Inc. issues a share of Common Stock pursuant to a primary public offering registered under the Securities Act, or in a private placement or other transaction exempt from registration under the Securities Act, the net proceeds received by UCP, Inc. with respect to such share, if any, shall be concurrently transferred to the Company and the Company shall issue to UCP, Inc. one (1) Series B Unit registered in the name of UCP, Inc. for each share of Common Stock issued.

(c)If at any time UCP, Inc. issues debt securities which are convertible into Common Stock (“Convertible Debt”), the proceeds received from the issuance of such Convertible Debt shall be used by UCP, Inc. to purchase a debt security of the Company, with the same principal amount and substantially equivalent terms to the Convertible Debt (the “Back-to-Back Debt”). Upon conversion into Common Stock of any portion of the principal amount of Convertible Debt by any holder thereof the same principal amount of the Back-to-Back Debt automatically shall be converted into a number of Membership Units equal to the number of shares of Common Stock into which such portion of the Convertible Debt has been converted. In such event, the Gross Asset Value of the Company assets shall be adjusted pursuant to clause (ii)(q) of the definition of Gross Asset Value.

(d)If UCP, Inc. acquires any assets or Person for which the consideration, in whole or in part, consists of Common Stock, (i) the legal structure of such acquisition shall be agreed upon by UCP, Inc. and PICO, (ii) the assets or Person shall be contributed by UCP, Inc., directly or indirectly, to the Company or a subsidiary thereof in a manner to be agreed upon by UCP, Inc. and PICO, and (iii) appropriate adjustments, in accordance with the principles of this Agreement and as agreed upon by UCP, Inc. and PICO, shall be made to the number of Units, Gross Asset Value of Company assets and the Capital Accounts of each of the Members.

Section 10.6    Regulations. The Managing Member may make such additional rules and regulations, not inconsistent with this Agreement, as it may deem expedient with respect to the issue and Transfer of Membership Units and issuance of certificates for the Membership Units.

Section 10.7    Registered Members. The Company shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of the Membership Units to receive distributions and shall not be bound to recognize any equitable or other claim to or interest in such Membership Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the LLCA.

ARTICLE XI

MISCELLANEOUS

Section 11.1    Severability. The terms, conditions, and provisions of this Agreement are fully severable, and the decision or judgment of any court of competent jurisdiction rendering void or unenforceable any one or more of such terms, conditions or provisions shall not render void or unenforceable any of the other terms, conditions or provisions hereof and such void or unenforceable term shall be replaced with a valid and enforceable term which would to the greatest degree possible reflect the original intentions of the parties hereunder.

Section 11.2    Notices. All notices, requests, consents and other communications hereunder (each, a “Notice”) to any party shall be in writing and shall be delivered in person or sent by facsimile (provided a copy is thereafter promptly delivered as provided in this Section 11.2) or nationally recognized overnight courier, addressed to such party at the address or facsimile number set forth below, or such other address or facsimile number as may hereafter be designated in writing by such party to the other parties:

If to the Company or UCP, Inc., to:

6489 Camden Avenue, Suite 204

San Jose, CA 95120

Attention: President

Fax: 408-323-1114

If to PICO, to:

7979 Ivanhoe Avenue, Suite 300

La Jolla, CA 92037

Attention: President

Fax: 858-456-6480

Each Notice shall be deemed received on the date sent to the recipient thereof in accordance with this Section 11.2, if sent prior to 5:00 p.m. in the place of receipt and such day is a Business Day; otherwise, such Notice shall be deemed not to have been received until the next succeeding Business Day.

Section 11.3    Captions. The captions at the heading of each Article or Section of this Agreement are for convenience of reference only, and are not to be deemed a part of this Agreement itself.

Section 11.4    Entire Agreement. This Agreement, including the Schedules hereto and the other agreements and documents referenced herein or contemplated hereby, constitutes the entire agreement and understanding of the parties hereto with respect to the matters herein set forth, and all prior negotiations and understandings relating to the subject matter of this Agreement are merged herein and are superseded and canceled by this Agreement.

Section 11.5    Counterparts. This Agreement may be executed and delivered in one or more counterparts, each of which shall be deemed an original, and all of which shall be deemed to constitute one and the same agreement.

Section 11.6    Amendments; Waiver. Amendments to this Agreement may be made from time to time, provided, however, that no amendment, modification or waiver of this Agreement or any provision hereof shall be valid or effective unless in writing and approved by both the Managing Member and PICO. No consent to, waiver, discharge or release (each, a “Waiver”) of, any provision of, or breach under this Agreement shall be valid or effective unless in writing and signed by the party giving such Waiver, and no specific Waiver shall constitute a Waiver with respect to any other provision or breach, whether or not of similar nature. Failure on the part of any party hereto to insist in any instance upon

strict, complete and timely performance by another party hereto of any provision of or obligation under this Agreement shall not constitute a Waiver by such party of any of its rights under this Agreement or otherwise.

Section 11.7    Further Assurances. Each party shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

Section 11.8    Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without regard to conflicts of law principles thereof.

Section 11.9    Third Party Beneficiary. Except as set forth in Article VIII, nothing set forth in this Agreement shall be construed to confer any benefit to any third party who is not a party to this Agreement. The holders of securities of each of UCP, Inc. and PICO specifically shall not be deemed third party beneficiaries and shall not have or be construed to have any legal or equitable right, remedy or claim in respect of or by virtue of this Agreement or any provision herein contained.

Section 11.10    Assignment. This Agreement is personal to the parties hereto and neither party may (except as set forth in Article VII) assign or Transfer the rights accruing hereunder nor may performance of any duties by either party hereunder be delegated or assumed by any other Person or legal entity without the prior written consent of the other parties hereto.

Section 11.11    Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of each party hereto; provided, however, that no party hereto may Transfer any of such party's Membership Units (or any portion thereof or any beneficial interest therein) or this Agreement or such party's rights, interests or obligations hereunder, except in accordance with the terms of this Agreement, and for the avoidance of doubt, provided, further, that in case of any Transfer of Membership Units by PICO (other than any Transfer pursuant to the Exchange Agreement or a Transfer to an Affiliate of PICO), none of the special information and/or consent rights of PICO under Section 5.4(d), Section 6.2, Section 6.3, Section 6.6(b), Section 6.7, Section 6.8(a), and/or Section 9.3(b), as the case may be, shall, in whole or in part, be transferred or deemed to be transferred to such transferee (and PICO may not claim such rights for the benefit of any such transferee).

Section 11.12    Relationship. This Agreement does not constitute any Member, Managing Member, or any employee or agent of the Company as the agent or legal manager of any Member for any purpose whatsoever and no Member, Managing Member, or any employee or agent of the Company is granted hereby any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of any Member or to bind any Member in any manner or thing whatsoever.

Section 11.13    Consent to Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought and maintained exclusively in the United States District Court for the Northern District of California or the Superior Court of the State of California located in the County of Santa Clara. Each of the parties irrevocably consents to submit to the personal jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding. Process in any such suit, action or proceeding in such courts may be served, and shall be effective, on any party anywhere in the world, whether within or without the jurisdiction of any such court, by any of the methods specified for the giving of Notices pursuant to Section 11.2. Each of the parties irrevocably waives, to the fullest extent permitted by law, any objection or defense that it may now or hereafter have based on venue, inconvenience of forum, the lack of personal jurisdiction and the adequacy of service of process (as long as the party was provided Notice in accordance with the methods

specified in Section 11.2) in any suit, action or proceeding brought in such courts.

Section 11.14    Equitable Remedies. Each party acknowledges that no adequate remedy of law would be available for a breach of Articles VII and VIII of this Agreement, and that a breach of any of such Articles of this Agreement by one party would irreparably injure the other and accordingly agrees that in the event of a breach of any of such Articles of this Agreement, the respective rights and obligations of the parties hereunder shall be enforceable by specific performance, injunction or other equitable remedy (without bond or security being required), and each party waives the defense in any action and/or proceeding brought to enforce this Agreement that there exists an adequate remedy or that the other party is not irreparably injured. Nothing in this Section 11.14 is intended to exclude the possibility of equitable remedies with respect to breaches of other Sections or Articles of this Agreement.

Section 11.15    Fees and Expenses. Except as specifically set forth herein, each party shall be responsible for any legal and other fees and expenses incurred by such party in connection with the negotiation and preparation of this Agreement and the transactions contemplated hereby.

Section 11.16    Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 11.17    Confidentiality. Each Member acknowledges and agrees that the information of the Company and of its Affiliates is confidential and, except in the course of performing any duties as necessary for the Company and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Company and its Affiliates and successors, concerning the Company and its Affiliates and successors. This Section 11.17 shall not apply to (i) any information that has been made publicly available by the Company or any of its Affiliates, becomes public knowledge (except as a result of an act of violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for a Member to prepare and file its Tax Returns, to respond to any inquiries regarding the sale from any taxing authority or to prosecute or defend any action, proceeding or audit by any taxing authority with respect to such Tax Returns.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Second Amended and Restated Limited Liability Company Operating Agreement of UCP, LLC to be duly executed as of the date first above written.

COMPANY:

UCP, LLC

By: /s/ John R. Hart

Name: John R. Hart

Title: Chairman

MEMBERS:

UCP, Inc.

By: /s/ Dustin L. Bogue

Name: Dustin L. Bogue

Title: CEO

PICO Holdings, Inc.

By: /s/ Maxim C. W. Webb

Name: Maxim C. W. Webb

Title: Chief Financial Officer

SCHEDULE I

MEMBERS; MEMBERSHIP UNITS;

PERCENTAGE INTERESTS; CAPITAL ACCOUNTS

Member	Membership Units	Percentage Interest	Capital Account
UCP, Inc.	7,750,000 Series B Units	42.3%	$105,624,000
PICO Holdings, Inc.	10,593,000 Series A Units	57.7%	$144,078,128
	_____________________	________________________	_______________
	18,343,000	100%	$249,702,128

EX-31.1

EXHIBIT 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dustin L. Bogue, certify that:

1. I have reviewed this quarterly report on Form 10-Q of UCP, Inc. (the “Registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)[Intentionally Omitted];

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  September 3, 2013

/s/ Dustin L. Bogue

Dustin L. Bogue

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, William La Herran, certify that:

1. I have reviewed this quarterly report on Form 10-Q of UCP, Inc. (the “Registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)[Intentionally Omitted];

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  September 3, 2013

/s/ William J. La Herran

William J. La Herran

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of UCP, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dustin L. Bogue, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that to the best of my knowledge:

(1) The Report fully complies with requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  September 3, 2013

/s/ Dustin L. Bogue

Dustin L. Bogue

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of UCP, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. La Herran, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that to the best of my knowledge:

(1) The Report fully complies with requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  September 3, 2013

/s/ William J. La Herran

William J. La Herran

Chief Financial Officer

XML

Segment Information (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Segment Reporting Information [Line Items]

Segment Information

Segment Information

The Company’s operations are organized into two reportable segments: homebuilding and land development. The Company’s homebuilding operations construct and sell single-family homes, primarily in California. The homebuilding reportable segment includes real estate of similar economic characteristics, including similar historical and expected future long-term gross margin percentages, similar product types, production processes and methods of distribution. The land development operations develop and sell lots, primarily in California, and include real estate of similar economic characteristics, including similar historical and expected future long-term gross margin percentages, similar product types, production processes and methods of distribution. The reportable segments follow the same accounting policies as the condensed consolidated financial statements described in Note 1. Operating 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.

Financial information relating to reportable segments was as follows (in thousands): 

	June 30, 2013		December 31, 2012
Assets
Homebuilding	$	75,637	$	31,427
Land development	72,199		93,940
Corporate	5,851		12,167
Total	$	153,687	$	137,534

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenue
Homebuilding	$	20,907		$	1,435		$	25,240		$	2,968
Land development	6,815			—			14,285			2,002
Total	27,722			1,435			39,525			4,970
Gross margin
Homebuilding	4,425			378			5,298			849
Land development	1,679			(9		)	4,569			644
Total	6,104			369			9,867			1,493
Selling, marketing and general and administrative expenses	(7,425		)	(2,624		)	(12,037		)	(5,053		)
Other income (expense), net	224			93			263			301
Net loss	$	(1,097	)	$	(2,162	)	$	(1,907	)	$	(3,259	)

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Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2013	Dec. 31, 2012
Assets
Cash and cash equivalents	$ 100
Total assets	100
Liabilities and member’s equity:
Total liabilities	0
Total liabilities and stockholder’s equity	100
UCP LLC [Member]
Assets
Cash and cash equivalents	1,788,000	10,324,000
Real estate inventories	147,836,000	125,367,000
Fixed assets, net	860,000	680,000
Receivables	243,000	243,000
Other assets	2,960,000	920,000
Total assets	153,687,000	137,534,000
Liabilities and member’s equity:
Accounts payable and accrued liabilities	11,662,000	6,107,000
Debt	33,259,000	29,112,000
Total liabilities	44,921,000	35,219,000
Commitments and contingencies (Note 7)
Member’s equity	108,766,000	102,315,000
Total liabilities and stockholder’s equity	$ 153,687,000	$ 137,534,000

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Organization, Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Entity Information [Line Items]

Organization, Basis of Presentation and Summary of Significant Accounting Policies

Background and Basis of Presentation

UCP, Inc., a Delaware corporation (the “Company”), was incorporated on May 7, 2013 for the purpose of facilitating an initial public offering (the “IPO”). At June 30, 2013, the Company had no material assets, no liabilities and had conducted no operations, and engaged only in activities in contemplation of the IPO.

The accompanying balance sheet of the Company was prepared in conformity with accounting principles generally accepted in the United States of America.

As of June 30, 2013, the Company had authorized 1,000 shares of common stock, par value $0.01 per share, 100 of which were issued and outstanding as of such date. As of June 30, 2013, all of the Company's outstanding common stock was held by PICO Holdings, Inc. (“PICO”).

UCP LLC [Member]

Entity Information [Line Items]

Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization, Basis of Presentation and Summary of Significant Accounting Policies

Business Description and Organizational Structure of the Company:

UCP, LLC, a Delaware limited liability company (together with its consolidated subsidiaries, “UCP” or the “Company”), is a wholly-owned subsidiary of PICO Holdings, Inc. (“PICO”), a NASDAQ listed diversified holding company, as of June 30, 2013. The Company is a homebuilder and land developer in Northern California and the Puget Sound area of Washington State. As described in Note 9 - Subsequent Events, UCP, Inc. completed the initial public offering of its Class A common stock, par value $0.01 per share (“Class A Common Stock”) on July 23, 2013 (the “IPO”). In connection with the IPO, UCP, Inc. became the sole managing member of UCP, LLC and purchased a 42.3% economic interest in UCP, LLC with the net proceeds, with PICO retaining the remaining 57.7% economic interest in UCP, LLC.

Prior to completion of the IPO, the Company was funded primarily though contributions from PICO. As of June 30, 2013 and December 31, 2012, the Company's capital structure was comprised solely of PICO's membership interests and the Company did not have any outstanding shares. During the six months ended June 30, 2013 and 2012, the Company received $34.0 million and $19.9 million, respectively in contributions from PICO. As the Company generated excess cash, primarily from the sale of real estate inventories, it repaid $25.6 million and $1.8 million of the contributions to PICO during the six months ended June 30, 2013 and 2012, respectively. Subsequent to the IPO, the Company does not anticipate receiving additional contributions from PICO or repaying any remaining contributions to PICO.

For the periods prior to the completion of the IPO, PICO allocated expenses to the Company for certain corporate services and other expenses. The material costs allocated were payroll and benefits, which were allocated based on estimated time for the services provided. These allocations include payroll and benefits related to corporate services, such as executive management, information technology, legal, finance and accounting, human resources, risk management, tax and treasury. The total amounts of the cost allocations from PICO were approximately $270,000 and $306,000 for the three months ended June 30,2013 and 2012, and $525,000 and $574,000, for the six months endedJune 30, 2013 and 2012, respectively. These cost allocations are primarily reflected within general and administrative expenses in the Company's condensed consolidated statements of operations. The Company's management believes the basis on which the expenses have been allocated is a reasonable reflection of the services and other benefits received by the Company during the periods presented, and that the financial statements reflect all of the costs of doing business related to the Company's operations, including expenses incurred by PICO on the Company's behalf.

After completion of the IPO, the Company will ultimately assume responsibility for the costs and performance of many of the functions historically undertaken by PICO. The allocations may not reflect the expense the Company would have incurred as a stand-alone public company for the periods presented. Actual costs that may have been incurred if the Company was a stand-alone public company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees, and strategic decisions made in certain areas. Following completion of the IPO, the Company expects PICO to continue to provide accounting, human resources and information technology functions on a transitional basis for a fee pursuant to a Transition Services Agreement.

Subsequent to the IPO and related transactions, as the sole managing member of UCP, LLC, UCP, Inc. will control all of the business and affairs of UCP, LLC and its subsidiaries and will consolidate the results of operations of UCP, LLC in its condensed consolidated financial statements.

Basis of Presentation:

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2012, which are included in UCP, Inc.'s prospectus that was filed by UCP, Inc. with the Securities and Exchange Commission (“SEC”) on July 18, 2013. The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring entries) necessary for the fair presentation of the Company’s results for the interim periods presented. The results for interim periods are not indicative of the results to be expected for the full year.

Use of Estimates in Preparation of Financial Statements:

The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses for each reporting period. The significant estimates made in the preparation of the Company’s condensed consolidated financial statements relate to the assessment of real estate impairments, warranty reserves and contingent liabilities. While management believes that the carrying value of such assets and liabilities are appropriate as of June 30, 2013 and December 31, 2012, it is reasonably possible that actual results could differ from the estimates upon which the carrying values were based.

Related Party Transactions:

As of June 30, 2013, loans with aggregate commitments of $17.1 million and an aggregate outstanding balance of $6.0 million were guaranteed by PICO. These loans are secured by liens on the projects that they finance. PICO has provided payment and completion guarantees with respect to these loans. In addition, PICO has agreed to indemnify the lender for any losses it may suffer in connection with hazardous materials on the financed property.

The Company is often required to provide performance bonds to governmental authorities and others to ensure the completion of its projects. As of June 30, 2013, PICO had guaranteed the Company’s obligations under performance bonds with an aggregate amount of $9.8 million. The Company does not expect PICO to provide additional guarantees, indemnities or any other forms of credit support after completion of the IPO.

Segment Reporting:

The Company determined that its operations are organized into two reportable segments: homebuilding and land development. In accordance with the aggregation criteria defined in the applicable accounting guidance, the Company considered similar economic and other characteristics, including product types, average selling prices, gross margins, production processes, suppliers, subcontractors, regulatory environments, land acquisition results and underlying supply and demand in determining its reportable segments.

Cash and Cash Equivalents:

Cash and cash equivalents include highly liquid instruments purchased with original maturities of three months or less.

Real Estate Inventories and Cost of Sales:

The Company capitalizes pre-acquisition costs, the purchase price of real estate, development costs and other allocated costs, including interest, during development and home construction. Applicable costs incurred after development or construction is substantially complete are charged to sales and marketing or general and administrative as appropriate. Pre-acquisition costs, including non-refundable land deposits, are expensed to cost of sales when the Company determines continuation of the related project is not probable.

Land, development and other common costs are typically allocated to real estate inventories using the relative-sales-value method. Direct home construction costs are recorded using thespecific identification method. Cost of sales - homebuilding includes the allocation of construction costs of each home and all applicable land acquisition, real estate development and related common costs based upon the relative-sales-value of the home. Changes to estimated total development costs subsequent to initial home closings in a community are generally allocated on a relative-sales-value method to remaining homes in the community. Cost of sales - land development includes land acquisition and development costs, capitalized interest, impairment charges, abandonment charges for projects that are no longer economically viable, and real estate taxes. Abandonment charges during the three months ended June 30, 2013 and 2012, were $3,000 and $9,000, respectively, and were $12,000 and $68,000 during the six months endedJune 30, 2013 and 2012, respectively. Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to fair value.

All real estate inventories are classified as held until the Company commits to a plan to sell the real estate, the real estate can be sold in its present condition, is being actively marketed for sale, and it is probable that the real estate will be sold within the next twelve months. At June 30, 2013 and December 31, 2012, the Company had real estate inventories of $7.6 million and $2.9 million, respectively, classified as held for sale.

Impairment of Real Estate Inventories:

The Company records an impairment loss when conditions exist where the carrying amount of real estate is not fully recoverable and exceeds its fair value. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses. The Company prepares and analyzes cash flows at the lowest level for which there is identifiable cash flows that are independent of the cash flows of other groups of assets.

If events or circumstances indicate that the carrying amount may be impaired, such impairment will be measured based upon the difference between the carrying amount and the fair value of such assets determined using the estimated future discounted cash flows, excluding interest charges, generated from the use and ultimate disposition of the respective real estate inventories. Such losses, if any, are reported within cost of sales - land development. No such losses were recorded during the three and six months ended June 30, 2013 and 2012.

When estimating undiscounted future cash flows of our real estate assets, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available on the market, pricing and incentives being offered by us or other builders in other communities, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs incurred to date and expected to be incurred, including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property. The Company did not have any real estate assets for which the estimated undiscounted future cash flows were not in excess of their carrying values.

Capitalization of Interest:

The Company capitalizes interest to real estate inventories during the period of development. Interest capitalized as a cost of real estate inventories is included in cost of sales - homebuilding or cost of sales - land development as related homes or real estate are sold. To the extent the Company’s debt exceeds the related asset under development, the Company expenses that portion of the interest incurred. Qualifying assets include projects that are actively selling or under development.

Fixed Assets, net:

Fixed assets are carried at cost, net of accumulated depreciation.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets.  Computer software and hardware are depreciated over three years, office furniture and fixtures are depreciated over seven years, vehicles are depreciated over five years and leasehold improvements are depreciated over the shorter of their useful life or lease term and range from one to three years.  Maintenance and repairs are charged to expense as incurred, while significant improvements are capitalized.  Depreciation expense is included in general and administrative expenses, and gains or losses on the sale of fixed assets are included in other income.

Receivables:

Receivables include amounts due from buyers for homes sold on the last day of the month and from utility companies for reimbursement of costs. At June 30, 2013 and December 31, 2012, the Company had no allowance for doubtful accounts recorded.

Other assets:

At June 30, 2013, other assets included amounts accrued related to the IPO. The detail of other assets is set forth below (in thousands):

	June 30, 2013		December 31, 2012
Deferred IPO costs	$	1,783	$	—
Customer deposits in escrow	461		388
Prepaid expenses	300		207
Deposits	416		325
	$	2,960	$	920

Homebuilding and Land Development Sales and Profit Recognition:

In accordance with Financial Accounting Standard Board (“FASB”) issued Accounting Standard Codification Topic 360 (“ASC Topic 360”), Property, Plant, and Equipment, revenue from home sales and other real estate sales are recorded and any profit is recognized when the respective sales are closed. Sales are closed when all conditions of escrow are met, title passes to the buyer, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured and the Company has no continuing involvement. The Company does not offer financing to any buyers. Sales price incentives are accounted for as a reduction of revenues when the sale is recorded. If the earnings process is not complete, the sale and any related profits are deferred for recognition in future periods. Any profit recorded is based on the calculation of cost of sales, which is dependent on an allocation of costs.

Warranty Reserves:

Estimated future direct warranty costs are accrued and charged to cost of sales - homebuilding in the period in which the related homebuilding revenue is recognized. Amounts accrued are based upon estimates of the amount the Company expects to pay for warranty work. The Company assesses the adequacy of its warranty reserves on a quarterly basis and adjusts the amounts recorded, if necessary. Warranty reserves are included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets.

Changes in warranty reserves are detailed in the table set forth below (in thousands):

	June 30, 2013			December 31, 2012
Warranty reserves, beginning of period	$	141		$	102
Warranty reserves accrued	170			51
Warranty expenditures	(6		)	(12		)
Warranty reserves, end of period	$	305		$	141

Consolidation of Variable Interest Entities:

The Company enters into purchase and option agreements for the purchase of real estate as part of the normal course of business. These purchase and option agreements enable the Company to acquire real estate at one or more future dates at pre-determined prices. The Company believes these acquisition structures reduce its financial risk associated with real estate acquisitions and holdings and allow the Company to better manage its cash position.

Based on the provisions of the relevant accounting guidance, the Company concluded that when it enters into a purchase agreement to acquire real estate from an entity, a variable interest entity (“VIE”), may be created. The Company evaluates all option and purchase agreements for real estate to determine whether they are a VIE. The applicable accounting guidance requires that for each VIE, the Company assess whether it is the primary beneficiary and, if it is, the Company consolidates the VIE in its condensed consolidated financial statements in accordance with ASC Topic 810 - Consolidations, and would reflect such assets and liabilities as “Real estate inventories not owned.”

In order to determine if the Company is the primary beneficiary, it must first assess whether it has the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with us; and the ability to change or amend the existing option contract with the VIE. If the Company is not determined to control such activities, the Company is not considered the primary beneficiary of the VIE. If the Company does have the ability to control such activities, the Company will continue its analysis by determining if it is also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if the Company will benefit from a potentially significant amount of the VIE’s expected gains.

In substantially all cases, creditors of the entities with which the Company have option agreements have no recourse against the Company and the maximum exposure to loss on the applicable option or purchase agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Some of the Company’s option or purchase deposits may be refundable to the Company if certain contractual conditions are not performed by the party selling the lots. The Company did not consolidate any VIE at June 30, 2013 and December 31, 2012.

Income Taxes:

The Company is a limited liability company which is treated as an entity that is disregarded from its owner for income tax purposes and is subject to certain minimal taxes and fees. However, income taxes on taxable income or losses realized by the Company are the obligation of PICO. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements, nor has the Company been assessed interest or penalties by any major tax jurisdictions.

Recently Issued Accounting Standards:

In February 2013, guidance that requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the amount the reporting entity agreed to pay plus additional amounts the reporting entity expects to pay on behalf of its co-obligors was issued. The guidance further provides for disclosure of the nature and amount of the obligation. The amendment is effective for interim and annual reporting periods beginning after December 15, 2013. The Company is currently evaluating the effect of this standard will have on the condensed consolidated financial statements.

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Debt (Tables) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Debt Instrument [Line Items]

Schedule of debt

Debt consisted of the following (in thousands):

	June 30, 2013		December 31, 2012
Acquisition Debt:
Interest rates from 4% to 4.75% - payments due through 2014	$	5,365	$	5,551
Interest rate of 5% - payments due through 2015	5,116		425
Interest rate of 6% - payments due through 2014	3,202		4,136
Interest rate of 6.5% - payments due through 2036	552		558
Interest rate of 10% - payments due through 2014	1,604		1,604
	15,839		12,274
Construction and Development Debt:
Interest rate of 6% - payments due through 2014	11,420		10,838
Interest rate of 10% - payments due through 2014	6,000		6,000
	17,420		16,838
Total debt	$	33,259	$	29,112

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Event [Line Items]

Subsequent Events

Subsequent Events

The Company completed its IPO on July 23, 2013 and purchased a 42.3% economic interest in UCP, LLC with the net proceeds. In connection with the IPO, the Company became the sole managing member of UCP, LLC, the entity through which it conducts its post-IPO operations. As the sole managing member of UCP, LLC, the Company will control all of the business and affairs of UCP, LLC and its subsidiaries and will consolidate the results of operations of UCP, LLC in its condensed consolidated financial statements. Subsequent to the IPO and related transactions, the Company's sole material asset is its 42.3% economic interest in UCP, LLC; PICO holds the remaining 57.7% interest in UCP, LLC.

Subsequent events have been evaluated through September 3, 2013, the date the balance sheet was available to be issued.

UCP LLC [Member]

Subsequent Event [Line Items]

Subsequent Events

Subsequent Events

As of June 30, 2013 and up to the completion of the IPO, each of UCP, LLC and UCP, Inc. were wholly-owned subsidiaries of PICO. On July 23, 2013, UCP, Inc. completed the IPO, became a publicly-owned company and purchased a 42.3% economic interest in UCP, LLC with the net proceeds, with PICO retaining the remaining 57.7% economic interest in UCP, LLC. In connection with the IPO, UCP, Inc. became the sole managing member of UCP, LLC; as such, UCP, Inc. will control all of the business and affairs of UCP, LLC and its subsidiaries. Subsequent to the IPO and related transactions, UCP, Inc. will consolidate the results of operations of UCP, LLC in its condensed consolidated financial statements.

Subsequent events have been evaluated through September 3, 2013, the date the condensed consolidated financial statements were available to be issued.

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Fair Value Disclosures (Details) (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 33,259	$ 29,112
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 34,859	$ 28,184

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Background and Basis of Presentation - UCP (Details) (USD $)	Jun. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Common Stock, shares authorized (in shares)	1,000
Common Stock, par value (in dollars per share)	$ 0.01
Common Stock, shares issued (in shares)	100
Common Stock, shares outstanding (in shares)	100

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Segment Information (Tables) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Segment Reporting Information [Line Items]

Schedule of financial information relating to segments

Financial information relating to reportable segments was as follows (in thousands): 

	June 30, 2013		December 31, 2012
Assets
Homebuilding	$	75,637	$	31,427
Land development	72,199		93,940
Corporate	5,851		12,167
Total	$	153,687	$	137,534

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenue
Homebuilding	$	20,907		$	1,435		$	25,240		$	2,968
Land development	6,815			—			14,285			2,002
Total	27,722			1,435			39,525			4,970
Gross margin
Homebuilding	4,425			378			5,298			849
Land development	1,679			(9		)	4,569			644
Total	6,104			369			9,867			1,493
Selling, marketing and general and administrative expenses	(7,425		)	(2,624		)	(12,037		)	(5,053		)
Other income (expense), net	224			93			263			301
Net loss	$	(1,097	)	$	(2,162	)	$	(1,907	)	$	(3,259	)

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Fixed Assets, Net (Details) (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Fixed assets, gross	$ 1,208		$ 1,208		$ 915
Accumulated depreciation	(348)		(348)		(235)
Fixed assets, net	860		860		680
Depreciation	62	37	113	66
Computer hardware and software [Member]
Property, Plant and Equipment [Line Items]
Fixed assets, gross	899		899		667
Office furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Fixed assets, gross	230		230		169
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Fixed assets, gross	$ 79		$ 79		$ 79

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Segment Information (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Assets	$ 100		$ 100
Gross Profit [Abstract]
Reportable segments			2
UCP LLC [Member]
Segment Reporting Information [Line Items]
Assets	153,687,000		153,687,000		137,534,000
Revenues [Abstract]
Homebuilding	20,907,000	1,435,000	25,240,000	2,968,000
Land development	6,815,000	0	14,285,000	2,002,000
Total	27,722,000	1,435,000	39,525,000	4,970,000
Gross Profit [Abstract]
Gross margin	(1,321,000)	(2,255,000)	(2,170,000)	(3,560,000)
Net loss	(1,097,000)	(2,162,000)	(1,907,000)	(3,259,000)
UCP LLC [Member] | Home Building [Member]
Segment Reporting Information [Line Items]
Assets	75,637,000		75,637,000		31,427,000
UCP LLC [Member] | Land Development [Member]
Segment Reporting Information [Line Items]
Assets	72,199,000		72,199,000		93,940,000
UCP LLC [Member] | Corporate [Member]
Segment Reporting Information [Line Items]
Assets	5,851,000		5,851,000		12,167,000
UCP LLC [Member] | Operating Segments [Member]
Revenues [Abstract]
Total	27,722,000	1,435,000	39,525,000	4,970,000
Gross Profit [Abstract]
Gross margin	6,104,000	369,000	9,867,000	1,493,000
UCP LLC [Member] | Operating Segments [Member] | Home Building [Member]
Revenues [Abstract]
Homebuilding	20,907,000	1,435,000	25,240,000	2,968,000
Gross Profit [Abstract]
Gross margin	4,425,000	378,000	5,298,000	849,000
UCP LLC [Member] | Operating Segments [Member] | Land Development [Member]
Revenues [Abstract]
Land development	6,815,000	0	14,285,000	2,002,000
Gross Profit [Abstract]
Gross margin	1,679,000	(9,000)	4,569,000	644,000
UCP LLC [Member] | Corporate, Non-Segment [Member]
Gross Profit [Abstract]
Selling, marketing and general and administrative expenses	(7,425,000)	(2,624,000)	(12,037,000)	(5,053,000)
Other income	$ 224,000	$ 93,000	$ 263,000	$ 301,000

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Organization, Basis of Presentation and Summary of Significant Accounting Policies - Warranty Reserves (Details) (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
UCP LLC [Member]
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Warranty reserves, beginning of period	$ 141	$ 102
Warranty reserves accrued	170	51
Warranty expenditures	(6)	(12)
Warranty reserves, end of period	$ 305	$ 141

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Fair Value Disclosures (Tables) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Schedule of financial instruments not carried at fair value

The following presents the carrying value and fair value of the Company’s financial instruments which are not carried at fair value (in thousands):

	June 30, 2013				December 31, 2012
	Carrying Amount		Estimated Fair  Value		Carrying Amount		Estimated Fair  Value
Financial liabilities:
Debt	$	33,259	$	34,859	$	29,112	$	28,184

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Condensed Consolidated Statements of Members' Equity (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	UCP LLC [Member] USD ($)	Member Units [Member] UCP LLC [Member] USD ($)
Beginning balance at Dec. 31, 2011	$ 92,992
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Member contributions	(19,879)	19,879
Repayments of member contributions	1,817	(1,817)
Net loss	(3,259)
Ending balance at Jun. 30, 2012	107,795
Beginning balance at Mar. 31, 2012
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(2,162)
Ending balance at Jun. 30, 2012	107,795
Beginning balance at Dec. 31, 2012	102,315
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Member contributions	(33,956)	33,956
Repayments of member contributions	25,598	(25,598)
Net loss	(1,907)
Ending balance at Jun. 30, 2013	108,766
Beginning balance at Mar. 31, 2013
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(1,097)
Ending balance at Jun. 30, 2013	$ 108,766

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Background and Basis of Presentation - UCP

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

Background and Basis of Presentation

UCP, Inc., a Delaware corporation (the “Company”), was incorporated on May 7, 2013 for the purpose of facilitating an initial public offering (the “IPO”). At June 30, 2013, the Company had no material assets, no liabilities and had conducted no operations, and engaged only in activities in contemplation of the IPO.

The accompanying balance sheet of the Company was prepared in conformity with accounting principles generally accepted in the United States of America.

As of June 30, 2013, the Company had authorized 1,000 shares of common stock, par value $0.01 per share, 100 of which were issued and outstanding as of such date. As of June 30, 2013, all of the Company's outstanding common stock was held by PICO Holdings, Inc. (“PICO”).

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Real Estate Inventories (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Entity Information [Line Items]

Real Estate Inventories

Real Estate Inventories

Real estate inventories consisted of the following (in thousands):

	June 30, 2013		December 31, 2012
Deposits and pre-acquisition costs	$	2,607	$	2,177
Land held and land under development	119,734		110,463
Homes completed or under construction	21,445		9,441
Model homes	4,050		3,286
	$	147,836	$	125,367

Model homes and homes completed or under construction include all costs associated with home construction, including land, development, indirect costs, permits and fees, and vertical construction. Land under development includes costs incurred during site development, such as land, development, indirect costs and permits. As of June 30, 2013, the Company had $2.2 million of deposits pertaining to land purchase contracts for 1,255 lots with an aggregate purchase price of approximately $72.4 million, net of deposits.

Interest Capitalization

Interest is capitalized on real estate inventories during development. Interest capitalized is included in cost of sales as related sales are recognized. For the three months ended June 30, 2013 and 2012, and for the six months endedJune 30, 2013 and 2012, interest incurred was $624,000 and $445,000, and $1.3 million and $898,000, respectively, and was capitalized in each respective period. Amounts capitalized to home inventory and land inventory were as follows (in thousands): 

	June 30,
	2013			2012
Interest expense capitalized as cost of home inventory	$	887		$	73
Interest expense capitalized as cost of land inventory	403			825
Total interest expense capitalized	1,290			898
Previously capitalized interest expense included in cost of sales - homebuilding	(358		)	(33		)
Previously capitalized interest expense included in cost of sales - land development	(7		)	(41		)
Net activity of capitalized interest	925			824
Capitalized interest expense in beginning inventory	4,620			3,431
Capitalized interest expense in ending inventory	$	5,545		$	4,255

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Subsequent Events - UCP

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company completed its IPO on July 23, 2013 and purchased a 42.3% economic interest in UCP, LLC with the net proceeds. In connection with the IPO, the Company became the sole managing member of UCP, LLC, the entity through which it conducts its post-IPO operations. As the sole managing member of UCP, LLC, the Company will control all of the business and affairs of UCP, LLC and its subsidiaries and will consolidate the results of operations of UCP, LLC in its condensed consolidated financial statements. Subsequent to the IPO and related transactions, the Company's sole material asset is its 42.3% economic interest in UCP, LLC; PICO holds the remaining 57.7% interest in UCP, LLC.

Subsequent events have been evaluated through September 3, 2013, the date the balance sheet was available to be issued.

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Subsequent Events (Details) (Subsequent Event [Member])	Jul. 23, 2013
UCP LLC [Member]
Subsequent Event [Line Items]
Economic interest percentage	42.30%
Subsidiaries [Member]
Subsequent Event [Line Items]
Ownership percentage	57.70%

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Subsequent Events - UCP (Details) (Subsequent Event [Member])	Jul. 23, 2013
UCP LLC [Member]
Subsequent Event [Line Items]
Economic interest percentage	42.30%
Material asset percentage	42.30%
Subsidiaries [Member]
Subsequent Event [Line Items]
Ownership percentage	57.70%

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Real Estate Inventories - Real Estate Inventory (Details) (UCP LLC [Member], USD $)	Jun. 30, 2013 lot	Dec. 31, 2012
UCP LLC [Member]
Deposits and pre-acquisition costs	$ 2,607,000	$ 2,177,000
Land held and land under development	119,734,000	110,463,000
Homes completed or under construction	21,445,000	9,441,000
Model homes	4,050,000	3,286,000
Total Inventory	147,836,000	125,367,000
Deposits on land purchase contracts	2,200,000
Number of land purchase contracts	1,255
Aggregate land purchase contracts, net	$ 72,400,000

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Debt - Long Term Debt (Details) (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Debt	$ 33,259	$ 29,112
Acquisition Debt [Member]
Debt Instrument [Line Items]
Debt	15,839	12,274
Acquisition Debt [Member] | Interest rates from 4% to 4.75% - payments due through 2014 [Member]
Debt Instrument [Line Items]
Debt	5,365	5,551
Acquisition Debt [Member] | Interest rate of 5% - payments due through 2015 [Member]
Debt Instrument [Line Items]
Debt	5,116	425
Interest rate	5.00%
Acquisition Debt [Member] | Interest rate of 6% - payments due through 2014 [Member]
Debt Instrument [Line Items]
Debt	3,202	4,136
Interest rate	6.00%
Acquisition Debt [Member] | Interest rate of 6.5% - payments due through 2036 [Member]
Debt Instrument [Line Items]
Debt	552	558
Interest rate	6.50%
Acquisition Debt [Member] | Interest rate of 10% - payments due through 2014 [Member]
Debt Instrument [Line Items]
Debt	1,604	1,604
Interest rate	10.00%
Construction Development Debt [Member]
Debt Instrument [Line Items]
Debt	17,420	16,838
Construction Development Debt [Member] | Interest rate of 6% - payments due through 2014 [Member]
Debt Instrument [Line Items]
Debt	11,420	10,838
Interest rate	6.00%
Construction Development Debt [Member] | Interest rate of 10% - payments due through 2014 [Member]
Debt Instrument [Line Items]
Debt	$ 6,000	$ 6,000
Interest rate	10.00%
Minimum [Member] | Acquisition Debt [Member] | Interest rates from 4% to 4.75% - payments due through 2014 [Member]
Debt Instrument [Line Items]
Interest rate	4.00%
Maximum [Member] | Acquisition Debt [Member] | Interest rates from 4% to 4.75% - payments due through 2014 [Member]
Debt Instrument [Line Items]
Interest rate	4.75%

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UCP Inc. Balance Sheet (Parenthetical) (USD $)	Jun. 30, 2013
Statement of Financial Position [Abstract]
Common Stock, par value (in dollars per share)	$ 0.01
Common Stock, shares authorized (in shares)	1,000
Common Stock, shares issued (in shares)	100
Common Stock, shares outstanding (in shares)	100

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Debt (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Debt Instrument [Line Items]

Debt

Debt

The Company enters into acquisition, development and construction debt agreements to purchase and develop real estate inventories and for the construction of homes, which are secured primarily by the underlying real estate. Certain of the loans are funded in full at the initial loan closing and others are revolving facilities under which the Company may borrow, repay and redraw up to a specified amount during the term of the loan. The loans are due at various dates but are generally repaid when lots are released from the loans based upon a specific release price, as defined in each respective loan agreement, or the loans are refinanced at current prevailing rates. The construction and development debt is required to be repaid with proceeds from home closings based upon a specific release price, as defined in each respective loan agreement. Certain of the construction and development debt agreements include provisions that require minimum loan-to-value ratios. During the term of the loan, the lender may require the Company to obtain a third-party written appraisal of the underlying real estate collateral. If the appraised fair value of the collateral securing the loan is below the specified minimum, the Company may be required to make principal payments in order to maintain the required loan-to-value ratios. As of June 30, 2013 and December 31, 2012, the lenders have not requested, and the Company has not obtained, any such appraisals. As of June 30, 2013, the Company had approximately $39.3 million of aggregate loan commitments and approximately $11.0 million of unused loan commitments. At June 30, 2013 and December 31, 2012, the weighted average interest rate on the Company’s outstanding debt was 6.5% and 6.7%, respectively.

Debt consisted of the following (in thousands):

	June 30, 2013		December 31, 2012
Acquisition Debt:
Interest rates from 4% to 4.75% - payments due through 2014	$	5,365	$	5,551
Interest rate of 5% - payments due through 2015	5,116		425
Interest rate of 6% - payments due through 2014	3,202		4,136
Interest rate of 6.5% - payments due through 2036	552		558
Interest rate of 10% - payments due through 2014	1,604		1,604
	15,839		12,274
Construction and Development Debt:
Interest rate of 6% - payments due through 2014	11,420		10,838
Interest rate of 10% - payments due through 2014	6,000		6,000
	17,420		16,838
Total debt	$	33,259	$	29,112

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Condensed Consolidated Statements of Operations (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
UCP LLC [Member]
Revenues [Abstract]
Homebuilding	$ 20,907	$ 1,435	$ 25,240	$ 2,968
Land development	6,815	0	14,285	2,002
Total revenue	27,722	1,435	39,525	4,970
COSTS AND EXPENSES:
Cost of sales - homebuilding	16,482	1,057	19,942	2,119
Cost of sales - land development	5,136	9	9,716	1,358
Sales and marketing	2,099	238	3,231	459
General and administrative	5,326	2,386	8,806	4,594
Total costs and expenses	29,043	3,690	41,695	8,530
Loss from operations	(1,321)	(2,255)	(2,170)	(3,560)
Other income (expense), net	224	93	263	301
Net loss	(1,097)	(2,162)	(1,907)	(3,259)
Other comprehensive income (loss), net of tax	0	0	0	0
Comprehensive loss	$ (1,097)	$ (2,162)	$ (1,907)	$ (3,259)

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UCP Inc. Balance Sheet (USD $)	Jun. 30, 2013
Assets:
Cash	$ 100
Total assets	100
Total liabilities	0
Stockholder’s equity:
Common stock, $0.01 par value, 1,000 shares authorized, 100 shares issued and outstanding	1
Additional paid-in-capital	99
Total stockholder’s equity	100
Total liabilities and stockholder’s equity	$ 100

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Organization, Basis of Presentation and Summary of Significant Accounting Policies (Details) (USD $)	6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended			6 Months Ended
	Jun. 30, 2013 segment	Jul. 23, 2013 Subsequent Event [Member] IPO [Member]	Jul. 23, 2013 UCP LLC [Member] Subsequent Event [Member]	Jun. 30, 2013 UCP LLC [Member]	Jun. 30, 2012 UCP LLC [Member]	Jun. 30, 2013 UCP LLC [Member]	Jun. 30, 2012 UCP LLC [Member]	Jun. 30, 2013 Subsidiaries [Member]	Jun. 30, 2012 Subsidiaries [Member]	Jun. 30, 2013 Subsidiaries [Member]	Jun. 30, 2012 Subsidiaries [Member]	Jul. 23, 2013 Subsidiaries [Member] Subsequent Event [Member]	Jun. 30, 2013 Computer hardware and software [Member] UCP LLC [Member]	Jun. 30, 2013 Furniture and Fixtures [Member] UCP LLC [Member]	Jun. 30, 2013 Vehicles [Member] UCP LLC [Member]	Jun. 30, 2013 Minimum [Member] Leasehold Improvements [Member] UCP LLC [Member]	Jun. 30, 2013 Maximum [Member] Leasehold Improvements [Member] UCP LLC [Member]	Jun. 30, 2013 Real Estate [Member] UCP LLC [Member]	Dec. 31, 2012 Real Estate [Member] UCP LLC [Member]
Property, Plant and Equipment [Line Items]
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Economic interest percentage			42.30%
Ownership percentage												57.70%
Cash contributions from member						$ 33,956,000	$ 19,879,000
Repayments of member contributions						25,598,000	1,817,000
Allocated expenses								270,000	306,000	525,000	574,000
Guarantor aggregate commitments				17,100,000		17,100,000
Long-term debt				6,000,000		6,000,000
Guarantor performance bonds					9,800,000		9,800,000
Reportable segments	2
Abandonment of real estate inventories				3,000	9,000	12,000	68,000
Inventory held for sale																		$ 7,600,000	$ 2,900,000
Fixed asset useful life													3 years	7 years	5 years	1 year	3 years

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Accounts Payable and Accrued Liabilities (Tables) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Entity Information [Line Items]

Schedule of accounts payable and accrued liabilities

Accounts payable and accrued liabilities consisted of the following (in thousands): 

	June 30, 2013		December 31, 2012
Accounts payable and accrued expenses	$	10,757	$	5,263
Accrued payroll liabilities	600		703
Warranty reserves (Note 1)	305		141
	$	11,662	$	6,107

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Commitments and Contingencies (Details) (Surety Bond [Member], UCP LLC [Member], USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Surety Bond [Member] | UCP LLC [Member]
Loss Contingencies [Line Items]
Surety bonds	$ 10.0	$ 6.9

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Accounts Payable and Accrued Liabilities (Details) (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Dec. 31, 2011
UCP LLC [Member]
Accounts Payable and Accrued Liabilities [Line Items]
Accounts payable and accrued expenses	$ 10,757	$ 5,263
Accrued payroll liabilities	600	703
Warranty reserves (Note 1)	305	141	102
Total liabilities	$ 11,662	$ 6,107

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Debt (Details) (UCP LLC [Member], USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
UCP LLC [Member]
Debt Instrument [Line Items]
Aggregate loan commitments	$ 39.3
Unused loan commitments	$ 11.0
Weighted average interest rate	6.50%	6.70%

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Accounts Payable and Accrued Liabilities (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Entity Information [Line Items]

Accounts Payable and Accrued Liabilities

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following (in thousands): 

	June 30, 2013		December 31, 2012
Accounts payable and accrued expenses	$	10,757	$	5,263
Accrued payroll liabilities	600		703
Warranty reserves (Note 1)	305		141
	$	11,662	$	6,107

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Organization, Basis of Presentation and Summary of Significant Accounting Policies - Other Assets (Details) (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
UCP LLC [Member]
Other Assets [Line Items]
Deferred IPO costs	$ 1,783	$ 0
Customer deposits in escrow	461	388
Prepaid expenses	300	207
Deposits	416	325
Other assets	$ 2,960	$ 920

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Commitments and Contingencies (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Loss Contingencies [Line Items]

Commitments and Contingencies

Commitments and Contingencies

Lawsuits, claims and proceedings have been or may be instituted or asserted against the Company in the normal course of business, including actions brought on behalf of various classes of claimants. The Company is also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, the Company is subject to periodic examinations or inquiries by agencies administering these laws and regulations.

The Company records a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. The accrual for these matters is based on facts and circumstances specific to each matter and the Company revises these estimates when necessary.

In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, the Company generally cannot predict their ultimate resolution, related timing or any eventual loss. If the evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, disclosure of the nature with an estimate of possible range of losses or a statement that such loss is not reasonably estimable is made. The Company is not involved in any material litigation nor, to the Company's knowledge, is any material litigation threatened against it. At June 30, 2013 and December 31, 2012, the Company did not have any accruals for asserted or unasserted matters.

The Company obtains surety bonds in the normal course of business to ensure completion of certain infrastructure improvements at its projects. As of June 30, 2013 and December 31, 2012, the Company had outstanding surety bonds totaling $10.0 million and $6.9 million, respectively. The beneficiaries of the bonds are various municipalities. In the event that any such surety bond issued by a third party is called because the required improvements are not completed, the Company could be obligated to reimburse the issuer of the bond.

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Fixed Assets, Net (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Property, Plant and Equipment [Line Items]

Fixed Assets, net

Fixed Assets, net

Fixed assets consisted of the following (in thousands): 

	June 30, 2013			December 31, 2012
Computer hardware and software	$	899		$	667
Office furniture and equipment	230			169
Vehicles	79			79
	1,208			915
Accumulated depreciation	(348		)	(235		)
Fixed assets, net	$	860		$	680

Depreciation expense for the three months ended June 30, 2013 and 2012 was $62,000 and $37,000, respectively, and for the six months endedJune 30, 2013 and 2012 was $113,000 and $66,000, respectively, and is recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations.

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Condensed Consolidated Statements of Cash Flows (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2012
Financing activities:
Cash and cash equivalents – end of period	$ 100	$ 100
UCP LLC [Member]
Operating activities:
Net loss	(1,097,000)	(1,907,000)	(3,259,000)
Abandonment of real estate inventories	3,000	12,000	68,000
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	62,000	113,000	66,000
Changes in operating assets and liabilities:
Real estate inventories		(17,790,000)	(15,812,000)
Receivables		0	5,000
Other assets		(2,040,000)	405,000
Accounts payable and accrued liabilities		5,555,000	2,168,000
Net cash used in operating activities		(16,057,000)	(16,359,000)
Investing activities:
Purchases of fixed assets		(293,000)	(408,000)
Net cash used in investing activities		(293,000)	(408,000)
Financing activities:
Cash contributions from member		33,956,000	19,879,000
Repayments of member contributions		(25,598,000)	(1,817,000)
Proceeds from debt		10,011,000	1,001,000
Repayment of debt		(10,555,000)	(2,789,000)
Net cash provided by financing activities		7,814,000	16,274,000
Net decrease in cash and cash equivalents		(8,536,000)	(493,000)
Cash and cash equivalents – beginning of period		10,324,000	2,276,000
Cash and cash equivalents – end of period	1,788,000	1,788,000	1,783,000
Supplemental disclosure of cash flow information:
Debt incurred to acquire real estate inventories		4,691,000	360,000
Accrued offering cost		$ 1,678,000	$ 0

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Real Estate Inventories - Interest Capitalization (Details) (UCP LLC [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
UCP LLC [Member]
Real Estate Inventory, Capitalized Interest Costs [Roll Forward]
Interest expense capitalized as cost of home inventory			$ 887	$ 73
Interest expense capitalized as cost of land inventory			403	825
Total interest expense capitalized	624	445	1,290	898
Previously capitalized interest expense included in cost of sales - homebuilding			(358)	(33)
Previously capitalized interest expense included in cost of sales - land development			(7)	(41)
Net activity of capitalized interest			925	824
Capitalized interest expense in beginning inventory			4,620	3,431
Capitalized interest expense in ending inventory	$ 5,545	$ 4,255	$ 5,545	$ 4,255

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Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Entity Information [Line Items]

Basis of Presentation

Basis of Presentation:

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2012, which are included in UCP, Inc.'s prospectus that was filed by UCP, Inc. with the Securities and Exchange Commission (“SEC”) on July 18, 2013. The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring entries) necessary for the fair presentation of the Company’s results for the interim periods presented. The results for interim periods are not indicative of the results to be expected for the full year.

Use of Estimates in Preparation of Financial Statements

Use of Estimates in Preparation of Financial Statements:

The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses for each reporting period. The significant estimates made in the preparation of the Company’s condensed consolidated financial statements relate to the assessment of real estate impairments, warranty reserves and contingent liabilities. While management believes that the carrying value of such assets and liabilities are appropriate as of June 30, 2013 and December 31, 2012, it is reasonably possible that actual results could differ from the estimates upon which the carrying values were based

Segment Reporting

Segment Reporting:

The Company determined that its operations are organized into two reportable segments: homebuilding and land development. In accordance with the aggregation criteria defined in the applicable accounting guidance, the Company considered similar economic and other characteristics, including product types, average selling prices, gross margins, production processes, suppliers, subcontractors, regulatory environments, land acquisition results and underlying supply and demand in determining its reportable segments.

Cash and Cash Equivalents

Cash and Cash Equivalents:

Cash and cash equivalents include highly liquid instruments purchased with original maturities of three months or less

Real Estate Inventories and Cost of Sales

Real Estate Inventories and Cost of Sales:

The Company capitalizes pre-acquisition costs, the purchase price of real estate, development costs and other allocated costs, including interest, during development and home construction. Applicable costs incurred after development or construction is substantially complete are charged to sales and marketing or general and administrative as appropriate. Pre-acquisition costs, including non-refundable land deposits, are expensed to cost of sales when the Company determines continuation of the related project is not probable.

Land, development and other common costs are typically allocated to real estate inventories using the relative-sales-value method. Direct home construction costs are recorded using thespecific identification method. Cost of sales - homebuilding includes the allocation of construction costs of each home and all applicable land acquisition, real estate development and related common costs based upon the relative-sales-value of the home. Changes to estimated total development costs subsequent to initial home closings in a community are generally allocated on a relative-sales-value method to remaining homes in the community. Cost of sales - land development includes land acquisition and development costs, capitalized interest, impairment charges, abandonment charges for projects that are no longer economically viable, and real estate taxes. Abandonment charges during the three months ended June 30, 2013 and 2012, were $3,000 and $9,000, respectively, and were $12,000 and $68,000 during the six months endedJune 30, 2013 and 2012, respectively. Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to fair value.

All real estate inventories are classified as held until the Company commits to a plan to sell the real estate, the real estate can be sold in its present condition, is being actively marketed for sale, and it is probable that the real estate will be sold within the next twelve months. At June 30, 2013 and December 31, 2012, the Company had real estate inventories of $7.6 million and $2.9 million, respectively, classified as held for sale.

Impairment of Real Estate Inventories

Impairment of Real Estate Inventories:

The Company records an impairment loss when conditions exist where the carrying amount of real estate is not fully recoverable and exceeds its fair value. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses. The Company prepares and analyzes cash flows at the lowest level for which there is identifiable cash flows that are independent of the cash flows of other groups of assets.

If events or circumstances indicate that the carrying amount may be impaired, such impairment will be measured based upon the difference between the carrying amount and the fair value of such assets determined using the estimated future discounted cash flows, excluding interest charges, generated from the use and ultimate disposition of the respective real estate inventories. Such losses, if any, are reported within cost of sales - land development. No such losses were recorded during the three and six months ended June 30, 2013 and 2012.

When estimating undiscounted future cash flows of our real estate assets, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available on the market, pricing and incentives being offered by us or other builders in other communities, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs incurred to date and expected to be incurred, including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property. The Company did not have any real estate assets for which the estimated undiscounted future cash flows were not in excess of their carrying values.

Capitalization of Interest

Capitalization of Interest:

The Company capitalizes interest to real estate inventories during the period of development. Interest capitalized as a cost of real estate inventories is included in cost of sales - homebuilding or cost of sales - land development as related homes or real estate are sold. To the extent the Company’s debt exceeds the related asset under development, the Company expenses that portion of the interest incurred. Qualifying assets include projects that are actively selling or under development.

Fixed Assets, Net

Fixed Assets, net:

Fixed assets are carried at cost, net of accumulated depreciation.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets.  Computer software and hardware are depreciated over three years, office furniture and fixtures are depreciated over seven years, vehicles are depreciated over five years and leasehold improvements are depreciated over the shorter of their useful life or lease term and range from one to three years.  Maintenance and repairs are charged to expense as incurred, while significant improvements are capitalized.  Depreciation expense is included in general and administrative expenses, and gains or losses on the sale of fixed assets are included in other income.

Receivables

Receivables:

Receivables include amounts due from buyers for homes sold on the last day of the month and from utility companies for reimbursement of costs. At June 30, 2013 and December 31, 2012, the Company had no allowance for doubtful accounts recorded.

Homebuilding and Land Development Sales and Income Recognition

Homebuilding and Land Development Sales and Profit Recognition:

In accordance with Financial Accounting Standard Board (“FASB”) issued Accounting Standard Codification Topic 360 (“ASC Topic 360”), Property, Plant, and Equipment, revenue from home sales and other real estate sales are recorded and any profit is recognized when the respective sales are closed. Sales are closed when all conditions of escrow are met, title passes to the buyer, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured and the Company has no continuing involvement. The Company does not offer financing to any buyers. Sales price incentives are accounted for as a reduction of revenues when the sale is recorded. If the earnings process is not complete, the sale and any related profits are deferred for recognition in future periods. Any profit recorded is based on the calculation of cost of sales, which is dependent on an allocation of costs

Warranty Reserves

Warranty Reserves:

Estimated future direct warranty costs are accrued and charged to cost of sales - homebuilding in the period in which the related homebuilding revenue is recognized. Amounts accrued are based upon estimates of the amount the Company expects to pay for warranty work. The Company assesses the adequacy of its warranty reserves on a quarterly basis and adjusts the amounts recorded, if necessary. Warranty reserves are included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets.

Consolidation of Variable Interest Entities

Consolidation of Variable Interest Entities:

The Company enters into purchase and option agreements for the purchase of real estate as part of the normal course of business. These purchase and option agreements enable the Company to acquire real estate at one or more future dates at pre-determined prices. The Company believes these acquisition structures reduce its financial risk associated with real estate acquisitions and holdings and allow the Company to better manage its cash position.

Based on the provisions of the relevant accounting guidance, the Company concluded that when it enters into a purchase agreement to acquire real estate from an entity, a variable interest entity (“VIE”), may be created. The Company evaluates all option and purchase agreements for real estate to determine whether they are a VIE. The applicable accounting guidance requires that for each VIE, the Company assess whether it is the primary beneficiary and, if it is, the Company consolidates the VIE in its condensed consolidated financial statements in accordance with ASC Topic 810 - Consolidations, and would reflect such assets and liabilities as “Real estate inventories not owned.”

In order to determine if the Company is the primary beneficiary, it must first assess whether it has the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with us; and the ability to change or amend the existing option contract with the VIE. If the Company is not determined to control such activities, the Company is not considered the primary beneficiary of the VIE. If the Company does have the ability to control such activities, the Company will continue its analysis by determining if it is also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if the Company will benefit from a potentially significant amount of the VIE’s expected gains.

In substantially all cases, creditors of the entities with which the Company have option agreements have no recourse against the Company and the maximum exposure to loss on the applicable option or purchase agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Some of the Company’s option or purchase deposits may be refundable to the Company if certain contractual conditions are not performed by the party selling the lots.

Income Taxes

Income Taxes:

The Company is a limited liability company which is treated as an entity that is disregarded from its owner for income tax purposes and is subject to certain minimal taxes and fees. However, income taxes on taxable income or losses realized by the Company are the obligation of PICO. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements, nor has the Company been assessed interest or penalties by any major tax jurisdictions.

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Fair Value Disclosures (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Fair Value Disclosure

Fair Value Disclosures

The accounting guidance regarding fair value disclosures defines fair value as the price that would be received for selling an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company determines the fair values of its financial instruments based on the fair value hierarchy established in accordance with ASC Topic 820 - Fair Value Measurements, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

• 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

Estimated Fair Value of Financial Instruments Not Carried at Fair Value:

As of June 30, 2013 and December 31, 2012, the fair values of cash and cash equivalents, accounts payable and receivable approximated their carrying values because of the short-term nature of these assets or liabilities. The estimated fair value of the Company’s debt is based on cash flow models discounted at current market interest rates for similar instruments, which are based on Level 3 inputs.

The following presents the carrying value and fair value of the Company’s financial instruments which are not carried at fair value (in thousands):

	June 30, 2013				December 31, 2012
	Carrying Amount		Estimated Fair  Value		Carrying Amount		Estimated Fair  Value
Financial liabilities:
Debt	$	33,259	$	34,859	$	29,112	$	28,184

Non-Financial Fair Value Measurements:

Non-financial assets and liabilities include items such as inventory and long lived assets that are measured at fair value when acquired and resulting from impairment, if deemed necessary. There were no non-financial fair value measurements during the six months ended June 30, 2013 or 2012.

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Fixed Assets, Net (Tables) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Property, Plant and Equipment [Line Items]

Schedule of fixed assets

Fixed assets consisted of the following (in thousands): 

	June 30, 2013			December 31, 2012
Computer hardware and software	$	899		$	667
Office furniture and equipment	230			169
Vehicles	79			79
	1,208			915
Accumulated depreciation	(348		)	(235		)
Fixed assets, net	$	860		$	680

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Organization, Basis of Presentation and Summary of Significant Accounting Policies (Tables) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Entity Information [Line Items]

Schedule of other assets

At June 30, 2013, other assets included amounts accrued related to the IPO. The detail of other assets is set forth below (in thousands):

	June 30, 2013		December 31, 2012
Deferred IPO costs	$	1,783	$	—
Customer deposits in escrow	461		388
Prepaid expenses	300		207
Deposits	416		325
	$	2,960	$	920

Schedule of warranty reserves

Changes in warranty reserves are detailed in the table set forth below (in thousands):

	June 30, 2013			December 31, 2012
Warranty reserves, beginning of period	$	141		$	102
Warranty reserves accrued	170			51
Warranty expenditures	(6		)	(12		)
Warranty reserves, end of period	$	305		$	141

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 26, 2013 Common Class A [Member]	Aug. 26, 2013 Common Class B [Member]
Entity Registrant Name	UCP, Inc.
Entity Central Index Key	0001572684
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		7,750,000	100
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013

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Real Estate Inventories (Tables) (UCP LLC [Member])

6 Months Ended

Jun. 30, 2013

UCP LLC [Member]

Entity Information [Line Items]

Schedule of real estate inventory

Real estate inventories consisted of the following (in thousands):

	June 30, 2013		December 31, 2012
Deposits and pre-acquisition costs	$	2,607	$	2,177
Land held and land under development	119,734		110,463
Homes completed or under construction	21,445		9,441
Model homes	4,050		3,286
	$	147,836	$	125,367

Schedule of interest capitalization

Amounts capitalized to home inventory and land inventory were as follows (in thousands): 

	June 30,
	2013			2012
Interest expense capitalized as cost of home inventory	$	887		$	73
Interest expense capitalized as cost of land inventory	403			825
Total interest expense capitalized	1,290			898
Previously capitalized interest expense included in cost of sales - homebuilding	(358		)	(33		)
Previously capitalized interest expense included in cost of sales - land development	(7		)	(41		)
Net activity of capitalized interest	925			824
Capitalized interest expense in beginning inventory	4,620			3,431
Capitalized interest expense in ending inventory	$	5,545		$	4,255