DEVELOPMENT PLAN AGREEMENT

This Agreement dated as of April __, 2006, is among Heritage Ranch Owners Association ("HROA"), John King, Carole King and King Ventures ("King"), H.R. Holdings and Weyrich Development Company ("Weyrich"). The purpose of this Agreement is to facilitate and conceptualize the final build-out of the planned community known as Heritage Ranch. The HROA is the Heritage Ranch homeowners= association. King, H.R. Holdings and Weyrich (collectively, "Developers") own the land on which the final development and complete build-out will occur.

This Agreement will establish ground rules and concepts between the HROA and the Developers to guide the final build-out of Heritage Ranch.

Weyrich is presently the owner of Certificate Parcels 1, 2, 3, 6, 7, 8, 9, 10, 11, 12 and 13. There is a pending sale of Parcel 12. Absent an express agreement with a purchaser of Parcel 12, the rights and obligations of Weyrich set forth under this Agreement do not apply to Parcel 12.

Open Space and Density

The parties all agree that the Developers must provide a minimum of 5,100 acres of Open Space. Upon Entry of Judgment incorporating this Agreement, Weyrich will execute an Open Space Easement Agreement in favor of the County of San Luis Obispo and the HROA, covering parcels 8, 9, and 11 to HROA (533 acres) of which 393 shall remain permanent Open Space, subject to a provision that Weyrich will have the right to an approximate 40 acre remainder parcel on each of Parcels 8, 9, and 11 for residential development for Weyrich.

The King and H.R. Holdings= projects will comprise approximately 2770 units of the current 2,900 density limit inside the Village Reserve Line ("VRL"). Assuming a current Open Space of 3039.52 acres inside the VRL, the new development will bring the total to 5,263 acres or more (King pending projects - 1741.48 acres, Weyrich - 393 acres, and H.R. Holdings - 89 acres). The Open Space Inventory will be as follows:

Open Space Inside the Village Reserve

Acres

Current SLO Co-Recognized Open Space

3,039.52

Tract 1910 OS lot pending

703.00

3742.52

Tract 1990 OS lot pending

308.00

4,050.52

Tract 1910 remainder subdivision

129.40

4,179.92

Tract 1990 remainder subdivision

121.62

4,301.54

Ibis Lane, Old Tract 1503 subdivisions

80.56

4,382.10

Village Center/Finger subdivisions

26.65

4,408.75

Old Tract 1666 subdivision

4.79

4,413.54

Open Space Outside the Village Reserve

Acres

H.R. Holdings Parcel

89.00

4,502.54

Weyrich Certificate Parcels

393.00

4,895.54

King Lot 6 - Tract 720 (474 acres total/106.54 remainder)

367.46

5,263.00

The Developers agree that they will not, individually or collectively, seek to reduce the Open Space requirement below 5,100 acres.

Currently, there are approximately 2100 lots approved and there is a total allowable density of 2900 units. The parties agree to support a density increase to 3100 units consistent with the terms of this Agreement.

Under the current density of 2900, the Developers agree to allocate density as follows: King 510 (up to 520) units, Weyrich 220 (up to 230) units and H.R. Holdings 70 units; if density is increased to 3100, King will have a right to 520, Weyrich will have a right to 340 (up to 350) units and H.R. Holdings 150 units. Note: If King achieves less than 520 units, any shortfall shall be transferred to Weyrich and H.R. Holdings and if used, shared 50/50; alternatively, if Weyrich achieves less than 350 units, the shortfall shall be transferred to King and H.R. Holdings and if used, shared 50/50.

Common Area Improvements

Common Area improvements and facilities will be financed by an Impact Fee of $10,000 per lot paid by the Developers. Those Common Area improvements and facilities that the County requires per Conditions of Approval shall be bonded for and constructed by the Developers. The Developers shall obtain bona fide competitive bids for construction and shall select the bid of the lowest responsible bidder to achieve the lowest reasonable construction costs. Any remaining excess monies ($10,000/lot less cost of construction) following such construction shall be utilized by the HROA as determined by the HROA in its sole discretion. Note: Developers are responsible for the cost of all non-Common Area improvements and facilities required by the County and the cost for such non-Common Area improvements and facilities is separate from and above the $10,000 Impact Fee.

Specifically, HROA and the parties have agreed that Common Area improvements and facilities within the VRL for the benefit of HROA members and the Developer=s new tracts will include (1) a second marina consisting of boat and trailer parking for at least 100 spaces and two boat launch ramps, (2) an additional 100 vehicle/trailer parking spaces at the existing marina, (3) a day use parking overflow area and open boat/trailer storage immediately north of the existing marina, (4) a temporary R.V. storage facility north of the existing marina, pending relocation to Open Space on the Weyrich property (5) expansion of the existing equestrian facility, and (6) pedestrian trails associated with the new tracts. Developers will prepare and submit schematic plans to the HROA for HROA approval of the Common Area improvements and facilities for each phase/application. The HROA will maintain the Impact Fee monies paid by the Developers in a separate Amenities Fund Bank Account and not commingle the Amenities Fund with any other monies or accounts of the HROA. Any conditions for Common Area improvements and facilities in future tract approvals shall be deemed complete, as among the parties (subject to County and DRE approval), upon consideration of the $10,000 per Lot Impact Fee. The parties agree to use their best efforts to create an excess of funds above and beyond construction of Common Area improvements and facilities imposed by the County or State, and further agree to use their best efforts to make certain that such construction costs not exceed the equivalent of $10,000 per lot.

The Developers agree that if the Conditions of Approval require Common Area Improvements and facilities inside the VRL, or alternatively, on the Weyrich property, that results in an aggregate cost exceeding $10,000 per lot, that the respective Developers (King-H.R. Holdings inside the VRL, and/or Weyrich) shall be responsible for the excess above the aggregate cost of $10,000 per lot.

HROA shall not be responsible for the construction of any Common Area improvements until and unless funds from the payment of Impact Fees are received by the HROA in a sufficient amount for the proposed construction.

DEVELOPMENT PHASES
PHASE 1

King and H.R. Holdings will assign their remaining Lake Water entitlement (211 AFY) to Heritage Ranch Community Services District (HRCSD) in amounts and at times as needed to implement this Development Plan Agreement.

King

King will apply for a Tract Map to complete Tract 1990 (37 lots - 29 new and 8 existing lots); and in addition, a Parcel Map(s) over Lot 7 of Tract 720 to create four parcels: one for King (Ibis Lane) and three (3) for H.R. Holdings. Upon approval of such Maps, King will grant the remaining acreage to HROA as Open Space subject to four privately retained parcels as follows:

King parcel: Ibis Lane - 45 lots;

H.R. Holdings parcels: Opposite Equestrian Entrance - 7 lots;

CSD West - 60 lots

CSD East - 10 lots.

Upon recordation of Final Tract Map, King will pay HROA $290,000 for the Impact Fee for the 29 new lots.

H.R. Holdings

H.R. Holdings will apply for a Tract Map for eight (8) lots on the 2.17 acre Gate Parcel owned by H.R. Holdings.

Upon approval of the three parcels to be created in favor of H.R. Holdings as set forth above, H.R. Holdings will transfer the 89-acre parcel to the HROA in exchange for title to the three Parcels; and King and HROA will cooperate with H.R. Holdings to facilitate a like kind Section 1031 exchange.

H.R. Holdings will, if requested, transfer the R.V. Storage Yard business to HROA and lease the R.V. Storage Yard for $1 per year until the current R.V. Storage Yard is rezoned to allow residential units up to 65 units.

Upon recording the Tract Map, H.R. Holdings will pay $80,000 to HROA for the Impact Fee for the eight (8) lots.

Weyrich may apply for a density increase to 3,100 units to complete the Heritage Ranch development (including the lots allowed in Phase 1 above). All parties will support the request for the density increase. H.R. Holdings and Weyrich agree to be responsible, on a proportional lot basis, for any costs of additional water/retrofit and/or sewer expansion of the current sewer site, if required to accommodate more than 2,900 units.

King will apply for zoning changes and new Tract Maps for 481 lots within the Village Reserve Line as follows (including 29 new lots in PHASE 1):

Additionally, King will seek zoning changes and a Tract Map for ten (10) lots on Lot 6, Tract 720, across Snake Creek, behind the ridge line across from the Village. King will submit detailed visual presentations and site planning with this application to demonstrate that the 10 units will not present a negative visual impact to the Village. If some or all of the 10 units are not allowed, that density will be transferred to King’s property inside the Village Reserve Line.

King shall pay $10,000 per lot to HROA for the Impact Fee upon the sale of each recorded lot, or upon any bulk sale of two or more recorded lots.

King will deed acreage near the Campground and on the "through road" (Heritage Road) to HROA for day-use parking (1.14 acres), and up to 200 boat storage and R.V. Storage spaces (approximately 3.5 acres). HROA must move the 3.5 acre temporary storage component to HROA Open Space on the Certificated Parcels upon the 1^st phase of the Weyrich development. King will also provide an additional 10 acre private boat/trailer and R.V. storage nearby (approximately 7 acres), with upscale amenities and high security, as well as free day use parking for at least 100 vehicle/trailer spaces (approximately 3 acres). HROA will also have the right to move its campground to and/or on the "through road" provided that the existing campground is converted to parking. King will also deed to HROA a site for a second marina area (including day use parking area of at least 100 vehicle/trailer spaces). King will also allow HROA to expand its parking on the southern boundary of Heritage Park by deeding to HROA a minimum amount of land necessary to "double" the parking on the southern boundary of Heritage Park to a minimum of 60 vehicle spaces. All of the above (excepting possible conversion of campground to parking) will allow HROA an additional 200 vehicle/trailer spaces which together with prior approvals, will allow HROA to design up to 500 parking spaces.

Prior to the recordation of the Final Tract Maps, King will allow the HROA and its members to access King=s property for uses reasonably authorized by King and the HROA, subject to provision of adequate insurance provided by the HROA and the obligation of the HROA to monitor and supervise the proper use of the King property.

Weyrich may apply for GPA and zoning change for Tract Maps to allow up to 350 units (plus any unused King and/or H.R. Holdings lots) on Certificate Lots 1, 2, 9, 10 and 11. Weyrich will also apply to LAFCO, Heritage Ranch Community Services District, and the County to move the HRCSD Sphere of Influence and Village Reserve Lines as far as Dip Creek. Weyrich agrees its development will include Common Area Open Space deeded to the HROA for a lakefront park on Dip Creek. Weyrich will pay $10,000 per lot to HROA for the Impact Fee upon the sale of each recorded lot, or upon any bulk sale of two or more recorded lots.

Upon approval of the Tract Maps, Weyrich will deed approximately 393 acres of parcels 8, 9 and 11 to the HROA, leaving Weyrich approximately 40 acres in each parcel for residential development by Weyrich.

HROA agrees to grant a sufficient easement to accommodate a road over HROA property to the Weyrich parcels, as may be approved by the County for the Weyrich project.

H.R. Holdings will apply for a zoning change and new Tract Maps to allow up to an additional 142 units for Phase 2 (plus any unused King and/or Weyrich lots) as follows:

H.R. Holdings will pay $10,000 per lot to HROA for the Impact Fee upon sale of each recorded lot, or upon any bulk sale of two or more recorded lots.

HROA has approved the proposed locations and/or "area" for King lot configurations and recreational sites, H.R. Holdings= lot configurations, and Weyrich=s proposal, attached hereto as Exhibits 1, 2 and 3, respectively, which the parties agree are subject to the County process and requirements. HROA hereby consents to the filing of tract maps to facilitate applications for these projects and will execute any and all necessary consent and/or other forms to do so. King and H.R. Holdings agree to deed all Common Area property designated within the VRL to the HROA upon recordation of Final Tract Maps, except for approved lots and the private Boat/R.V. Storage Yard and free day use vehicle/trailer parking area (10 acres). King agrees to deed that portion of Lot 6, Tract 720, outside the VRL to HROA upon recordation of Final Map, excepting all approved lots on such property. Upon recordation of the Final Map, Weyrich agrees to deed all of the Open Space Parcels, 8, 9 and 11 (with the exception of the 40 acres on each parcel to remain for development) and the Common Area in as may be applicable for the development on any of the other property owned and developed by Weyrich. Weyrich further agrees that H.R. Holdings may process its Phase 2 Tract Maps for approval of 142 lots based on the current density and water entitlements that apply for 2,900 lots within the existing VRL, provided however, that H.R. Holdings shall honor the density allocation between H.R. Holdings and Weyrich and potential financial obligations for any costs of additional water/retrofit and/or sewer expansion of the current site, if required, to accommodate more than 2,900 units.

HROA agrees individual lot dues by Developers will be payable in one of two methods: (1) upon recordation of the Final Map and CC&Rs, or (2) at the discretion of the Developer, upon the recordation of a "Declaration of Annexation" to be filed after recordation of a Final Map specifying a separate phase of development for a Tract, along with CC&Rs in substantial conformance with the HROA Master CC&Rs, which will contain a provision allowing sequential annexation to the HROA by filing a subsequent "Declaration of Annexation" with each annexation.

HROA and Weyrich agree to provide King road access to King=s portion of Lot 6 - Tract 720, outside of the Village Reserve Line, and Weyrich agrees should it proceed with its development, to provide utility connection/sizing for 10 units on such King property.

HROA, King Ventures, John King, Carole King, H.R. Holdings, Dan Lloyd, Robert Schiebelhut and Charlie Richardson wish to finally resolve their four lawsuits: HROA v. Dorsey, et al. (Action No. CV 030379); H.R. Holdings, LLC v. HROA (Action No. CV 040670); King v. HROA (Action No. CV 040671); and H.R. Holdings, LLC v. HROA (Action No. CV 040725) and specifically agree to exchange mutual releases, waive all attorneys= fees and costs, and bear their own costs and fees; provided, that nothing in said Mutual Releases shall relieve any party of any obligation or provision of this Agreement or deny any party the benefit provided in this Agreement.

Within thirty days following the execution of this Agreement by all parties, King will pay HROA $34,000 to settle the assessment case, with each party to bear its own fees and costs.

This Agreement shall be binding upon and inure to the administrators, executors, legal representatives, assignees, successors, and agents of the Parties hereto.