Document:

bcyc_Ex10_3

		
			Exhibit 10.3
		

		
			BICYCLE THERAPEUTICS PLC
		

		

		
			RULES OF
		

		
			THE BICYCLE THERAPEUTICS SHARE OPTION PLAN
		

		

		
			Approved by the Board on 9 May 2019 and amended by the Compensation Committee on 12 September 2019
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			CONTENTS
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						1.

					
					
						DEFINITIONS AND INTERPRETATION

					
1
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						2.

					
					
						GRANT OF OPTIONS

					
5
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						3.

					
					
						NON-TRANSFERABILITY

					
7
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						4.

					
					
						PERFORMANCE CONDITIONS

					
7
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						5.

					
					
						PLAN LIMITS

					
7
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						6.

					
					
						VESTING, EXERCISE AND LAPSE OF OPTIONS

					
8
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						7.

					
					
						MANNER OF EXERCISE

					
11
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						8.

					
					
						SHARE SETTLEMENT OF OPTION EXERCISE

					
11
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						9.

					
					
						TAX LIABILITIES

					
12
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						10.

					
					
						CORPORATE EVENTS

					
13
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						11.

					
					
						OPTION ROLLOVER

					
14
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						12.

					
					
						VARIATION OF SHARE CAPITAL

					
15
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						13.

					
					
						AMENDMENT

					
15
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						14.

					
					
						RELATIONSHIP WITH CONTRACT OF EMPLOYMENT OR FOR PROVISION OF CONSULTANCY SERVICES AND EXCLUSION OF LIABILITY

					
16
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						15.

					
					
						ADMINISTRATION

					
16
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						16.

					
					
						DATA PRIVACY

					
17
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						17.

					
					
						THIRD PARTY RIGHTS

					
18
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						18.

					
					
						GOVERNING LAW AND JURISDICTION

					
18
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						19.

					
					
						TRADING POLICY RESTRICTIONS

					
18
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						20.

					
					
						CLAWBACK POLICY

					
18
				

		
			 
		

		
			 
		

		
			

		 

		

		
			 
		

		
			RULES OF THE BICYCLE THERAPEUTICS SHARE OPTION PLAN
		

		
			 
		

		
			 
		

		
			1.          DEFINITIONS AND INTERPRETATION
		

		
			Definitions
		

		
			1.1        The following definitions shall apply for the purposes of this Plan:
		

			
					
						“Adoption Date”

					
					
						the date on which the Plan was approved by the Board, being 9 May 2019;

				
	
					
						“Annual Increase”

					
					
						as defined in Rule 5.2;

				
	
					
						“Board”

					
					
						the board of directors of the Company;

				
	
					
						“Cessation Date”

					
					
						in relation to an Optionholder, means the date notice of termination of his employment, contract for services or letter of appointment (as applicable) is given by or to him or her unless the Compensation Committee in their absolute discretion determines a later date, not being later than the statutory or contractual expiry date of any applicable notice period;

				
	
					
						“Change of Control”

					
					
						as defined in Rule 10.1;

				
	
					
						“Code”

					
					
						the U.S. Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations;

				
	
					
						“Company”

					
					
						Bicycle Therapeutics Plc registered in England with number 11036004;

				
	
					
						“Compensation Committee”

					
					
						the committee of the Board constituted for the purpose of, amongst other matters, discharging the Board’s responsibility relating to compensation of the Company’s directors and executives, save that in the event such committee has not been constituted, the Board;

				
	
					
						“Consultant”

					
					
						an individual who provides consultancy services to a Group Company (which, for the avoidance of doubt, shall include any person who is: (a) directly engaged by a Group Company; and (b) employed by a third party to work in the provision of services to a Group Company on behalf of such third party who is engaged by a Group Company to provide such services), and including a director or secretary of any Group Company who is not an employee;

				

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

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						“Control”

					
					
						the meaning in section 995 of the Income Tax Act 2007;

				
	
					
						“Corporate Event”

					
					
						an event within Rule 10;

				
	
					
						“Data”

					
					
						as defined in Rule 16.1;

				
	
					
						“Date of Grant”

					
					
						the date on which an Option is granted under this Plan;

				
	
					
						“Eligible Person”

					
					
						an Employee or Consultant;

				
	
					
						“Employee”

					
					
						an employee of a Group Company, including a director or company secretary of any Group Company who is an employee;

				
	
					
						“Employers’ NICs”

					
					
						as defined in Rule 9.4;

				
	
					
						“Engaging Company”

					
					
						in the case of an Optionholder who is:

					
						(a)         an Employee, the Optionholder’s employer or former employer; and

					
						(b)         a Consultant, the Group Company to which the Optionholder is or was providing services,

					
						as applicable;

				
	
					
						“Exercise Price”

					
					
						the price determined in accordance with Rule 2.4 at which each Share subject to an Option may be acquired on the exercise of that Option;

				
	
					
						“Financial Year”

					
					
						the accounting reference period (as defined by the Companies Act 2006) of the Company;

				
	
					
						“First Amendment Date”

					
					
						the date on which this Plan was first amended, being 12 September 2019;

				
	
					
						“Fully Diluted Share Capital”

					
					
						at the relevant time, the aggregate of: (a) the number of Shares in issue; and (b) the number of additional Shares which would be issued assuming the allotment and issue of the number of Shares in the Option Pool (whether or not on their terms the securities are actually convertible into Shares at such time) only to the extent that such Shares are not already included in part (a) of this definition;

				

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

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						“Good Leaver”

					
					
						an Optionholder who ceases (or gives or is given notice that he or she will cease, as applicable) to be an Eligible Person for one of the reasons in Rule 6.3;

				
	
					
						“Group”

					
					
						the Company, any company which is the Company’s subsidiary, its holding company or a subsidiary of its holding company (as “subsidiary” and “holding company” are defined in section 1159 of the UK Companies Act 2006) and “Group Company” shall be construed accordingly;

				
	
					
						“HMRC”

					
					
						Her Majesty’s Revenue & Customs;

				
	
					
						“Incentive Stock Option”

					
					
						any Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code;

				
	
					
						“Market Value”

					
					
						the market value of the shares subject to an Option determined in accordance with the applicable provisions of Part VIII of the Taxation of Chargeable Gains Act 1992; provided, however, that the Market Value for the purposes of an Option granted to a U.S. Eligible Person shall be the closing market price on the Nasdaq Global Market (or such other market on which the Company’s Shares are then principally listed) of one Share (or American Depositary Share(s) representing one Share) on the effective date of grant, or if no closing price is reported for such date, the closing price on the next immediately following date for which a closing price is reported;

				
	
					
						“New Option”

					
					
						as defined in Rule 11.1;

				
	
					
						“Non-Qualified Stock Option”

					
					
						any Option that is not an Incentive Stock Option;

				
	
					
						“Old Option”

					
					
						as defined in Rule 11.1;

				
	
					
						“Option”

					
					
						a right to acquire Shares granted under the Plan;

				
	
					
						“Option Certificate”

					
					
						a certificate setting out the terms of an Option issued in accordance with Rule 2.5;

				
	
					
						“Option Pool”

					
					
						the pool of Shares: (a) over which options have or may be granted to Eligible Persons under this Plan or any other plan; and (b) allotted and issued to Eligible Persons under any other arrangement;

				

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

			3

		

		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						“Optionholder”

					
					
						an Eligible Person who has been granted an Option under this Plan (including his or her personal representatives or beneficiaries in the event of his or her death);

				
	
					
						“Performance Condition”

					
					
						any objective condition(s) imposed in accordance with Rule 4.1 or any amended condition(s) substituted in accordance with Rule 4.2;

				
	
					
						“Plan”

					
					
						the Bicycle Therapeutics Share Option Plan constituted and governed by these Rules as amended from time to time;

				
	
					
						“Scheme of Arrangement”

					
					
						as defined in Rule 10.2;

				
	
					
						“Shares”

					
					
						ordinary shares in the Company;

				
	
					
						“Tax”

					
					
						as defined in Rule 9.1;

				
	
					
						“Ten Percent Owner”

					
					
						an Employee who resides in the U.S. who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of shares of the Company or any parent or subsidiary corporation;

				
	
					
						“U.S.”

					
					
						United States of America; and

				
	
					
						“Vest”

					
					
						subject to Rule 6.4 (Lapse of Options), the extent to which an Option (or part thereof) becomes capable of exercise on the first to occur of:

				
	
					
						 

					
					
						(a)         the applicable vesting date specified in the Option Certificate;

					
						(b)         the date of the Optionholder’s death;

					
						(c)         in the case of a Good Leaver only, the Optionholder’s Cessation Date;

					
						(d)         a Corporate Event; and

					
						(e)         any date determined by the Compensation Committee,

				
	
					
						 

					
					
						and “Vested” and “Unvested” shall be construed accordingly.

				

		
			 
		

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

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			Interpretation
		

		
			1.2        Headings are for reference purposes only and shall not affect the construction of these Rules.
		

		
			1.3        References to any statutory provision are to that provision as amended, previously enacted, re-enacted or consolidated.
		

		
			1.4        Where the context permits words in the singular shall include the plural and the masculine shall include the feminine and vice versa.
		

		
			1.5        A reference to writing or written includes email and any other electronic means permitted by the Compensation Committee from time to time.
		

		
			2.          GRANT OF OPTIONS
		

		
			Type of option
		

		
			2.1        The Company may grant Options to any Eligible Person it chooses provided that Incentive Stock Options may be granted only to Employees of the Company or any subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
		

		
			When options may normally be granted
		

		
			2.2        Subject to Rule 2.3, the Company may grant Options to any Eligible Person it chooses:
		

		
			(a)          during the period of 42 days after:
		

		
			(i)          the Adoption Date;  or
		

		
			(ii)         the day on which the Company announces its results for the proceeding Financial Year, quarter, or other period; or
		

		
			(b)         at any other time the Compensation Committee decides that circumstances have arisen which justify the grant of Options.
		

		
			When Options may be granted
		

		
			2.3        Options may be granted to any Eligible Person the Company chooses:
		

		
			(a)          at any time when that grant would not be prohibited by, or in breach of:
		

		
			(i)          any law;
		

		
			(ii)         any other regulation with the force of law; or
		

		
			(iii)        the rules of any investment exchange on which Shares (or American Depositary Shares representing Shares) are listed or traded, or any other 
		

		
			
		

		
			

		 

		

			5

		

		

		
			 
		

		
			non-statutory rule that binds the Company or with which the Compensation Committee has resolved to comply; and
		

		
			(b)          before the tenth anniversary of the Adoption Date.
		

		
			Exercise Price
		

		
			2.4        Subject to Rule 12  (Variation of Share Capital), the Exercise Price per Share may not be less than the higher of:
		

		
			(a)         if Shares are to be newly issued to satisfy the exercise of Options, the nominal value of a Share; and
		

		
			(b)         the Market Value of a Share on the Date of Grant.
		

		
			In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the Exercise Price of such Incentive Stock Option shall be not less than 110 percent of the Market Value on the grant date.
		

		
			Option Certificates
		

		
			2.5        An Option shall be granted by the Company executing an Option Certificate as a deed in a form approved by the Compensation Committee, or in such other manner as the Compensation Committee may approve from time to time. Each Option Certificate shall state:
		

		
			(a)         the Date of Grant of the Option;
		

		
			(b)         the number and class of the Shares subject to the Option;
		

		
			(c)         the Exercise Price;
		

		
			(d)         the date or dates or which the Option shall normally Vest in accordance with Rule 6.1(A) or 6.1(B) (as applicable) and the proportion of the Option becoming Vested thereon;
		

		
			(e)         any applicable Performance Conditions imposed in accordance with Rule 4.1;
		

		
			(f)          the date when the Option will lapse (being not be later than the tenth anniversary of the Date of Grant); and
		

		
			(g)         if the Compensation Committee so determines, such obligations on the part of the Optionholder as shall be deemed necessary to comply with any tax or securities laws or other regulatory issues in any jurisdiction which may apply to the Company, any other Group Company, the Optionholder or any other person.
		

		
			2.6        The Option Certificate is subject to the terms and conditions of this Plan.
		

		
			 
		

		
			
		

		
			

		 

		

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			3.          NON-TRANSFERABILITY
		

		
			Other than where Options are transferred or assigned to an Optionholder’s personal representatives or beneficiary in the event of the Optionholder’s death or as specifically permitted under the terms of the Option Certificate, Options may not be transferred, assigned, pledged or charged and any purported transfer, assignment, pledge or charge shall cause the Option to lapse immediately. Each Option Certificate shall carry a statement to this effect.
		

		
			4.          PERFORMANCE CONDITIONS
		

		
			Imposition of performance conditions
		

		
			4.1        The exercise of an Option may be conditional upon the satisfaction of one or more objective Performance Condition(s) imposed by the Compensation Committee at the Date of Grant and specified in the Option Certificate.
		

		
			Variation and waiver of performance conditions
		

		
			4.2        If, after the Compensation Committee has determined any objective Performance Condition(s) to be satisfied pursuant to this Rule, events occur which cause the Compensation Committee to consider that any of the existing Performance Condition(s) has become unfair or impractical, the Compensation Committee may, in its absolute discretion, make a recommendation (for approval by the Board) to amend, relax or waive such Condition and the Board’s decision on all disputes in this respect shall be final; provided, however that with respect to a Performance Condition applicable to the Chief Executive Officer, the Compensation Committee may, in its absolute discretion, amend, relax or waive such Condition, and the Compensation Committee’s decision on all disputes in this respect shall be final.
		

		
			Notification to Optionholders
		

		
			4.3        The Compensation Committee shall notify all relevant Optionholders in writing of any amendment, relaxation or waiver of existing Performance Condition(s) made pursuant to Rule 4.2.
		

		
			5.          PLAN LIMITS
		

		
			5.1        The number of Shares in the Option Pool at the Adoption Date shall be 10% of the Fully Diluted Share Capital, subject to adjustment per Section 12.
		

		
			5.2        Thereafter, on the first day of each new Financial Year following the Adoption Date, until such time as the Compensation Committee otherwise determines, the number of Shares in the Option Pool shall be cumulatively increased by 4% of the number of Shares outstanding as of the day prior to the first day of the applicable new Financial Year (or such lesser amount as determined by the Board) (the “Annual Increase”).
		

		
			
		

		
			

		 

		

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			Inclusion of treasury shares
		

		
			5.3        For the purposes of this Rule, any Shares which are treasury shares within sections 724 - 732 of the Companies Act 2006 shall be treated as though they were unissued Shares.
		

		
			Exclusion of certain Shares
		

		
			5.4        For the purposes of this Rule any Shares which are not treasury shares within Rule 5.3 and:
		

		
			(a)         which are already in issue when any option or other right is granted over them; or
		

		
			(b)         which were comprised in any option or other right to the extent that it has lapsed or been surrendered,
		

		
			shall be disregarded.
		

		
			ISO Limitation
		

		
			5.5        Subject to such overall limitations set forth above, no more than 2,470,583 Shares may be issued in the form of Incentive Stock Options, increased on the first day of each new Financial Year following the Adoption Date, by the lesser of 430,000 Shares or the Annual Increase.
		

		
			Annual Limit on Incentive Stock Options.
		

		
			5.6        To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Market Value (determined as of the time of grant) of the shares with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an Optionholder during any calendar year shall not exceed U.S. $100,000. To the extent that any Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
		

		
			6.          VESTING, EXERCISE AND LAPSE OF OPTIONS
		

		
			Vesting of options
		

		
			6.1         (A)        In respect of Options with a Date of Grant prior to the First Amendment Date:
		

		
			Save as otherwise determined by the Compensation Committee either before or after the Date of Grant, Options shall (i) Vest in equal tranches of 1/36th at the end of each calendar month following the Date of Grant; and (ii) save as provided in Rules 6.2  (Death of the Optionholder), 6.3  (Ceasing to be an Eligible Person as a Good Leaver), 6.4  (Lapse of Options) and 10  (Corporate Events), may only be exercised after the later of:
		

		
			(a)         the third anniversary of the Date of Grant; and
		

		
			(b)         the date on which any applicable Performance Condition(s) have been satisfied or waived in accordance with Rule 4.2.
		

		
			
		

		
			

		 

		

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			6.1         (B)        In respect of Options with a Date of Grant on or after the First Amendment Date:
		

		
			Save as otherwise determined by the Compensation Committee either before or after the Date of Grant, Options:
		

		
			(a)        granted to a member of the Board other than in accordance with Rule 6.1(B)(a) below shall (i) Vest in equal tranches of 1/36th at the end of each calendar month following the Date of Grant; and (ii) save as provided in Rules 6.2  (Death of the Optionholder), 6.3  (Ceasing to be an Eligible Person as a Good Leaver), 6.4  (Lapse of Options) and 10  (Corporate Events), may only be exercised after the date on which any applicable Performance Condition(s) have been satisfied or waived in accordance with Rule 4.2;
		

		
			(b)         granted to a member of the Board as part of the Company’s annual grant on or following the date of its annual general meeting shall Vest in full on the Date of Grant;
		

		
			(c)         granted to an Employee who is not a member of the Board shall (i) Vest as to 1⁄4 of the total number of Shares under Option on the first anniversary of the Date of Grant; (ii) Vest in respect of the remaining number of Shares under Option in equal tranches of 1/36th at the end of each calendar month following the first anniversary of the Date of Grant; and (iii) save as provided in Rules 6.2  (Death of the Optionholder), 6.3  (Ceasing to be an Eligible Person as a Good Leaver), 6.4  (Lapse of Options) and 10  (Corporate Events), may only be exercised after the date on which any applicable Performance Condition(s) have been satisfied or waived in accordance with Rule 4.2; and
		

		
			(d)         granted to any other Eligible Person shall (i) Vest over such periods as the Compensation Committee shall determine in its absolute discretion and (ii) save as provided in Rules 6.2  (Death of the Optionholder), 6.3  (Ceasing to be an Eligible Person as a Good Leaver), 6.4  (Lapse of Options) and 10  (Corporate Events), may only be exercised after the date on which any applicable Performance Condition(s) have been satisfied or waived in accordance with Rule 4.2.
		

		
			Death of an Optionholder
		

		
			6.2        Save as provided in Rule 6.4  (Lapse of Options), if an Optionholder dies whilst he or she is employed within the Group or while time is running under Rule 6.3  (Ceasing to be an Eligible Person as a Good Leaver) his or her personal representatives may exercise his or her Option at any time within the period of 12 months after the date of his or her death to the extent it had Vested, and any applicable Performance Condition(s) had been satisfied, at that date (or to a greater extent if the Compensation Committee should so decide).
		

		
			Ceasing to be an Eligible Person as a Good Leaver
		

		
			6.3        Save where an Option lapses earlier under Rule 6.4  (Lapse of Options), if an Optionholder ceases to be an Eligible Person:
		

		
			(a)         by reason of illness, injury or disability (evidenced to the satisfaction of the Compensation Committee);
		

		
			 
		

		
			
		

		
			

		 

		

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			(b)         in the case of an Employee, by reason of redundancy within the meaning of the Employment Rights Act 1996;
		

		
			(c)         by reason that the only company, undertaking or part-undertaking within the Group by which he or she is employed, engaged or to which he or she provides consultancy services ceases to be a member of, or is transferred outside, the Group; or
		

		
			(d)         for any other reason which the Compensation Committee considers justifies his or her treatment as a Good Leaver,
		

		
			he or she may exercise his or her Option within the period of twelve months after the Cessation Date (or such other period as the Compensation Committee may decide) to the extent it had Vested, and any applicable Performance Condition(s) had been satisfied, on the Cessation Date (or to a greater extent if the Compensation Committee should so decide). For the avoidance of doubt, any portion of his or her Option that is Unvested as of the Cessation Date shall lapse.
		

		
			Lapse of Options
		

		
			6.4        Options shall lapse on the earliest of the following events:
		

		
			(a)         the expiry of the period allowed for the satisfaction of any Performance Condition(s) without such Performance Condition(s) being satisfied;
		

		
			(b)         the expiry of the applicable periods in Rule 6.2 (Death of the Optionholder) and Rule 6.3  (Ceasing to be an Eligible Person as a Good Leaver) but if an Optionholder dies while time is running under Rule 6.3 the Option shall not lapse until the expiry of the period in Rule 6.2;
		

		
			(c)         the Cessation Date, where such cessation occurs for any reason whatsoever (including wrongful or unfair dismissal in the case of an Optionholder who is an Employee) other than those specified in Rule 6.2  (Death of the Optionholder) or Rule 6.3  (Ceasing to be an Eligible Person as a Good Leaver);
		

		
			(d)         save as provided in Rule 11  (Option Rollover), the expiry of the applicable period in Rule 10  (Corporate Events);
		

		
			(e)         the expiry of the applicable period in Rule 11  (Option Rollover);
		

		
			(f)          the date on which the Optionholder becomes bankrupt or does or omits to do anything as a result of which he is deprived of the legal or beneficial ownership of the Option;
		

		
			(g)         the lapse date specified in the Option Certificate; and
		

		
			(h)         the tenth anniversary of the Date of Grant (provided that, in the case of an Incentive Stock Option granted to a Ten Percent Owner, such Incentive Stock Option shall lapse on the fifth anniversary of the Date of Grant).
		

		
			 
		

		
			
		

		
			

		 

		

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			7.          MANNER OF EXERCISE
		

		
			7.1        Provided it would not then be in breach of any applicable restriction (including, without limitation, the U.S. Sarbanes-Oxley Act of 2002), a Vested Option may be exercised in whole or in part by the Optionholder giving a notice of exercise in such manner as the Company may from time to time determine, including electronically. The notice of exercise shall be accompanied by:
		

		
			(a)         a remittance in cleared funds for the aggregate Exercise Price;
		

		
			(b)         irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the aggregate Exercise Price; or
		

		
			(c)         an application for bridging finance to exercise the Option, in such form as the Company may prescribe.
		

		
			7.2        The Company shall allot or procure the transfer of Shares pursuant to a notice of exercise within 30 days of the date of exercise. Except for any rights determined by reference to a date preceding the date of allotment, any new Shares allotted shall rank pari passu with the other shares of the same class in issue at that date of allotment.
		

		
			7.3        For so long as the Shares (or American Depositary Shares representing the Shares)  are admitted to trading on Nasdaq or any other investment exchange the Company will apply for admission or listing (as the case may be) of any new Shares (or American Depositary Shares representing Shares) issued as soon as is practicable after their allotment.
		

		
			8.          SHARE SETTLEMENT OF OPTION EXERCISE
		

		
			Notwithstanding any other provision of this Plan, the Company may agree with an Optionholder that he or she will undertake a share-settled exercise in respect of any Option that is not an Incentive Stock Option held by him or her whereby, subject to Rule 9  (Tax Liabilities), on exercise of the Option:
		

		
			(a)         no Exercise Price is paid; and
		

		
			(b)         the Optionholder is given free of charge, a number of Shares calculated in accordance with the following formula:
		

		
			S = N x (MV – EP) ÷ MV where:
		

		
			S = the number of Shares to be delivered to the Optionholder, rounded down to the nearest whole Share
		

		
			N = the total number of Shares in respect of which the Option is being exercised
		

		
			MV = the Market Value of a Share at the date of exercise
		

		
			EP= the Option Exercise Price payable per Share.
		

		
			 
		

		
			
		

		
			

		 

		

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			9.          TAX LIABILITIES
		

		
			9.1        For the purposes of this Rule “Tax” means all UK income tax and primary class 1 (employee) and (to the extent the Compensation Committee decides that it shall be borne by the relevant Optionholder), secondary class 1 (employer) National Insurance Contributions, and their equivalent in any other jurisdiction including the U.S., which may properly be borne by Optionholders by reason of the grant, vesting and/or exercise of options or otherwise as a consequence, directly or indirectly, of being an Optionholder.
		

		
			9.2        Any Group Company or other person which is liable to account for Tax may withhold the appropriate amount of Tax from the Optionholder’s remuneration or make such other arrangements as it considers necessary (including the sale of Shares on behalf of an Optionholder) to finance the amounts due. The amount to be withheld may if necessary be estimated provided that if a subsequent adjustment is required it is made as soon as practicable after the amount has been definitively determined.
		

		
			9.3        With respect to any Optionholder that resides in the U.S., subject to approval by the Compensation Committee, an Optionholder may elect to have the Group Company’s required tax withholding obligation satisfied, in whole or in part, by authorising the Group Company to withhold from the Shares to be issued pursuant to an Option a number of shares with an aggregate Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due; provided, however, that the amount withheld does not exceed the maximum statutory tax rate or such lesser amount as is necessary to avoid liability accounting treatment. The Compensation Committee may also require Options to be subject to mandatory share withholding up to the required withholding amount. For purposes of share withholding, the Market Value of withheld shares shall be determined in the same manner as the value of Shares includible in income of the Optionholder. The required tax withholding obligation may also be satisfied, in whole or in part, by an arrangement whereby a certain number of Shares issued pursuant to the Option are immediately sold and proceeds from such sale are remitted to the Group Company in an amount that would satisfy the withholding amount due.
		

		
			9.4        If the Company or any other person is liable to account for UK secondary Class 1 national insurance contributions (“Employers’ NICs”) in the UK by virtue of the exercise of an Option the Compensation Committee may make it a condition of the exercise of the Option that the Optionholder either:
		

		
			(a)         meets such liability to pay Employers’ NICs; or
		

		
			(b)         enters into an election to transfer the liability for Employers’ NICs to the Optionholder in a form approved by HMRC,
		

		
			and enters into such arrangements as may be approved by HMRC in order to ensure that the Employers’ NICs liability can be met.
		

		
			
		

		
			

		 

		

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			9.5        The Compensation Committee may make it a condition of the exercise of an Option that the Optionholder enters into:
		

		
			(a)         a joint election under section 431 of the UK Income Tax (Earnings and Pensions) Act 2003 to disregard any restrictions for the purposes of any income tax and primary Class 1 national insurance contributions which may arise as the consequence of the exercise of the Option and to disapply section 425 of that Act; or
		

		
			(b)         a similar election in any other jurisdiction.
		

		
			9.6        If the Compensation Committee so determines, Optionholders may be offered the opportunity to make other funding arrangements satisfactory to the relevant Group Company or other person in relation to the Tax liability.
		

		
			9.7        By accepting an Option an Optionholder agrees to indemnify any Group Company and any other person against any Tax liability if and to the extent it is not discharged in accordance with this Rule.
		

		
			10.        CORPORATE EVENTS
		

		
			Change of Control
		

		
			10.1      Save as provided in Rules 8  (Share Settlement of Option Exercise) and 11  (Option Rollover), if any person:
		

		
			(a)         (or group of persons acting in concert (as “acting in concert” is defined in The City Code on Takeovers and Mergers) obtains Control of the Company as a result of making a general offer to acquire either:
		

		
			(i)          the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company, or
		

		
			(ii)         all the shares in the Company which are of the same class as the Plan Shares, or
		

		
			(b)         acquires more than 50 percent of the issued ordinary share capital of the Company,
		

		
			(a “Change of Control”) all Options (whether Vested or Unvested) may, subject to Rule 10.3  (Squeeze-out and sell-out) be exercised on the same day as, and immediately prior to, the Change of Control becoming effective or within such period not exceeding 6 months afterwards as the Compensation Committee shall determine, and any Options not exercised within such period shall lapse.
		

		
			Scheme of Arrangement
		

		
			10.2      Save as provided in Rules 8  (Share Settlement of Option Exercise) and 11  (Option Rollover), if under section 899 of the Companies Act 2006 the Court sanctions a compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with any other company or companies (a
		

		
			 
		

		
			
		

		
			

		 

		

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			“Scheme of Arrangement”), all Options (whether Vested or Unvested) may be exercised on the same day as, and immediately prior to, the Court sanctioning the compromise or arrangement or within such period not exceeding 6 months afterwards as the Compensation Committee shall determine, and any Options not exercised within such period shall lapse.
		

		
			Squeeze-out and sell-out
		

		
			10.3      Save as provided Rules 8  (Share Settlement of Option Exercise) and 11  (Option Rollover), if any person (or group of persons acting in concert) becomes bound or entitled to acquire shares in the Company under sections 974 to 979 of the Companies Act 2006 (“squeeze-out” and “sell-out”) all Options (whether Vested or Unvested) may be exercised at any time when that person remains so bound or entitled, and any Options not exercised within such period shall lapse.
		

		
			Winding-up
		

		
			10.4      If notice is given of a general meeting at which a resolution will be proposed for the voluntary winding-up of the Company (except for the purposes of a Scheme of Arrangement) all Unvested Options shall lapse unless and to the extent the Compensation Committee determines otherwise and Vested Options may be exercised conditionally on the resolution being passed at any time between the notice of the resolution being given and the resolution being passed or defeated.
		

		
			11.        OPTION ROLLOVER
		

		
			11.1      This Rule applies if there is a Corporate Event and an Optionholder is offered a new option (the “New Option”) in exchange for the original Option (the “Old Option”) and the New Option is equivalent to the Old Option. For the purposes of this Rule a New Option is equivalent to an Old Option if:
		

		
			(a)         it is exercisable in the same manner as the Old Option and subject to the provisions of this Plan as they had effect immediately before the exchange;
		

		
			(b)         the total market value of the Shares subject to the Old Option immediately before the exchange equals, as far as is reasonably practicable, the total market value of the shares or securities subject to the New Option immediately after the exchange; and
		

		
			(c)         the total amount payable to exercise the New Option is equal to the total amount payable to exercise the Old Option.
		

		
			11.2      If there is a Change of Control or Scheme of Arrangement such that Shares are exchanged for shares or securities in another company and the persons who will own the shares in that other company will be the same, or substantially the same, as the persons who owned the Shares immediately before that Change of Control or Scheme of Arrangement and the Optionholder is offered a New Option which is equivalent to the Old Option, the Old Option shall not become exercisable in accordance with whichever is applicable of Rules 10.1 and 10.2 and shall lapse if and to the extent the Optionholder does not accept the offer of the New Option within one month of the offer date.
		

		
			 
		

		
			
		

		
			

		 

		

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			11.3      Where any New Options are granted pursuant to this Rule, references to “Options” shall be construed as references to the New Options for which they have been exchanged and references to the “Company” shall be construed as references to the grantor of the New Options.
		

		
			11.4      Where there is an exchange of Old Options for New Options pursuant to this Rule, such exchange shall be done in compliance with the Code with respect to Optionholders that reside in the U.S..
		

		
			12.        VARIATION OF SHARE CAPITAL
		

		
			12.1      In the event of any variation in the share capital of the Company by way of capitalisation or rights issue, consolidation, subdivision or reduction or otherwise, the number and kind of Shares subject to any Option and the Exercise Price shall be adjusted in such manner as the Compensation Committee shall determine to be fair and reasonable, SAVE THAT with respect to Optionholders who reside in the U.S., the number of Shares subject to an Option, the Exercise Price, and the limits in Rule 5.5 shall be adjusted proportionately in a manner that complies with Sections 409A and 424 of the Code.
		

		
			12.2      The Company will take such steps as are considered necessary to notify Optionholders of any adjustments made under this Rule and may call in, endorse, issue or re-issue any Option Certificate as a result of that adjustment.
		

		
			13.        AMENDMENT
		

		
			13.1      Subject to Rule 13.2, the Compensation Committee may from time to time amend these Rules provided that no amendment to the advantage of Eligible Persons and Optionholders may be made to the provisions relating to:
		

		
			(a)          the persons to whom Options may be granted;
		

		
			(b)          the limit on the number of Shares in respect of which Options may be granted; and
		

		
			(c)          this Rule,
		

		
			without the prior approval of the Company’s shareholders in general meeting except for minor amendments which the Compensation Committee considers necessary or desirable in order to benefit the administration of the Plan, take account of any changes to the applicable legislation in any country or territory or to obtain or maintain favourable tax, exchange control or regulatory treatment for Optionholders or any Group Company. The Compensation Committee are specifically authorized to exercise their discretion to make a recommendation (for approval by the Board) to reduce the Exercise Price of outstanding Options or effect the repricing of such Options through cancellation and re-grants.
		

		
			
		

		
			

		 

		

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			13.2      The Compensation Committee may not make any amendment which would abrogate or adversely affect the subsisting rights of Optionholders unless it is made:
		

		
			(a)         with the written consent of the number of Optionholders who hold Options to acquire 75% of the Shares which would be issued or transferred if all subsisting Options (being Options that have neither been exercised nor lapsed) were exercised; or
		

		
			(b)         by a resolution of a meeting of Optionholders passed by not less than 75% of the Optionholders who attend and vote either in person or by proxy.
		

		
			14.        RELATIONSHIP WITH CONTRACT OF EMPLOYMENT OR FOR PROVISION OF CONSULTANCY SERVICES AND EXCLUSION OF LIABILITY
		

		
			14.1      Notwithstanding any other provision of this Plan:
		

		
			(a)         nothing in this Plan or in any Eligible Person’s contract of employment, appointment letter or contract for the provision of consultancy services shall be construed as giving any Eligible Person a right to be granted an Option under this Plan;
		

		
			(b)         an Eligible Person or Optionholder shall not be entitled, and by accepting an Option granted under this Plan he or she shall be deemed to have waived any possible entitlement, to any compensation or loss he or she may suffer as a result of the exercise by the Compensation Committee of any discretion given to them in accordance with these Rules, or the failure by the Compensation Committee to exercise any such discretion, even if such exercise or failure to exercise constitutes a breach of contract by the Company or any other Group Company which employs or engages the Eligible Person or Optionholder (or to whom he or she provides consultancy services) or a breach of any other duty owed by the Company or any other Group Company or gives rise to any other claim whatsoever; and
		

		
			(c)         if an Eligible Person or Optionholder shall cease to be employed within, engaged by, or to provide consultancy services to, the Group for any reason whatsoever, including (in the case of an Employee) as a result of being wrongfully or unfairly dismissed, he or she shall not be entitled, and by accepting an Option he or she shall be deemed to have waived any possible entitlement, to any sum or benefit to compensate him or her for any loss or curtailment of any right or benefit accrued or in prospect under the Plan, and no such loss or curtailment shall form part of any claim for damages for breach of any contract of employment, contract for the provision of consultancy services, or appointment letter of any Eligible Person or Optionholder or compensation for unfair or wrongful dismissal or any other claim whatsoever.
		

		
			14.2      No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Group Company except as expressly provided in writing in such other plan or an agreement thereunder.
		

		
			15.        ADMINISTRATION
		

		
			15.1      Subject to Rules  4.2 and 13.1, the Plan shall be administered by the Compensation Committee whose decision on all disputes shall be final. The Compensation Committee may delegate
		

		
			 
		

		
			
		

		
			

		 

		

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			specific administrative functions relating to the operation of the Plan to a third party professional equity plan administrator.
		

		
			15.2      The Company shall at all times keep available sufficient authorised and unissued shares, or will ensure that sufficient shares will be available, to satisfy the exercise to the full extent still possible all Options which have neither lapsed nor been fully exercised, taking account of any other obligations of the company to issue unissued shares.
		

		
			15.3      Any notice or other communication under or in connection with this Plan may be given by the Company either personally, by email or by post and to the Company either personally, by email or by post to the secretary. Items sent by post shall be pre-paid and shall be deemed to have been received 72 hours after posting.
		

		
			15.4      This Plan shall terminate on the tenth anniversary of the Adoption Date or at any earlier time by resolution of the Compensation Committee. Termination of the Plan shall be without prejudice to the subsisting rights of Optionholders and any other relevant persons.
		

		
			16.        DATA PRIVACY
		

		
			16.1      As a condition of participation in the Plan, each Optionholder acknowledges that the Company and any Group Company may collect, use and transfer, in electronic or other form, personal data as described in this Rule by and among the Group Companies exclusively for implementing, administering and managing the Optionholder’s participation in the Plan. The Group Companies may hold certain personal information about an Optionholder, including the Optionholder’s name, address and telephone number; birthdate; national insurance, social security, or other identification number; salary; nationality; job title(s); any Shares held in the Company; and Option details, to implement, manage and administer the Plan and Options (the “Data”). The Group Companies may transfer the Data amongst themselves as necessary to implement, administer and manage an Optionholder’s participation in the Plan, and the Group Companies may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Optionholder’s country, or elsewhere, and the Optionholder’s country may have different data privacy laws and protections than the recipients’ country. By accepting the grant of an Option, each Optionholder acknowledges that such recipients may receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Optionholder’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Optionholder may elect to deposit any Shares. The Data related to an Optionholder will be held only as long as necessary to implement, administer, and manage the Optionholder’s participation in the Plan. An Optionholder may, at any time, view the Data that the Company holds regarding such Optionholder, request additional information about the storage and processing of the Data regarding such Optionholder and recommend any necessary corrections to the Data regarding the Optionholder in writing, without cost, by contacting the local human resources representative.
		

		
			16.2      For the purpose of operating the Plan in the European Union (including the United Kingdom after the United Kingdom leaves the European Union), the Company will collect and process
		

		
			 
		

		
			
		

		
			

		 

		

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			information relating to Optionholders in accordance with the privacy notice which is available from the Company’s secretary and the EU General Data Protection Regulation of 25 May 2018.
		

		
			17.        THIRD PARTY RIGHTS
		

		
			A person who is not a party to any Option granted under this Plan shall not have any rights under or in connection with that Option as a result of the Contract (Rights of Third Parties) Act 1999 except where such rights under any provision of the Plan in relation to any Engaging Company of the Optionholder which is not a party to the Option.
		

		
			18.        GOVERNING LAW AND JURISDICTION
		

		
			This Plan is governed by and shall be construed in accordance with the laws of England and Wales and the courts of England and Wales shall have exclusive jurisdiction to hear any claim or dispute arising out of it.
		

		
			19.        TRADING POLICY RESTRICTIONS
		

		
			Option exercises under the Plan and the sale of the Shares acquired on the exercise of such Options shall be subject to the Company’s insider trading policies and procedures, as in effect from time to time.
		

		
			20.        CLAWBACK POLICY
		

		
			Options and/or Shares subject to Options under the Plan shall be subject to the Company’s clawback policy, as in effect from time to time.
		

		
			 
		

		 

		

			18EXHIBIT 10.1

EXECUTION VERSION

VOTING AGREEMENT

This Voting Agreement (this “Agreement”), dated as of November 5, 2019, is made by and among Taylor Morrison Home Corporation, a Delaware corporation (the “Parent”), William H. Lyon (the “Wolf Individual”), Lyon Shareholder 2012, LLC, a Delaware limited liability company (“Wolf LLC”) and The William Harwell Lyon Separate Property Trust established July 28, 2000 (the “Wolf Trust,” and together with the Wolf Individual and Wolf LLC, the “Stockholders”).  Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned to them in the Merger Agreement (as defined below), each as in effect on the date hereof.

WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Tower Merger Sub, Inc., a Delaware corporation and a wholly owned, direct subsidiary of Parent (“Merger Sub”) and William Lyon Homes, a Delaware corporation (the “Company”), are entering into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), which, among other things, provides for the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation upon the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”);

WHEREAS, each Stockholder agrees to enter into this Agreement with respect to all Company Shares that such Stockholder owns or has voting power over as of the date of this Agreement and any additional Company Shares that such Stockholder may hereinafter acquire;

WHEREAS, each Stockholder is the beneficial or record owner with respect to the number of Company Class A Shares or Company Class B Shares, as applicable, set forth opposite such Stockholder’s name on Schedule I attached hereto (together with any additional Company Shares beneficially owned or acquired by any Stockholder (including any Company Shares acquired in connection with the exercise of the Class B Warrant) after the date hereof and prior to the termination of this Agreement in accordance with its terms, the “Subject Shares”);

WHEREAS, Wolf Individual has sole voting power with respect to the Subject Shares;

WHEREAS, the Company Board has, prior to the execution of this Agreement, approved, for purposes of Section 203 of the DGCL, this Agreement and the transactions contemplated hereby;

WHEREAS, as a condition to Parent’s willingness to enter into the Merger Agreement, Parent has required that each Stockholder agree, and each Stockholder has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

		SECTION 1.	
Voting Agreement.

1.1          Voting Agreement.  Each Stockholder hereby agrees that, subject to and conditioned upon the approval by the Company Board, for purposes of Section 203 of the DGCL, of this Agreement and the Merger Agreement, and the transactions contemplated hereby 

 

and thereby, from the date of this Agreement until the termination of this Agreement in accordance with Section 6 (the “Voting Period”), at any meeting of the Company’s stockholders (including the Company Stockholders Meeting), and at every adjournment or postponement thereof, or in any action proposed to be taken by written consent of the stockholders of the Company, each Stockholder shall appear (in person or by proxy), or shall cause the holder(s) of record of all such Stockholder’s issued and outstanding Subject Shares on any applicable record date to appear (in person or by proxy), at such meeting of the Company’s stockholders (including the Company Stockholders Meeting), or any adjournment or postponement thereof, in accordance with the Company Bylaws and cause all of the Subject Shares to be counted as present thereat for purposes of calculating a quorum and shall affirmatively vote (or cause to be voted) all of the issued and outstanding Subject Shares:

(a)           in favor of, or, if action is to be taken by written consent in lieu of a meeting of the Company’s stockholders, deliver to the Company a duly executed affirmative written consent in favor of (to the extent applicable), (i) the adoption of the Merger Agreement, and (ii) any proposal to adjourn the Company Stockholders Meeting to solicit additional proxies in favor of the adoption of the Merger Agreement and the approval of the Merger if there are not sufficient votes to adopt the Merger Agreement and approve the Merger on the date on which such Company Stockholders Meeting is held; and

(b)          against, and not provide any written consent with respect to or for, the adoption or approval of (i) any Company Acquisition Proposal (and the transactions contemplated thereby), including any Superior Company Proposal, (ii) any action, omission, proposal, transaction or agreement to be taken, consummated or entered into by the Company that, if so taken, consummated or entered into by the Company would result in (x) a breach by the Company of any covenant, representation, warranty or other obligation of the Company set forth in the Merger Agreement or (y) the failure of any of the conditions to the obligations of Parent or Merger Sub to consummate the Merger and the other transactions contemplated by the Merger Agreement set forth in Article 6 of the Merger Agreement and (iii) any agreement (including, without limitation, any amendment, waiver, release from or non-enforcement of any agreement), any amendment, supplement, modification or restatement of the Company Charter or the Company Bylaws, to the extent such agreement, amendment, supplement, modification or restatement or other action or failure to act would reasonably be expected to prevent, interfere with, impair or delay the consummation of the Merger.

1.2          Change in Company Recommendation.  Notwithstanding anything to the contrary herein, in the event that the Company Board makes a Company Change of Board Recommendation in accordance with Section 5.3 of the Merger Agreement, the obligations of the Stockholders under Section 1.1 above shall be modified such that the aggregate number of Subject Shares that the Stockholders must vote as set forth in Section 1.1(a) and Section 1.1(b) shall be equal to (rounded up to the nearest whole share) the number of Subject Shares that would represent (as of the record date of the applicable Company Stockholders Meeting) thirty (30) percent of the aggregate voting power of the outstanding shares of Company Shares entitled to vote thereon.

1.3          Other Voting.  Each Stockholder shall vote in its sole discretion on all issues other than those specified in Section 1.1 or Section 1.2.

 

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1.4          Other Agreements.

(a)          No Solicitation.  During the Voting Period, each Stockholder hereby agrees that it shall not, and shall cause any directors, officers, employees, controlled affiliates, accountants, consultants, legal counsel, investment bankers, advisors, agents and other representatives (collectively, “Representatives”) of such Stockholder not to, (i) initiate, solicit, knowingly facilitate or knowingly encourage any inquiry, proposal or offer that constitutes or would reasonably be expected to lead to a Company Acquisition Proposal or engage in any discussions or negotiations with respect thereto, (ii) approve or recommend, or publicly propose to approve or recommend, any Company Acquisition Proposal, (iii) enter into any letter of intent or other similar agreement relating to any Acquisition Proposal  or (iv) resolve or agree to do any of the foregoing; provided that Section 1.4(a)(i) shall not restrict a Stockholder from taking any action or doing anything that the Company is permitted to do in accordance with the terms of Section 5.3 of the Merger Agreement.  Notwithstanding the foregoing, each Stockholder may (and may permit its Affiliates and its and its Affiliates’ Representatives to) participate in discussions and negotiations with the Company and/or any Person making a Company Acquisition Proposal (or their respective Representatives) with respect to such Company Acquisition Proposal to the extent: (x) the Company or the Company Board is engaging in discussions or negotiations with such Person in accordance with Section 5.3 of the Merger Agreement; and (y) such Stockholder’s negotiations and discussions are in conjunction with and ancillary to the Company’s or the Company Board’s discussions and negotiations with such Person making a Company Acquisition Proposal, solely in the case of (y), subject to promptly and, in any event, within twenty-four (24) hours of receipt thereof, notifying Parent of the status and material details thereof (including copies of any written documentation that is material to such Company Acquisition Proposal).

(b)          Waiver of Appraisal Rights.  Each Stockholder hereby irrevocably waives and agrees not to exercise any statutory rights of appraisal or rights to dissent that the Stockholder may have, or that may arise, under the Merger Agreement, the DGCL or otherwise, with respect to the Merger Agreement or the Merger.

(c)          No Subsequent Limitations.  Each Stockholder agrees not to enter into any agreement or commitment with any Person the effect of which would violate or prevent, impair or delay such Stockholder from performing its obligations under the provisions and agreements set forth in this Section 1.

1.5          No Limitations on Actions; No Ownership Interest.

(a)          Notwithstanding anything to the contrary herein, Parent expressly acknowledges that the Wolf Individual is entering into this Agreement solely in its capacity as the beneficial owner of the Subject Shares and this Agreement (i) shall not limit or otherwise affect (or require the Wolf Individual to attempt to limit or otherwise affect) any actions or omissions taken by the Wolf Individual in his capacity as a member of the Company Board, and officer of the Company, or a manager, officer or director of any of the Company’s Subsidiaries, including in exercising rights under the Merger Agreement, and no such actions or omissions in and of themselves shall be deemed a breach of this Agreement, or (ii) will be construed to prohibit, limit, or restrict the Wolf Individual from exercising his fiduciary duties as an officer or director to the Company or its stockholders, and Parent shall not, and shall cause its affiliates not to, assert any 

 

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claim that any action taken by the Wolf Individual, in his capacity as a member of the Company Board or officer of the Company, violates this Agreement.  It is expressly understood that the Wolf Individual is not making any agreement or understanding in his capacity as a manager, officer or director of the Company or its Subsidiaries.

(b)          Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership of or with respect to the Subject Shares.  All rights, ownership and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the Stockholders, and Parent shall have no authority to direct the Stockholders in the voting or disposition of any of the Subject Shares, except as provided herein.

SECTION 2.          Representations and Warranties of the Stockholders.  Each Stockholder hereby represents and warrants to Parent, jointly and severally, as follows:

2.1          Organization.  Each Stockholder is either (a) a natural person or (b) a limited liability company or trust, duly formed, validly existing and in good standing under the laws of its jurisdiction of organization.

2.2          Subject Shares.  As of the date hereof, other than the Subject Shares, no Stockholder holds or controls any other equity interests possessing voting rights in or with respect to the Company.  The Wolf Individual has sole voting power (including the right to control such vote as contemplated herein) and the power of disposition over all of the Subject Shares currently or hereinafter owned or held by each of the Stockholders.  Each Stockholder has the power to issue instructions with respect to the matters set forth in this Agreement and power to agree to all of the matters applicable to the Stockholder set forth in this Agreement, in each case, over all of the Subject Shares currently or hereinafter owned or held by such Stockholder.  Each Stockholder holds all of the Subject Shares set forth opposite such Stockholder’s name on Schedule I attached hereto (as well as all Subject Shares acquired by such Stockholder after the date hereof), free and clear of any and all claims, Liens, encumbrances or restrictions on the right to vote the Subject Shares, except as may exist by reason of this Agreement.  Other than such consents as have already been obtained, no consent of any Person is required for any Stockholder to execute and deliver this Agreement.

2.3          Authority Relative to this Agreement.  Each Stockholder has all requisite corporate power and authority (in the case of each Stockholder that is not an individual) or capacity (in the case of each Stockholder that is an individual) to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. With respect to each Stockholder that is not an individual, the execution and delivery of this Agreement by such Stockholder and the performance of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary and appropriate action on behalf of such Stockholder. This Agreement has been duly and validly executed and delivered by each Stockholder and, assuming the due authorization, execution and delivery hereof by Parent, constitutes a valid and binding obligation of each Stockholder, enforceable against each Stockholder in accordance with its terms, except to the extent that enforcement is limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights or by general equitable principles (whether considered in a proceeding at Law or in equity).

 

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2.4          No Conflict.  None of the execution, delivery or performance of this Agreement by any Stockholder or any other transaction contemplated by this Agreement will (with or without notice or lapse of time, or both), directly or indirectly, conflict with or violate any Law applicable to any Stockholder, except as would not reasonably be expected, either individually or in the aggregate, to impair the ability of any Stockholder to perform its obligations hereunder or to consummate the transactions contemplated hereby.   None of the execution, delivery or performance of this Agreement by any Stockholder or any other transaction contemplated by this Agreement will (with or without notice or lapse of time, or both), directly or indirectly, conflict with or violate any provision of the charter, certificate of incorporation, articles of association, by-laws, operating agreement or similar formation or governing documents or instruments of any Stockholder.  None of the execution, delivery or performance of this Agreement by any Stockholder or any other transaction contemplated by this Agreement will (x) (with or without notice or lapse of time, or both), directly or indirectly, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of an encumbrance on, any of the Subject Shares or (y) assuming the Company has taken all necessary action to exempt the Merger, the Merger Agreement, this Agreement and the transactions contemplated hereby and thereby from the restrictions set forth in Section 203 of the DGCL, render Section 203 of the DGCL applicable to the Merger, the Merger Agreement, this Agreement and the transactions contemplated hereby and thereby.

2.5          Absence of Other Voting Agreements.  No Stockholder is a party to, and the Subject Shares are not otherwise subject to, any agreement, arrangement or other understanding (i) that would constitute a breach of Section 1.1 or Section 1.2 if entered into during the Voting Period or (ii) that would reasonably be expected to materially delay, impair or restrict any Stockholder’s ability to perform its obligations under this Agreement.

2.6          No Litigation.  There is no action, suit, investigation, complaint or other proceeding pending against any Stockholder or, to the knowledge of any Stockholder, any other Person, or, to the knowledge of any Stockholder, threatened against any Stockholder or any other Person that restricts or prohibits (or, if successful, would restrict or prohibit) the performance by any Stockholder of its obligations under this Agreement.

SECTION 3.          Representations and Warranties of Parent.  Parent hereby represents and warrants to the Stockholders as follows:

 

3.1          Organization.  Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the state of Delaware.

3.2          Authority Relative to this Agreement.  Parent has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and the performance of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary and appropriate corporate action by Parent.  This Agreement has been duly and validly executed and delivered by Parent and, assuming the due authorization, execution and delivery by each of the Stockholders, constitutes a valid and binding obligation of Parent, 

 

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enforceable against Parent in accordance with its terms, except to the extent that enforcement is limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights or by general equitable principles (whether considered in a proceeding at Law or in equity).

3.3          No Conflict.  None of the execution, delivery or performance of this Agreement by Parent will (with or without notice or lapse of time, or both), directly or indirectly, conflict with or violate any Law applicable to Parent, except as would not reasonably be expected, either individually or in the aggregate, to impair the ability of Parent to perform its obligations hereunder.  None of the execution, delivery or performance of this Agreement by Parent will (with or without notice or lapse of time, or both), directly or indirectly, conflict with or violate any provision of the Parent Charter, the Parent Bylaws or the organizational or governing documents of Merger Sub or any Parent Subsidiary.  None of the execution, delivery or performance of this Agreement by Parent will (with or without notice or lapse of time, or both), directly or indirectly, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of an encumbrance on any of the Subject Shares, except as would not reasonably be expected, either individually or in the aggregate, to impair the ability of Parent to perform its obligations hereunder.

SECTION 4.          Lock-Up.  From the Closing Date until the date that is six (6) months after the Closing Date (the “Lock Up Period”), each Stockholder covenants and agrees that such Stockholder will not, directly or indirectly, without the prior written consent of Parent, offer, sell, lease, assign, encumber, pledge, hypothecate, dispose, tender, exchange, gift or otherwise transfer or dispose (by operation of Law or otherwise, including, without limitation, by way of Constructive Disposition), either voluntarily or involuntarily (each such action, a “Parent Share Conveyance”) any Parent Shares received by such Stockholder in the Merger as Stock Consideration.  Any Parent Share Conveyance or attempted Parent Share Conveyance of any such Parent Shares in violation of this Section 4 shall be null and void ab initio, and Parent may, and may instruct its transfer agent and other third parties not to, record or recognize such Parent Share Conveyance on the share register of Parent.

SECTION 5.          Additional Agreements.

5.1          Additional Shares.  In the event of a share split, dividend or distribution, or any other change in the Company Shares by reason of any share split, dividend, distribution, subdivision, recapitalization, reclassification, consolidation, conversion or the like, including the exchange of any securities convertible into or exercisable for any Company Shares, or any other acquisition of (or acquisition of control of) Company Shares after the date hereof, the term “Subject Shares” shall be deemed to refer to and include such shares as well as all such share dividends and distributions and any securities into which or for which any or all of the Subject Shares may be changed or exchanged or which are received in such transaction.  Until any termination of this Agreement in accordance with its terms, each Stockholder shall also promptly notify Parent of the number of Company Shares, if any, as to which such Stockholder and/or affiliate of such Stockholder acquires voting power over, or record or beneficial ownership of, after the date hereof.

 

- 6 -

5.2          Transfer or Encumbrance.  Other than a Permitted Transfer, during the Voting Period, each Stockholder shall not permit or allow any of the Subject Shares beneficially owned or held by such Stockholder to be, and shall cause such Subject Shares not to be, directly or indirectly, (i) Transferred, and shall not make any offer or enter into any agreement providing for a Transfer of any such Subject Shares and shall not commit to do, consent to, or otherwise facilitate any of the foregoing, except in cases where the transferee executes a customary joinder to this Agreement in a form reasonably acceptable to Parent agreeing to be bound by this Agreement in the same manner as such Stockholder, including full recourse to such Subject Shares so Transferred for any violation of this Agreement by such Stockholder or such transferee or (ii) deposited into a voting trust or become subject to a voting agreement or arrangement or a grant of a proxy or power of attorney (other than pursuant to this Agreement).  Any Transfer or encumbrance or attempted Transfer or encumbrance in violation of this Agreement shall be void ab initio.

5.3          Class B Warrant.  Each Stockholder hereby consents to and agrees to be bound by the treatment of the Class B Warrant as set forth in Section 2.4(d) of the Merger Agreement.  In accordance with the foregoing, at or prior to the Effective Time, Parent, the Parent Board or the compensation committee thereof, as applicable, shall adopt any resolutions and take any actions that are necessary to effectuate the issuance of the Parent warrant attached as Exhibit C to the Merger Agreement (the “Parent Warrant”).  At the Effective Time, Parent shall execute and deliver the warrant attached as Exhibit C to the Merger Agreement to the holder of the Class B Warrant in accordance with Section 2.4(d) of the Merger Agreement.  Parent shall take all corporate action necessary to reserve for issuance, and shall reserve for issuance so long as such warrant is outstanding, a sufficient number of Parent Shares for delivery upon the exercise of such warrant.  As soon as reasonably practicable after the Effective Time (or prior thereto), Parent shall take all actions reasonably necessary to cause any Parent Shares issuable pursuant to the exercise of the Parent Warrant to be listed and eligible for trading on the NYSE for so long as the Parent Warrant remains outstanding.

SECTION 6.          Termination.

6.1          This Agreement, and all of the rights and obligations set forth herein, shall terminate and be of no further force or effect upon the occurrence of the following:

(a)          the earlier of (i) the Closing in accordance with the terms of the Merger Agreement (except for the rights and obligations set forth in Section 4 herein, which shall terminate at the end of the Lock-Up Period) and (ii) the termination of the Merger Agreement in accordance with its terms;

(b)          any amendment to the Merger Agreement is effected, any action pursuant to Section 5.11 (Alternative Structure) of the Merger Agreement is taken or any waiver of the Company’s rights under the Merger Agreement is granted, in each case, without the Wolf Individual’s prior written consent, it being understood that, notwithstanding anything to the contrary in Section 1.1, such prior written consent may be granted or withheld in his sole discretion, in each case, that (i) diminishes the Merger Consideration received by the stockholders of the Company, (ii) changes the form of Merger Consideration payable to the stockholders of the Company, (iii) extends the Outside Date or imposes any additional conditions or obligations that 

 

- 7 -

would reasonably be expected to prevent the consummation of the Merger, or (iv) is or would reasonably be expected to affect the economics or any of the material terms of Article 1 (The Merger), Article 2 (Conversion of Securities in the Merger), Section 5.3 (No Solicitation by the Company), Section 5.9 (Indemnification of Directors and Officers), Section 5.10 (Tax Treatment), Article 6 (Conditions to Consummation of the Merger) or Article 7 (Termination, Amendment and Waiver) of the Merger Agreement in a manner that is materially adverse to the Company or any of the Stockholders (including with respect to the reduction of or the imposition of any restriction on any Stockholder's right to receive the Merger Consideration or Wolf LLC’s rights under Section 2.4(d) of the Merger Agreement); or

(c)          the written consent of all parties hereto.

6.2          Notwithstanding Section 6.1, termination of this Agreement shall not (a) relieve any party of liability for such party’s willful and material breach of any of the terms of this Agreement prior to such termination or (b) prevent any party hereunder from seeking any remedies (at Law or in equity) against any other party hereto for such party’s willful and material breach of any of the terms of this Agreement prior to such termination.   The provisions of this Section 6 and Section 7 hereof shall survive the termination of this Agreement.

SECTION 7.          Miscellaneous.

7.1          Expenses.  Subject to any other agreement between the parties, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such costs and expenses, whether or not the Merger is consummated.

7.2          Entire Agreement; No Third Party Beneficiaries.

(a)          This Agreement, together with the Merger Agreement, constitute the entire agreement of the parties and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof; provided that if there is any conflict between this Agreement and the Merger Agreement, this Agreement shall control.

(b)          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. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto.  Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto without notice or liability to any other Person.  In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto, and consequently, may not accurately characterize actual facts or circumstances.

7.3          Assignment.  This Agreement shall not be assigned by any party by operation of Law or otherwise without the prior written consent of the other party.  Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the 

 

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parties hereto and their respective successors and permitted assigns.  Any purported assignment in violation of this Agreement will be void ab initio.

7.4          Amendment; No Waiver.  This Agreement may not be amended except by an instrument in writing executed by the parties hereto.  Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.  In addition, (a) no claim or right arising out of this Agreement can be discharged by any party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by such party and (b) no notice to or demand on a party will be deemed to be a waiver of any obligation of such party and no notice from or demand by a party will be deemed to be a waiver of such party’s right to take further action without notice or demand as provided in this Agreement.

7.5          Severability.  If a court of competent jurisdiction determines, pursuant to a final, non-appealable order or judgement, that any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions 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 such 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 to all the parties hereto that will achieve, to the maximum extent possible, the economic, business and other purposes of such void or unenforceable provision.

7.6          Notices.  Any notices or other communications required or permitted under, or otherwise given in connection with, this Agreement shall be in writing and shall be deemed to have been duly given (a) on the next Business Day if transmitted by national overnight courier or (b) on the date delivered if sent by email (provided that confirmation of email receipt is obtained; provided further that if such notice or other communication is also sent by another means provided for by this Section 7.6 within one (1) Business Day after sending such email, such notice or other communication shall be deemed to have been duly given on the date such email was sent irrespective of whether confirmation of email receipt is obtained), in each case, as follows (or to such other Persons or addressees as may be designated in writing by the party to receive such notice):

if to Parent:

	
 

	Taylor Morrison Home Corporation
	
 

	4900 N. Scottsdale Rd., Suite 2000 
	
 

	Scottsdale, AZ 85251 
	
 

	Attention: 	
Sheryl Palmer

	
 

	Email:  	
SPalmer@taylormorrison.com

with copies (which shall not constitute notice) to:        

 

- 9 -

 

	
 

	Taylor Morrison Home Corporation
	
 

	4900 N. Scottsdale Rd., Suite 2000 
	
 

	Scottsdale, AZ 85251 
	
 

	Attention: 	
Darrell Sherman

	 	 	Benjamin A. Aronovitch
	
 

	Email:  	
DSherman@taylormorrison.com

	 	 	BAronovitch@taylormorrison.com 

with a copy (which shall not constitute notice) to:

	
 

	Paul, Weiss, Rifkind, Wharton & Garrison LLP
	
 

	1285 Avenue of the Americas
	
 

	New York, NY 10019
	
 

	Attention: 	
Scott A. Barshay

	 	 	Steven J. Williams
	
 

	Email:  	
sbarshay@paulweiss.com

	 	 	swilliams@paulweiss.com

if to any of the Stockholders:

	
 

	
c/o William Lyon Homes

	
 

	
4695 MacArthur Court, 8th Floor

	
 

	
Newport Beach, CA 92660

	
 

	
 

	
 

with a copy (which shall not constitute notice) to:

	
 

	Akin Gump Strauss Hauer & Feld LLP
	
 

	4 Park Plaza
	
 

	Suite 1900
	 	Irvine, California 92614
	
 

	Attention: 	
Terrence R. Allen

	
 

	Email:  	
tallen@akingump.com

 

with a copy (which shall not constitute notice) to:

 

	
 

	Latham & Watkins LLP
	
 

	650 Town Center Drive
	
 

	20th Floor
	 	Costa Mesa, CA 92626-1925
	
 

	Attention: 	
Michael Treska

	
 

	Email:  	
Michael.Treska@lw.com

7.7          Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury.

(a)          This Agreement and all claims and causes of action arising in connection herewith shall be governed by, and construed in accordance with, the Laws of the State 

 

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of Delaware, without regard to Laws that may be applicable under conflicts of laws principles (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

(b)          Each of the parties hereto irrevocably agrees that any Proceeding with respect to this Agreement and the rights and obligations arising in connection herewith or any claim or cause of action arising in connection with this Agreement or the negotiation hereof, and any Proceeding for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by any other party hereto or its successors or assigns, will be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery does not have subject matter jurisdiction over a particular matter, any state or federal court within the State of Delaware).  Each of the parties hereto hereby irrevocably submits with regard to any such Proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to or arising from this Agreement or any of the transactions contemplated hereby or the negotiation hereof in any court other than the aforesaid courts.  Each of the parties hereto hereby irrevocably waives, and agrees not to assert as a defense, counterclaim or otherwise, in any Proceeding with respect to this Agreement or the transactions contemplated hereby, (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve in accordance with this Section 7.7(b), (ii) any claim that it or its property is exempt or immune from the jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by the Law, any claim that (A) the Proceeding in such court is brought in an inconvenient forum, (B) the venue of such Proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.  Each of the parties hereto agrees that a final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.6 and agrees that service made in such manner shall have the same legal force and effect as if served upon such party personally within the State of Delaware.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law

(c)          EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY 

 

- 11 -

AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.7(c).

7.8          Specific Performance.  The parties hereto agree that if any the provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at Law would exist and damages would be difficult to determine, and accordingly, (a) the parties shall be entitled to an injunction or injunctions to prevent or remedy breaches of this Agreement and to specific performance of the terms hereof, in each case in the Delaware Court of Chancery or, if such court shall not have jurisdiction, in any federal court located in the State of Delaware or any Delaware state court, this being in addition to any other remedy to which they are entitled at Law or in equity, (b) the parties waive any requirement for the securing or posting of any bond in connection with the obtaining of any specific performance or injunctive relief and (c) the parties will waive, in any action for specific performance, the defense of adequacy of a remedy at Law.  Either party’s pursuit of specific performance at any time will not be deemed an election of remedies or waiver of the right to pursue any other right or remedy to which such party may be entitled, including the right to pursue remedies for liabilities or damages incurred or suffered by a party in the case of a breach of this Agreement involving willful breach or fraud.

7.9          Mutual Drafting; Interpretation.  Each party hereto has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties.  If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision.  For purposes of this Agreement, whenever the context requires:  the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include masculine and feminine genders.  As used in this Agreement, the words “include” and “including” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”  Except as otherwise indicated, all references in this Agreement to “Sections” are intended to refer to Sections of this Agreement.  The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular Section in which such words appear.  All references in this Agreement to “$” are intended to refer to U.S. dollars.  Unless otherwise specifically provided for herein, the term “or” shall not be deemed to be exclusive.

7.10        Counterparts.  This Agreement may be signed in any number of counterparts, including by facsimile or other electronic transmission each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when Parent, on the one hand, and the Stockholders, on the other hand, shall have received a counterpart hereof signed by the other parties hereto.  Until and unless Parent, on the one hand, and the Stockholders, on the other hand, shall have received a counterpart hereof signed by the other parties hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).  The exchange of a fully executed Agreement (in counterparts 

 

- 12 -

or otherwise) by electronic transmission in .PDF format or by facsimile shall be sufficient to bind the parties to the terms and conditions of this Agreement.

7.11        Further Actions.  From time to time, at the reasonable request of Parent and without further consideration, prior to the termination of this Agreement, each Stockholder shall execute and deliver such additional documents and instruments and take all such further action as may be reasonably required to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement.

7.12        Certain Definitions.

(a)           “beneficial ownership” means, with respect to any securities, the ownership of such security by any “beneficial owner” as such term is defined in Rule 13d-3 adopted by the SEC under the Exchange Act.  The terms “beneficial owner,” “beneficially own,” “beneficially owned” and similar terms shall have a correlative meaning.

(b)          “Constructive Disposition” means, with respect to any Subject Shares or Parent Shares received by a Stockholder as Stock Consideration in the Merger, a short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security or entering into any other hedging or other derivative, swap, “put-call,” margin, securities lending or other transaction that has or reasonably would be expected to have the effect of changing, limiting, arbitraging or reallocating the economic benefits and risks of ownership of such security.

(c)           “Permitted Transfer” shall mean, in each case, with respect to each Stockholder, so long as (i) such Transfer is in accordance with applicable Law and (ii) such Stockholder is and at all times has been in compliance with this Agreement, any Transfer of Subject Shares by such Stockholder to an affiliate of such Stockholder, so long as such affiliate, in connection with such Transfer, executes a customary joinder to this Agreement in a form reasonably acceptable to Parent pursuant to which such affiliate agrees to become a party to this Agreement in the same manner as such Stockholder and be subject to the restrictions applicable to such Stockholder and otherwise become a party for all purposes of this Agreement; provided that no such Transfer shall relieve the transferring Stockholder from its obligations under this Agreement, other than with respect to the Company Shares transferred in accordance with the foregoing provision.

(d)          “Transfer” means any direct or indirect offer, sale, lease, assignment, encumbrance, pledge, hypothecation, disposition, tender, exchange, gift or other transfer or disposition (by operation of Law or otherwise, including, without limitation, by way of Constructive Disposition), either voluntary or involuntary, of any Subject Shares (or any securities convertible or exchangeable into Subject Shares) or interest in any Subject Shares, excluding entry into this Agreement.

[Rest of page intentionally left blank]

 

- 13 -

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed as of the date first above written.

	 	PARENT: 	 
	 	 	 
	 	TAYLOR MORRISON HOME CORPORATION	 
	 	 	 
	 	 	 	 	 
	
 

	
By: 

	/s/ Sheryl D. Palmer	 
	 	 	Name: 	Sheryl D. Palmer	 
	 	 	Title: 	
Chairman, President and 

Chief Executive Officer

	 
	 	 	 	 	 

 

 

[Signature Page to Voting Agreement]

 

	 	THE STOCKHOLDERS:	 
	 	 	 
	 	WILLIAM H. LYON	 
	 	 	 
	 	/s/ William H. Lyon	 
	 	 	 
	 	 	 
	 	LYON SHAREHOLDER 2012, LLC 	 
	 	 	 
	 	 	 	 	 
	
 

	
By: 

	/s/ William H. Lyon	 
	 	 	Name: 	William H. Lyon	 
	 	 	Title: 	Manager	 
	 	 	 	 	 
	 	 	 	 	 
	 	THE WILLIAM HARWELL LYON SEPARATE PROPERTY TRUST ESTABLISHED JULY 28, 2000	 
	 	 	 	 	 
	 	 	 	 	 
	 	By: 	/s/ William H. Lyon	 
	 	 	Name: 	William H. Lyon 	 
	 	 	Title: 	Trustee 	 

 

 

[Signature Page to Voting Agreement]

SCHEDULE I

	
Stockholder

	
Number of Subject 

Shares of Company 

Class A Shares 

Beneficially Owned

	
Number of Subject 

Shares of Company 

Class B Shares 

Beneficially Owned

	
William H. Lyon

	
307,388

	
0

	
Lyon Shareholder 2012, LLC

	
0

	
4,817,394

	
The William Harwell Lyon Separate Property Trust established July 28, 2000

	
2,933

	
0

 

 

 

 

Schedule I

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