AMENDMENT TO THE
TOLL BROTHERS, INC.
KEY EXECUTIVES AND
NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
(1993)
WHEREAS, the Company desires to amend the Toll Brothers, Inc. Key
Executives and Non-employee Directors Stock Option Plan (1993) (the "Plan") to
increase the aggregate maximum number of shares of common stock of the Company
which may be subject to grants under the Plan from 1,0000,000 to 1,200,000
shares; and
WHEREAS, the Company desires to amend the Plan to clarify the
manner in which fair market value of the common stock of the Company is
determined; and
WHEREAS, the Company desires to amend the Plan to permit the
Committee to (i) grant stock awards and (ii) establish rules and procedures
regarding the withholding of Company common stock to satisfy federal, state
and/or local withholding tax requirements arising in connection with the Plan;
and
WHEREAS, the Board of Directors is generally authorized under
Section 10 of the Plan to amend the Plan from time to time in such manner as
it may deem advisable.
NOW, THEREFORE, the Plan is hereby amended, effective as of
January 31, 1995, as follows:
1. Section 2 of the Plan is amended to read as follows:
"2. Administration. The Plan shall be administered by the Board
of Directors of the Company, without participation by any director on any
matter pertaining to him, or by a Stock Option Committee composed of two or
more of its members to operate and administer the Plan in its stead. The
Stock Option Committee or the Board of Directors in its administrative
capacity with respect to the Plan is referred to herein as the "Committee".
Notwithstanding anything in this Section 2 to the contrary, in the case of the
non-employee members of the Board of Directors who are granted Options in
accordance with the provisions of Section 8, the members of the Stock Option
Committee to whom such Options will be granted, the timing of grants of such
Options, the Option Price (as defined in subsection 6(b)) of such Options and
the number of Option Shares (as defined in Section 4) included in such Options
shall be as specifically set forth in Section 8 respectively.
The Committee shall hold meetings at such times and places
as it may determine. Acts approved at a meeting by a majority of the members
of the Committee or acts approved in writing by the unanimous consent of the
members of the Committee shall be the valid acts of the Committee.
Except with respect to Options which may be granted to
members of the Stock Option Committee under Section 8, the Stock Option
Committee shall from time to time at its discretion direct the Company to
grant Options and awards involving the transfer or issuance of Common Stock
subject to conditions of forfeiture (the "Awards") pursuant to the provisions
of the Plan. The Committee shall have plenary authority to determine the
Optionees and the recipients of Awards ("Awardees") to whom and the times at
which Options and Awards shall be granted, the number of Option Shares (as
defined in Section 4) or shares of Common Stock covering an Award ("Award
Shares") to be granted and the price and other terms and conditions thereof,
including a specification with respect to whether an Option is intended to be
an ISO subject, however, to the express provisions of the Plan. In making
such determinations, the Committee may take into account the nature of the
Optionee's services and responsibilities, the Optionee's present and potential
contribution to the Company's success, the recommendations of those employees
or officers of the Company with knowledge of the performance of the Optionee,
and such other factors as it may deem relevant. The interpretation and
construction by the Committee of any provision of the Plan or of any Option or
Award granted under it shall be final, binding and conclusive.
No member of the Board of Directors or the Committee shall
be personally liable for any action or determination made in good faith with
respect to the Plan or any Option or Award granted under it. No member of the
Committee shall be liable for any act or omission of any other member of the
Committee or for any act or omission on his own part, including but not
limited to the exercise of any power and discretion given to him under the
Plan, except those resulting from (i) any breach of such member's duty of
loyalty to the Company or its stockholders, (ii) acts or omissions not in good
faith or involving intentional misconduct or a knowing violation of law, (iii)
acts or omissions that would result in liability under Section 174 of the
General Corporation Law of the State of Delaware, as amended, and (iv) any
transaction from which the member derived an improper personal benefit.
In addition to such other rights of indemnification as he
may have as a member of the Board of Directors or the Committee, and with
respect to administration of the Plan and the granting of Options and Awards
under it, each member of the Board of Directors and of the Committee shall be
entitled without further act on his part to indemnity from the Company for all
expenses (including the amount of any judgment and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit or proceeding with respect
to the administration of the Plan or the granting of Options or Awards under
it in which he may be involved by reason of his being or having been a member
of the Board of Directors or the Committee, whether or not he continues to be
such member of the Board of Directors or the Committee at the time of the
incurring of such expenses; provided, however, that such indemnity shall not
include any expenses incurred by such member of the Board of Directors or the
Committee: (i) in respect of matters as to which he shall be finally adjudged
in such action, suit or proceeding to have been guilty of gross negligence or
willful misconduct in the performance of his duties as a member of the Board
of Directors or the Committee; or (ii) in respect of any matter in which any
settlement is effected to an amount in excess of the amount approved by the
Company on the advice of its legal counsel; and provided further, that no
right of indemnification under the provisions set forth herein shall be
available to or accessible by any such member of the Board of Directors or the
Committee unless within five days after institution of any such action, suit
or proceeding he shall have offered the Company in writing the opportunity to
handle and defend such action, suit or proceeding at its own expense. The
foregoing right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each such member of the Board of Directors or
the Committee and shall be in addition to all other rights to which such
member of the Board of Directors or the Committee would be entitled as a
matter of law, contract or otherwise."
2. Section 3 of the Plan is hereby amended to read as follows:
"3. Eligibility. Those key executives of the Company or its
Affiliates (who may also be directors of the Company or its Affiliates) who
the Committee determines from time to time should be eligible to participate
in the Plan because they are critical to the operations of the Company or
because the Committee determines that such employees are or may become
"covered employees", as that term is used in Section 162(m) of the Code, and
the non-employee members of the Board of Directors shall be eligible to
receive Options and Awards hereunder; provided, however, that non-employee
members of the Board of Directors are only eligible to be granted an Option
under Section 8 and provided further that no such non-employee member of the
Board of Directors shall be eligible to receive an Award. The Committee, in
its sole discretion, shall determine whether an individual, other than a non-
employee member of the Board of Directors, qualifies as eligible to
participate in the Plan. An Optionee may receive more than one Option and an
Awardee may receive more than one Award, but only on the terms and subject to
the restrictions of the Plan."
3. Section 4 of the Plan is amended to read as follows:
"4. Option Shares. The aggregate maximum number of shares of
the Common Stock for which Options and Awards may be issued under the Plan is
One Million Two Hundred Thousand (1,200,000) shares, adjusted as provided in
Section 9 (the "Option Shares"). Option Shares and Award Shares shall be
issued from authorized and unissued Common Stock or Common Stock held in or
hereafter acquired for the treasury of the Company. If any outstanding Option
granted under the Plan expires, lapses or is terminated for any reason, or if
any Award Shares is forfeited the Option Shares allocable to the unexercised
portion of such Option and the forfeited Award Shares may again be the subject
of an Option or Award granted pursuant to the Plan."
4. Section 6(b) of the Plan is amended to read as follows:
"(b) Option Price. Each Option Document shall state the
price at which Option Shares may be purchased (the "Option Price"), which
shall be at least 100% of the fair market value of the Common Stock on the
date the Option is granted as determined by the Committee; provided, however,
that if an ISO is granted to an Optionee who then owns, directly or by
attribution under section 424(d) of the Code, shares possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or an Affiliate, then the Option Price shall be at least 110% of the
fair market value of the Option Shares on the date the Option is granted. If
the Common Stock is traded in a public market, then the fair market value per
share shall be, if the Common Stock is listed on a national securities
exchange or included in the NASDAQ National Market System, the last reported
sale price thereof on the relevant date, or, if the Common Stock is not so
listed or included, the mean between the last reported "bid" and "asked"
prices thereof on the relevant date, as reported on NASDAQ or, if not so
reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Committee determines."
5. Section 11 of the Plan is amended to read as follows:
"11. Continued Employment. The grant of an Option or an Award
pursuant to the Plan shall not be construed to imply or to constitute evidence
of any agreements express or implied, on the part of the Company or any
Affiliate to retain the Optionee in the employ of the Company or an Affiliate,
as a member of the Board of Directors or in any other capacity, whichever the
case may be."
6. Section 12 of the Plan is amended to read as follows:
"12. Withholding of Taxes. Whenever the Company proposes or is
required to issue or transfer Option Shares or Award Shares, the Company shall
have the right to (a) require the recipient or transferor to remit to the
Company an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Option Shares or Award Shares or (b) take
whatever action it deems necessary to protect its interests. The Company's
obligation to make any delivery or transfer of Option Shares or Award Shares
shall be conditioned on the recipient's compliance, to the Company's
satisfaction, with any withholding requirement. The Committee may establish
requirements and procedures with respect to the Company's withholding of
Option Shares or Award Shares to satisfy any federal, state and/or local
withholding tax requirements which arise in connection with the transfer of
Option Shares or Award Shares, as the Committee deems appropriate."
7. Sections 13 and 14 of the Plan are hereby renumbered as
Sections 14 and 15, respectively.
8. The Plan is hereby amended by adding the following new Section
13:
"13. Terms and Conditions of Awards. Awards granted pursuant to
the Plan shall be evidenced by written Award agreements (the "Award
Agreements") in such form as the Committee shall from time to time approve,
which Award Agreements shall comply with and be subject to the following terms
and conditions and such other terms and conditions which the Committee shall
from time to time require which are not inconsistent with the terms of the
Plan. The Committee may, in its sole discretion, shorten or waive any term or
condition with respect to all or any portion of any Award. Notwithstanding
the foregoing, all restrictions shall lapse or terminate with respect to Award
Shares upon the death or disability (within the meaning of section 22(e)(3) of
the Code) of an Awardee.
(a) Number of Shares. Each Award Agreement shall state
the number of shares of Common Stock to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify
the purchase price, if any, which applies to the Award. If the Committee
specifies a purchase price, the Awardee shall be required to make payment on
or before the date specified in the Award Agreement. An Awardee shall pay for
such shares (i) in cash, (ii) by certified check payable to the order of the
Company, or (iii) by such other mode of payment as the Committee may approve.
(c) Conditions for Transfer of Shares. In the case of an
Award which provides for a transfer of Award Shares without any payment by the
Awardee, the transfer shall take place on the date specified in the Award
Agreement. In the case of an Award which provides for a payment, the transfer
shall take place on the date the initial payment is delivered to the Company,
unless the Committee or the Award Agreement otherwise specifies. Stock
certificates evidencing Award Shares transferred pursuant to an Award shall be
issued in the sole name of the Awardee. Notwithstanding the foregoing, as a
precondition to a transfer, the Company may require an acknowledgment by the
Awardee as required with respect to Options under Section 7.
(d) Forfeiture Conditions. The Committee may specify in
an Award Agreement any conditions under which the Awardee shall be required to
convey to the Company the shares of Common Stock covered by the Award. Upon
the occurrence of any such specified condition, the Awardee shall forthwith
surrender and deliver to the Company the certificates evidencing such Award
Shares as well as completely executed instruments of conveyance. The
Committee, in its discretion, may provide that certificates for Award Shares
transferred pursuant to an Award be held in escrow by the Company's Treasurer
or an appropriate officer of the Company, together with an undated stock power
executed by the Awardee, until such time as each and every forfeiture
condition has lapsed, and that the Awardee be required, as a condition of the
transfer, to deliver to such escrow agent stock powers covering the
transferred shares of Common Stock duly endorsed by the Awardee. Stock
certificates evidencing shares of Common Stock subject to forfeiture shall
bear a legend to the effect that the Common Stock evidenced thereby is subject
to repurchase or conveyance to the Company in accordance with an Award made
under the Plan and that such shares may not be sold or otherwise transferred.
(e) Lapse of Conditions. Upon termination or lapse of
each and every forfeiture condition, the Company shall cause certificates
without the legend referring to the Company's repurchase right (but with any
other legends that may be appropriate) evidencing the shares of Common Stock
covered by the Award to be issued to the Awardee upon the Awardee's surrender
of the legended certificates held by him to the Company.
(f) Rights as Stockholder. Upon payment of the purchase
price, if any, for shares of Common Stock covered by an Award and compliance
with the acknowledgment requirement of subsection 13(c), the Awardee shall
have all of the rights of a stockholder with respect to the shares of Common
Stock covered thereby, including the right to vote such shares and receive all
dividends and other distributions paid or made with respect thereto, except to
the extent otherwise provided by the Committee or in the Award Agreement.
(g) Lapse of Restrictions. Upon the expiration or
termination of the Restrictions and the satisfaction of any other conditions
prescribed by the Committee as provided for in the Plan and the Award
Agreement, the restrictions applicable to the shares of Common Stock granted
pursuant to an Award shall lapse and a stock certificate for the number of
shares of Common Stock with respect to which the restrictions have lapsed
shall be delivered, free of all such restrictions, except any that may be
imposed by law or pursuant to any shareholders agreement then in effect, to
the Awardee or the beneficiary or estate, as the case may be. The Company
shall not, however, be required to deliver any fractional share of Common
Stock but will pay, in lieu thereof, the fair market value (determined as of
the date the restrictions lapse) of such fractional share to the Awardee or
the Awardee's beneficiary or estate, as the case may be. The Award may
provide for the lapse of restrictions on transfer and forfeiture conditions in
installments.
(h) Section 83(b) Elections. An Awardee who files an
election with the Internal Revenue Service to include the fair market value of
any shares of Common Stock granted pursuant to an Award in gross income while
they are still subject to restrictions shall promptly furnish the Company with
a copy of such election together with the amount of any federal, state, local
or other taxes required to be withheld to enable the Company to claim an
income tax deduction with respect to such election.
(i) Forfeiture for Breach of Duty to Company. Upon a
finding by the Committee, after full consideration of the facts presented on
behalf of both the Company and the Awardee, that the Awardee has breached his
or her employment or service contract with the Company or an Affiliate, or has
been engaged in disloyalty to the Company or an Affiliate, including, without
limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment or service, or has disclosed
trade secrets or confidential information of the Company or an Affiliate,
Awardee shall automatically forfeit all shares of Common Stock granted
pursuant to an Award for which (1) the Company has not yet delivered the share
certificates to the Awardee or (ii) any restrictions applicable to such shares
have not lapsed. Notwithstanding anything herein to the contrary, the Company
may withhold delivery of certificates for shares of Common Stock granted
pursuant to an Award pending the resolution of any inquiry that could lead to
a finding resulting in a forfeiture.
(j) Amendment. Subject to the provisions of the Plan, the
Committee shall have the right to amend Awards issued to an Awardee, subject
to the Awardee's consent if such amendment is not favorable to the Awardee,
except that the consent of the Awardee shall not be required for any amendment
made pursuant to Section 10 of the Plan.
(k) Change of Control. In the event of a Change of
Control (as defined in Section 6(f) above), the Committee may take whatever
action with respect to Awards that have been granted under the Plan that it
deems necessary or desirable. In addition to the foregoing, in the event of a
Change of Control, the restrictions applicable to shares of Common Stock
issued pursuant to Awards under the Plan shall lapse."