STOCK REDEMPTION AGREEMENT
THIS IS AN AGREEMENT by and between ROBERT I. TOLL, of
Solebury, Bucks County, Pennsylvania (hereinafter sometimes
referred to as the "Shareholder"), and TOLL BROTHERS, INC., a
Delaware corporation (the "Company").
BACKGROUND OF AGREEMENT
A. Shareholder is currently the owner of more than Six
Million (6,000,000) shares of the Common Stock, par value $.01
per share (the "Stock"), of the Company.
B. The Company and the Shareholder have entered into this
Agreement to provide for certain purchase rights by the Company
with respect to the Stock owned by the Shareholder at the time of
his death in the manner and to the extent set forth herein.
C. The parties to this Agreement have taken into
consideration the existence of the Cross Purchase Agreement (as
hereinafter defined) now in existence to which the Shareholder is
a party.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, and in consideration of the mutual covenants herein
contained, agree as follows:
1. DEATH OF THE SHAREHOLDER
1.1 Mandatory Sale and Purchase of Stock
Upon the death of the Shareholder at any time when
he owns any shares of the Stock of the Company, the deceased
Shareholder, through his personal representatives, shall be
required to sell that number of shares of Stock which he owns at
the time of his death which equals (herein, the "Required
Purchase Amount") the lesser of (i) Ten Million Dollars
($10,000,000) divided by the Market Value Per Share (as
hereinafter defined) or (ii) that number of shares of Stock which
he owns at the time of his death which are remaining after the
required sale and purchase of Stock pursuant to that certain
cross purchase agreement by and between the Shareholder and Bruce
E. Toll (the "Other Shareholder"), as such agreement may exist
from time to time (the "Cross Purchase Agreement"), and the
Company shall be required to purchase the Required Purchase
Amount of shares of Stock.
1.2 Optional Purchase of Stock
by Company
Upon the death of the Shareholder at any time when
he owns any shares of the Stock of the Company, the Company shall
have the option, exercisable at any time on or before one hundred
(100) days after the death of the Shareholder, to purchase from
the personal representatives of the Shareholder all or any part
of that number of shares of Stock equal to the lesser of (A) the
number of shares of Stock which the deceased Shareholder owns at
the time of his death after deducting (i) the required purchase
by the Other Shareholder pursuant to the Cross Purchase Agreement
and (ii) the number of shares purchased by the Company pursuant
to Section 1.1 hereof and (B) that number of shares of Stock
equal to Thirty Million Dollars ($30,000,000) divided by the
Market Price Per Share. The Company's option under this Section
1.2 must be exercised by written notice to the personal
representatives of the deceased Shareholder or, if none has been
appointed at the time of such written notice, to the widow and
surviving issue of the Shareholder and to the Related Transferees
(as hereinafter defined), if any, at any time on or before 5:00
P.M., local time, on the one hundredth (100th) day after the date
of death of the Shareholder. If the Company does not give such
written notice within said time period, it shall be deemed to
have waived its purchase option.
1.3 Purchase Price
The purchase price for each of the shares of Stock
which must be purchased by the Company under Section 1.1 hereof
or which the Company elects to purchase under Section 1.2 hereof
shall be the Market Value Per Share.
1.4 Shares Treated as Owned
(a) For purposes of this Agreement, shares of
Stock which, as of the date of death of the Shareholder, are
subject to stock options or rights in favor of the Shareholder
which are exercisable by the estate or personal representatives
of the Shareholder and which have an exercise price less than the
Market Price Per Share shall be treated for purposes of this
Agreement as owned by the Shareholder on the date of his death;
and if necessary to permit the Company to exercise its rights
under this Agreement, the personal representatives of the
deceased Shareholder shall exercise such stock options or rights.
(b) For purposes of this Agreement, shares of
Stock which the Shareholder has transferred or conveyed within
one year of his death, by gift or otherwise, to any trust in
which the Shareholder is a beneficiary (whether direct or
contingent) or to or in trust for the benefit of the spouse or
lineal descendants of the Shareholder or spouses of such lineal
descendants (collectively, such transfers are referred to
collectively as "Family Transfers" and such transferees are
referred to collectively as the "Related Transferees") shall be
treated for purposes of this Agreement as owned by the
Shareholder and the Shareholder shall not make any Family
Transfers without first providing, in form and substance
satisfactory to the Company, that such shares of Stock will, if
the Shareholder dies within one year of the date of any Family
Transfer, be subject to this Agreement and the Company's rights
under Section 1 hereof.
1.5 Shares of Stock Not Covered
Except as provided in Section 1.4,
no shares of Stock which have been transferred or otherwise
disposed of by the Shareholder prior to the date of his death
(for fair value or otherwise) shall be subject to Section 1 of
this Agreement.
2. DEFINITION OF MARKET VALUE PER SHARE
For purposes hereof, the term "Market Value Per Share"
shall mean for a share of Stock the greater of (i) the average of
the Stock's last reported daily sales price regular way or, in
the case no such reported sales take place on any day, the
average of the last reported bid and asked prices regular way,
for the thirty (30) consecutive business days on which shares of
Stock are or could have been traded beginning with the sixtieth
(60th) business day before the date of death of the Shareholder
(adjusted for any splits, dividends, combinations or
reclassifications which take effect during such period) and (ii)
the book value per share of Stock as determined as of the fiscal
quarter of the Company ending immediately prior to the date of
death of the deceased Shareholder based upon the balance sheet of
the Company which is included in the Form 10-Q or any successor
form filed with the Securities and Exchange Commission (adjusted
for any splits, dividends, combinations or reclassifications
which take effect after such date and prior to the Closing).
3. CLOSING
3.1 The closing (the "Closing") at which the Company
shall purchase shares of Stock under Section 1.1 from the
personal representatives of the deceased Shareholder shall occur
on the earlier of (i) the ninetieth (90th) day after the death of
the Shareholder or (ii) ten business (10) days after the receipt
by the Company of the insurance proceeds from the insurance
policies on the life of the Shareholder described in Section 5,
below.
3.2 The Closing at which the Company shall purchase
shares of Stock under Section 1.2 from the personal
representatives of the deceased Shareholder shall occur on the
one hundred twentieth (120th) day after the death of the
Shareholder.
3.3 Each Closing shall occur at 2:00 P.M. local time
at the executive offices of the Company.
3.4 At each Closing, the personal representatives of
the deceased Shareholder shall deliver to the Company
certificates representing the shares of Stock being sold,
properly endorsed for transfer with necessary transfer tax stamps
affixed and, if requested, with all necessary evidence of the
authority of such personal representatives. The shares of Stock
being sold and purchased pursuant to Section 1 shall be
transferred free and clear of all liens, encumbrances and
restrictions whatsoever.
4. TERMS OF PAYMENT OF PURCHASE PRICE
The purchase price shall be paid by certified or bank
cashier's check.
5. LIFE INSURANCE
The Company agrees that it shall maintain and keep in
full force and effect during the term of this Agreement, and pay
all premiums on, one or more policies insuring the life of the
Shareholder in the face amount of no less than Ten Million
Dollars ($10,000,000). The Company shall be the owner of and the
beneficiary under each such policy on the life of the Insured
Shareholder.
6. TERMINATION
This Agreement shall terminate upon the earlier to
occur of any of the following:
6.1 The death of the Shareholder and the occurrence of
the Closing under Section 3 hereof;
6.2 The mutual agreement in writing of the Company and
the Shareholder; or
6.3 October 28, 2005.
7. MISCELLANEOUS PROVISIONS
7.1 Supplemental Documents
The parties hereto agree to execute any further
instruments and shall perform any acts which are or may become
necessary to effectuate the terms of this Agreement.
7.2 Coverage
This Agreement shall be legally binding upon and
inure to the benefit of the parties and their respective heirs,
personal representatives and assigns. For purposes of this
Agreement, the term "personal representatives" shall include the
heirs of the Shareholder and the personal representatives, heirs
and assigns of any such heirs.
7.3 Entire Agreement
This Agreement sets forth all of the promises.
covenants, agreements, conditions and understandings between the
parties hereto, with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions pertaining thereto,
express or implied, oral or written, except as contained herein.
7.4 Waiver
No waiver by any party hereto of any condition, or
the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances,
shall be deemed or construed as a further or continuing waiver of
any such condition or breach or waiver of any other condition.
7.5 Applicable Law
This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
7.6 Arbitration
In the event of any dispute whatsoever arising as
to the interpretation of any provision of this Agreement or
arising as to the rights, duties or obligations of any of the
parties hereto in connection with any provision of this
Agreement, such dispute shall be settled by arbitration under the
rules and regulations of the American Arbitration Association in
Philadelphia, Pennsylvania.
7.7 Number of Days
In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of
any time period falls on a Saturday, Sunday or holiday, then the
final day shall be deemed to be the next day which is not a
Saturday, Sunday or holiday. For purposes hereof, the term
"business day" shall mean any day on which the New York Stock
Exchange is open for regular trading.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this ____ day of December, 1995, intending it to be
effective as of the date hereof.
_____________________________
Robert I. Toll
TOLL BROTHERS, INC.
By:__________________________