AGREEMENT
AGREEMENT made March 5, 1998, by and between TOLL
BROTHERS, INC., a Delaware corporation (the
"Company") and BRUCE E. TOLL ("Bruce"),
W I T N E S S E T H:
Bruce is a member of the Board of Directors, and
is the President, Chief Operating Officer and
Secretary, of the Company. Bruce has expressed an
intention to resign as an officer and employee of the
Company to pursue other business interests. In order
to provide for an orderly transition, the Company and
Bruce have agreed that Bruce's resignation as
President, Secretary and an employee of the Company
will not occur until the end of the Company's fiscal
year ending October 31, 1998 (the "Year End").
NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants and agreements herein
contained, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Board of Directors. Bruce shall remain a
member of the Board of Directors (the "Board")
through the end of his term in 1999. It is the
current intention of the Board to renominate Bruce in
1999 for an additional term of three years on the
Board, and it is Bruce's intention to accept such
nomination, although neither the Company (including
the Board) nor Bruce is obligated in this regard.
Effective November 1, 1998 Bruce will become a Vice
Chairman of the Board of the Company, with such
duties as are determined from time to time by the
Board or the Chairman of the Board, and continue to
hold that position if elected to the aforementioned
three year term on the Board.
2. Employment. Bruce will continue as an
employee of the Company, and will continue to serve
the Company as President and Secretary, through Year
End, at which time, by operation of this Agreement,
he will have resigned, ceased to be an employee and
ceased to hold such offices and any other offices of
the Company and its subsidiaries. By operation of
this Agreement, Bruce will cease to be Chief
Operating Officer of the Company effective April 30,
1998. Bruce may continue to use his current office
space for up to one year from the date of this
Agreement, and the Company will continue to provide
him with secretarial services for such period of time
as he uses such space.
3. Compensation. Bruce's salary will continue
at its present rate through Year End. Bruce shall
receive no separate compensation as Vice Chairman,
nor shall he receive an annual or per meeting stipend
or stock options as a Director; however, he will
receive compensation pursuant to the Consulting and
Non-Competition Agreement referred to in Section 5,
herein.
4. Options and Bonus Compensation Payments.
(a) Outstanding Options. The expiration
provisions of each option to acquire stock of the
Company granted to Bruce under the terms of any of
the Company's stock option or stock incentive plans
(an "Option") held by Bruce on the date of this
Agreement are being modified to provide that the
Option shall be exercisable pursuant to the terms of
the plan under which the Option was granted and the
provisions regarding exercisability set forth in any
document applicable to a particular Option as though,
at all times subsequent to the grant of the Option
and until the earlier of Bruce's death or the
exercise of the Option by Bruce, he were continuously
employed by the Company in the same capacity in which
he was employed immediately prior to the date hereof
for the remainder of the maximum term specified in
the respective Option documents. In addition, the
Option to acquire 50,000 shares of common stock
granted on November 1, 1997 under the terms of the
Company's Stock Option and Incentive Stock Plan
(1995) (the "1995 Plan"), is being amended so that
such Option is fully vested and exercisable as of the
date hereof. Schedule A hereto contains a list of
all unexercised Options held by Bruce prior to the
date of this Agreement.
(b) Grants of Options Subsequent to the
Date of this Agreement. Bruce shall not be entitled
to, and hereby waives any rights to, the grant of any
Options at any time after the date of this Agreement,
including (i) any Options under the Company's Stock
Incentive Plan (1998)(the "1998 Plan") and any other
stock option, stock option incentive or bonus plan
whether currently in effect or subsequently adopted
and (ii) any options to which he would be entitled
solely for serving on the Board, but excepting any
Options as specifically provided for in this
Paragraph 4.
The following Options are being granted to Bruce:
(i) An Option to acquire 45,000 shares
of common stock is being granted as of the date
hereof. The Option granted pursuant to the preceding
sentence is on substantially the same terms as the
Option that would have been granted to Bruce as an
Executive Officer (as defined in the 1995 Plan) on or
about the date that is 60 days following the Year End
pursuant to the provisions of Section 8(a)(ii) of the
1995 Plan, except (1) the exercise price per share
shall be equal to the Fair Market Value (as that term
is defined in the 1995 Plan) of a share of Company
stock as of the date of grant, (2) the number of
shares subject to the Option shall be as set forth
herein, (3) the expiration date of the Option shall
be ten years from the date the Option is granted, and
(4) the provisions of the Option relating to an
accelerated termination of the Option upon
termination of employment shall not cause the Option
to terminate solely on account of a change in, or
termination of, Bruce's role as employee or member of
the Company's Board.
(ii) An Option to acquire 47,500 shares
of Company stock is being granted as of the date
hereof. The Option granted pursuant to the preceding
sentence is on substantially the same terms as the
Option that would have been granted to Bruce as an
Executive Officer (as defined in the 1995 Plan) with
respect to the two year period which commenced on
March 1, 1997 and will end on February 28, 1999
pursuant to the provisions of Section 8(a)(iv) of the
1995 Plan, except (1) the exercise price per share
shall be equal to the closing price of the stock on
the New York Stock Exchange on the date of this
Agreement, (2) the number of shares subject to the
Option shall be as set forth herein, (3) the
expiration date of the Option shall be ten years from
the date the Option is granted, and (4) the
provisions of the Option relating to an accelerated
termination of the Option upon termination of
employment shall not cause the Option to terminate
solely on account of a change in, or termination of,
Bruce's role as employee or member of the Company's
Board.
(c) Benefits Under the Cash Bonus Plan.
Bruce shall receive a bonus benefit
under the Company's Cash Bonus Plan (the "Cash Bonus
Plan"), payable in cash rather than stock, which
benefit shall be equal to 50% of the benefit that
would be (i) payable under the Cash Bonus Plan with
respect to the Company's fiscal year ending October
31, 1998 based on an estimate of the Company's Income
Before Taxes (as that term is defined in the Cash
Bonus Plan) for such fiscal year (the "Estimated Full
Year Income") and (ii) converted to a cash amount as
determined below. The Estimated Full Year Income,
for purposes of this paragraph (c), shall be the
estimate of the Company's Income Before Taxes as
presented at the Board meeting of December 17, 1997
or such estimate as is presented at the Board meeting
scheduled to occur on March 5, 1998, whichever
estimate is higher.
The benefit payable to Bruce pursuant
to this paragraph (c) shall be paid to Bruce on or
before April 30, 1998, in cash, in an amount equal to
the aggregate value (based on the closing price of
the common stock on the last trading day prior to the
date of this Agreement) of a number of shares of
common stock determined by dividing the dollar amount
of the benefit (as determined pursuant to the last
preceding paragraph) by the Fair Market Value of a
share of common stock determined as of May 29, 1996.
Other than as provided in this
paragraph (c), Bruce shall not be entitled to any
benefits under the Company's Cash Bonus Plan
subsequent to the date hereof.
(d) Amendments to Plans. Appropriate
amendments to Options held by Bruce, stock option
plans and bonus compensation plans of the Company
(including, but not limited to, the Company's Stock
Option Plan (1986), the 1995 Plan, the 1998 Plan and
the Cash Bonus Plan) have been made, consistent with
the provisions contained in this Agreement.
(e) Adherence to Certain Conditions of Rule
16b-3. The Company agrees that the provisions of
this paragraph 4 (including all acquisitions and
dispositions of Company securities provided for
herein) have been specifically approved in a manner
that satisfies the requirements of Rule 16b-3(d)(1)
and Rule 16b-3(e) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
5. Consulting and Non-Competition Agreement.
Contemporaneous with the signing of this Agreement,
Bruce and the Company have executed and delivered to
each other a Consulting and Non-competition Agreement
relating to the 36 month period following Year End.
6. Registration Rights Agreement.
6.1 "Piggyback" Registration Rights.
(a) If the Company proposes to register an
offering consisting only of its Common Stock (or if
the Company proposes to register an offering pursuant
to which Common Stock only will be offered under a
separate prospectus) on Forms S-1, S-2 or S-3, or any
successor forms, under the Securities Act of 1933
(the "Act"), other than an offering on Form S-3 made
pursuant to Rule 415(a)(1)(x) under the Act covering
only securities to be sold by the Company or a
subsidiary (as defined in Rule 405 under the Act),
the Company shall give prompt written notice to Bruce
(defined, for the purpose of this Section 6 as
including Bruce's Affiliates, as defined in Section
6.8). Upon the written request of Bruce made within
5 days after the receipt of any such notice, which
written request shall specify the number of shares he
desires to be registered, the Company shall use its
best reasonable commercial efforts to cause all such
shares to be registered under the Act to permit the
sale of such shares, provided that the Company may
require that such shares be sold in accordance with
the plan of distribution of the majority of the
Common Stock to be registered by such registration
statement if such plan of distribution involves an
underwritten offering. Notwithstanding anything
contained herein to the contrary, and subject to
Section 6.4(a), herein, (i) the Company shall have
the right to decline to register any shares under
this Section 6.1 in the event its Board or the
managing underwriter of the offering determines in
its reasonable judgment (and communicates in writing
to Bruce such determination) that registration
hereunder is reasonably likely to materially and
adversely affect the offer and sale of Company shares
(provided that this right may be exercised if and
only if, as a result of the exercise of the right,
only the sale of shares by the Company will be
covered by the registration statement) (ii) if the
managing underwriter advises the Company in a writing
(which the Company will provide to Bruce) that
inclusion in such registration of all proposed
securities (including securities being offered by or
on behalf of the Company and Bruce and securities
covered by other requests for registration) would in
its reasonable opinion materially and adversely
affect the marketability of the offering of the
securities proposed to be registered by the Company,
then Bruce shall be entitled to participate pro rata
(based on the number of shares owned by the
respective holders) with any other shareholders
having piggyback registration rights with respect to
such registration to the extent the managing
underwriter determines, in its reasonable judgment,
that such shares may be included without such
material and adverse effect, and (iii) the Company
shall have the right to discontinue any registration
of Bruce's shares at any time prior to the effective
date of such registration if the proposed
registration of Common Stock giving rise to the
Company's notice under this Subsection 6.1(a) is
discontinued.
(b) Bruce's right to have his shares
included in such registration shall expire 90 days
after he ceases to be an affiliate (within the
meaning of Rule 405 under the Act) of the Company in
the opinion of counsel to the Company (a copy of
which the Company shall provide to Bruce promptly
after receipt by the Company), and shall immediately
be reinstated at such time, if ever, as he later
becomes an affiliate of the Company. Moreover, Bruce
shall be entitled to rely on this paragraph 6.1 on no
more than two occasions, each of which shall involve
at least 500,000 shares.
6.2 Demand Registration Rights: Subject to
Section 6.4(a) herein, at any time upon receipt of a
written request from Bruce, the Company will, with
reasonable promptness but in no event more than 20
business days following receipt of the request,
prepare and file with the Securities and Exchange
Commission under the Act a registration statement in
respect of no fewer than 500,000 shares and use its
best reasonable commercial efforts to cause such
registration statement to become effective promptly
thereafter, provided that the Company shall be
required to prepare and file under the Act no more
than three registration statements pursuant to this
Section 6.2. Without Bruce's consent, no securities
other than the shares subject to Bruce's request
pursuant to this Section 6.2 may be included in the
registration statement. Bruce's rights under this
Section 6.2 shall expire 90 days after he ceases to
be an affiliate (within the meaning of Rule 405 under
the Act) of the Company in the opinion of counsel to
the Company (a copy of which the Company shall
provide to Bruce promptly after receipt by the
Company), and shall immediately be reinstated at such
time, if ever, as he later becomes an affiliate of
the Company.
6.3 Expenses. The Company shall pay all
expenses incident to its performance of or compliance
with the provisions of Sections 6.1 hereof,
including, without limitation, all registration and
filing fees, fees and expenses of compliance with the
Act, printing expenses, messenger and delivery
expenses, "road show" expenses, fees and
disbursements of counsel for the Company (but not
Bruce's legal fees, which shall be paid by Bruce) and
all independent public accountants and other persons
retained by the Company, and any fees and
disbursements of underwriters customarily paid by
issuers or sellers of securities (excluding
underwriting commissions and discounts in respect of
shares sold by Bruce, which shall be paid by Bruce).
The Company shall pay none, and Bruce shall pay all,
of the aforementioned expenses (including, but not
limited to, his legal fees, the cost of a "comfort
letter" as provided in Section 6.4(h) herein, and any
incremental costs to the Company of maintaining
effectiveness of the registration) in the event of
registration under Section 6.2, unless Bruce agrees,
at the request of the Company, to sell his shares in
an underwritten offering, in which case the first
sentence of this Section 6.3 shall be applicable.
6.4 Obligations of Company.
(a) Notwithstanding anything to the
contrary in this Section 6, at any time prior to the
filing of the registration statement, the Company may
postpone its obligations pursuant to this Section 6
for a period not to exceed 90 days if, in the Board's
sole reasonable judgment, communicated to Bruce in
writing, performance of its obligations is reasonably
likely to materially interfere with any business
plans of the Company, including but not limited to
any financings, acquisitions or other transactions,
or any periods in which officers of the Company are
requested or required by the Company (if Bruce is
then an officer or director), in the best interests
of the Company, not to trade in Company securities.
The right of the Company to postpone the offering may
be exercised only once in any 270 day period.
(b) Whenever the Company is required to use
its best reasonable commercial efforts to effect or
cause the registration of any shares under the Act as
provided in Section 6.2, the Company shall as
expeditiously as possible prepare and file with the
SEC such amendments and supplements to such
registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective and such prospectus
current for a period not in excess of 18 months (or
24 months with respect to sales of the type referred
to in Section 8(b) hereunder), plus any period in
which Bruce has discontinued the sale of his shares
pursuant to Section 6.4(d), as may be necessary in
accordance with the intended methods of disposition
by Bruce;
(c) The Company will furnish to Bruce such
number of copies of such registration statement and
each such amendment and supplement thereto (in each
case including all exhibits), such number of copies
of the prospectus included in such registration
statement (including each preliminary prospectus) and
each supplement thereto, in conformity with the
requirements of the Act, and such other documents as
Bruce may reasonably request in order to facilitate
the disposition of the shares owned by him and
covered by such registration statement;
(d) The Company will notify Bruce, at any
time when a prospectus relating to a registration of
the sale of Bruce's shares is required to be
delivered under the Act, of the happening of any
event as a result of which the prospectus included in
such registration statement, as then in effect,
includes an untrue statement of a material fact or
omits to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading, and in such event (i) Bruce
will discontinue any sale of shares until he has been
advised that the prospectus has been amended,
supplemented or otherwise no longer contains an
untrue statement of a material fact or omits to state
any material fact required to be stated therein or
necessary to make the statements therein not
misleading, (ii) the Company shall use its best
reasonable commercial efforts to promptly amend and
supplement the prospectus, file such amendment or
supplement with the Securities and Exchange
Commission and (iii) the Company promptly will
prepare and furnish to Bruce, at his request, a
reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state
a material fact required to be stated therein or
necessary to make the statements therein not
misleading.
(e) Prior to any registered offering of
Bruce's shares, in the event the sale of the shares
is not exempt from the registration provisions of any
state securities or "blue sky" law, the Company shall
use its best reasonable commercial efforts to
register or qualify such shares for offer and sale
under the securities or blue sky laws of such
jurisdictions in which the sale is not so exempt as
Bruce or any underwriter reasonably requests.
(f) The Company shall cause all of Bruce's
shares included in a registration statement covered
by this Section 6 to be listed on each securities
exchange, interdealer quotation system or other
market on which similar securities issued by the
Company are then listed, unless such shares have
previously been so listed.
(g) In the event of any underwritten public
offering pursuant to Section 6.2, the Company shall
enter into and perform its obligations under an
underwriting agreement, usual and customary in form,
with the managing underwriter of such offering and
Bruce; the Company shall take such other actions
(including the inclusion of information in the
registration statement and participation in "road
show" activities similar in scope to those conducted
in an offering of securities by the Company) and
provide such information as the underwriters
reasonably request in order to expedite or facilitate
a disposition of Bruce's shares.
(h) Upon Bruce's request, the Company shall
furnish to Bruce a signed counterpart, addressed to
Bruce, of (i) an opinion of counsel for the Company,
dated the effective date of such registration
statement (or, if such registration includes an
underwritten public offering, dated the date of the
closing under the underwriting agreement), and (ii) a
"comfort" letter, dated the effective date of such
registration statement (and, if such registration
includes an underwritten public offering, dated the
date of the closing under the underwriting
agreement), signed by the independent public
accountants who have certified the Company's
financial statements included or incorporated by
reference in such registration statement, covering
substantially the same matters with respect to such
registration statement (and the prospectus included
therein) and, in the case of such accountants'
letter, with respect to events subsequent to the date
of such financial statements, as are customarily
covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in
underwritten public offerings of securities and, in
the case of the accountants' letter, such other
financial matters as may be covered in such a letter
pursuant to Statement on Auditing Standards No. 72 or
any amendment or supplement to such statement, as the
principal underwriter with respect to such
registration may reasonably request (or, if such
registration does not involve an underwritten
offering, as may reasonably be requested by Bruce).
6.5 Indemnification.
(a) The Company agrees to indemnify and
hold Bruce harmless, to the fullest extent permitted
by law, against all losses, claims, damages,
liabilities, costs (including, without limitation,
reasonable attorney's fees) and expenses caused by
any untrue or alleged untrue statement of a material
fact contained in any registration statement filed
pursuant to this Section 6 (a "Registration
Statement"), any related prospectus ("Prospectus") or
any preliminary prospectus or any amendment or
supplement thereto or any omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, except insofar as the same
are based upon any information furnished in writing
to the Company by Bruce, expressly for use therein,
and shall reimburse Bruce for any legal and any other
expenses reasonably incurred in connection with
investigating or defending any such claims, as such
expenses are incurred. Indemnity under this Section
4(a) shall remain in full force and effect regardless
of any investigation made by or on behalf of any
indemnified party.
(b) The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by
law, each underwriter, if any (including any broker
or dealer which may be deemed an underwriter) and
each person who controls any underwriter of Bruce's
Shares against all losses, claims, damages,
liabilities, costs (including, without limitation,
reasonable attorney's fees) and expenses caused by
any untrue or alleged untrue statement of a material
fact contained in any Registration Statement, any
Prospectus or any preliminary prospectus or any
amendment or supplement thereto or any omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, except insofar
as the same are based upon any information furnished
in writing to the Company by such underwriters,
expressly for use therein or insofar as such loss,
claim, damage, liability, expense or action arises
out of or is based upon any untrue statement or
omission in any preliminary prospectus which was
identified to such Underwriter in writing and was
corrected in the Prospectus and it shall have been
established that the Underwriter seeking
indemnification fails to deliver a copy of the
Prospectus to the person to whom liability has been
incurred at or prior to confirmation of the sales of
Bruce's shares to such person in any case where such
delivery is required by the Act and such delivery
would have cured the defect giving rise to the
liability hereunder, and shall reimburse each such
person for any legal and any other expenses
reasonably incurred in connection with investigating
or defending any such claims, as such expenses are
incurred. Indemnity under this Section 4(b) shall
remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified
party.
(c) In connection with any registration
pursuant to this Section 6, Bruce will furnish to the
Company in writing such information as the Company
reasonably requests concerning Bruce or the proposed
manner of distribution for use in connection with any
Registration Statement or Prospectus and Bruce agrees
to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and
officers and each person who controls the Company
(within the meaning of the Act) against any losses,
claims, damages, liabilities and expense resulting
from any untrue statement of a material fact or any
omission of a material fact required to be stated in
the Registration Statement or Prospectus or
preliminary prospectus or necessary to make the
statements therein not misleading, to the extent, but
only to the extent, that such untrue statement or
omission is contained in any information furnished in
writing by Bruce to the Company specifically for
inclusion in such Registration Statement or
Prospectus and that such information was
substantially relied upon by the Company in
preparation of the Registration Statement or
Prospectus or any amendment or supplement thereto.
In no event shall the liability of Bruce hereunder be
greater in amount than the dollar amount of the
proceeds (net of all expense paid by Bruce and the
amount of any damages Bruce has otherwise been
required to pay by reason of such untrue statement or
omission) received by Bruce upon the sale of shares
by Bruce giving rise to such indemnification
obligation.
(d) Any person entitled to indemnification
hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which
it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the
indemnified party; provided that any person entitled
to indemnification hereunder shall have the right to
employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of
such counsel shall be at the expense of such person
unless (a) the indemnifying party has agreed to pay
such fees or expenses, (b) the indemnifying party
shall have failed to assume the defense of such claim
and employ counsel reasonably satisfactory to such
person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a
conflict of interest may exist between such person
and the indemnifying party with respect to such
claims (in which case, if the person notifies the
indemnifying party in writing that such person elects
to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not
have the right to assume the defense of such claim on
behalf of such person); and provided, further, that
the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying
party of its obligations hereunder, except to the
extent that such failure to give notice shall
materially adversely affect the indemnifying party in
the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in
connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more
than one separate firm of attorneys (in addition to
local counsel) at any time for all such indemnified
parties. Nothing contained herein shall be deemed to
deny Bruce the right to be indemnified hereunder for
the fees and expenses of one separate firm of
attorneys (in addition to local counsel) in the event
the Company enters into other indemnification
arrangements with indemnified parties other than
Bruce. No indemnifying party will, except with the
consent of the indemnified party, consent to entry of
any judgment or enter into any settlement that does
not include as an unconditional term thereof the
giving by the claimant or plaintiff to such
indemnified party of a release from all liability in
respect to such claim or litigation.
(e) If for any reason the indemnification
provided for in the preceding clauses (a),(b) and (c)
is unavailable to an indemnified party or
insufficient to hold it harmless, other than as
expressly specified therein, then the indemnifying
party shall contribute to the amount paid or payable
by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No
person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty
of such fraudulent misrepresentation. In no event
shall the contribution obligation of Bruce be greater
in amount than the dollar amount of the proceeds (net
of all expenses paid by Bruce and the amount of any
damages Bruce has otherwise been required to pay by
reason of such untrue or alleged untrue statement or
omission or alleged omission) received by Bruce upon
the sale of Bruce's Shares giving rise to such
contribution obligation.
6.6 No Acknowledgment of Affiliation.
Nothing in this Agreement shall be deemed to be
an acknowledgment by the Company or Bruce that he is
an "affiliate" of the Company within the meaning of
Rule 405 under the Act.
6.7 Rule 144 Sales.
Subject to Section 8(a) hereunder, the Company
agrees that it shall fully cooperate with Bruce in
facilitating the sale of his shares pursuant to Rule
144 under the Act (including, as applicable, Rule
144(k)) and the prompt transfer of such shares
following such sale, including without limitation,
instructing the Company's transfer agent to remove
any legends on Bruce's share certificates (including
any legend referenced in Section 9(k)), and shall
instruct counsel to the Company to deliver such
opinion as is required by the transfer agent to
permit such transfer.
6.8 Bruce's Affiliates. Bruce's Affiliates
shall consist of his wife, lineal descendants, trusts
and other entities for the principal benefit of any
of the foregoing, heirs, executors or personal
representatives of his estate. Any notices required
in this Section 6 shall be sent to or from Bruce E.
Toll on behalf of any such persons and any
obligations of Bruce under this Section 6 shall be
obligations of Bruce E. Toll. Following Bruce's
death, Bruce's Affiliates shall have, collectively as
a group, acting by written consent of the holders of
a majority of the shares then held by Bruce's
Affiliates acquired by such Affiliates by sale, gift
or otherwise, directly or indirectly from Bruce,
Bruce's rights under this Section 6, and shall be
bound, jointly and severally, by Bruce's obligations
under this Section 6; except that the indemnification
and contribution obligations of Bruce's Affiliates
under this Section 6 shall be several and not joint.
7. Standstill Agreement.
For a period of time consisting of the
longer of (i) Bruce's tenure on the Board and the
five years immediately thereafter and (ii) in the
event of termination of Bruce's membership on the
Board by reason of his death or resignation, nine
years after the date of this Agreement, Bruce shall
not, directly or indirectly, without the prior
written consent of the Board: (a) in any manner
acquire, agree to acquire or make any proposal to
acquire, directly or indirectly, any equity
securities, or more than 5% of any class of
non-convertible debt securities outstanding at any
time, of the Company or any of its affiliates, (b)
propose to enter into, directly or indirectly, any
merger, consolidation, business combination, asset
purchase or other similar transaction involving the
Company or any of its affiliates, (c) make, or in any
way participate in any solicitation of proxies to
vote, execute any consent as a Company shareholder,
act to call a meeting of the Company stockholders,
make a proposal to be acted upon by the Company
stockholders or seek to advise or influence any
person with respect to the voting or not voting of
any securities of the Company, (d) form, join or in
any way participate in a partnership, syndicate,
joint venture or other "group" (as defined under
Section 13(d)(3) of the Exchange Act) with respect to
any voting securities of the Company or transfer his
voting rights with respect to any Company securities
(by voting trust or otherwise), except to the extent
required by this Agreement, (e) otherwise act, alone
or in concert with others, to seek to control or
influence the management or Board of the Company or
seek a position on the Board, other than pursuant to
this Agreement or consistent with the performance of
his duties as a director of the Company, (f) disclose
any intention, plan or arrangement inconsistent with
the foregoing, (g) induce or attempt to induce any
person who is then an employee, customer or supplier
of the Company to terminate a then existing
relationship with the Company, (h) employ or attempt
to employ any person who had been an employee of the
Company within the six months preceding the time in
question (with the exception of Bruce's secretary),
or (i) advise, assist or encourage any other persons
in connection with any of the foregoing. During the
period commencing the date hereof and expiring on the
date that Bruce no longer serves on the Board (or
March 15, 2002 in the event Bruce dies, resigns from
or does not seek election to the Board before
March 15, 2002), Bruce agrees that all shares of
Company stock beneficially owned or controlled
directly or indirectly by him will be voted as
recommended by the Company's management and that he
will execute any form of proxy or consent solicited
on behalf of the Company's management or its Board of
Directors and no other form of proxy or consent,
provided that this shall not apply to any proposal
that would have the effect of nullifying, restricting
or disparately reducing the per share voting rights
of the Shares held by Bruce. Notwithstanding
anything to the contrary in this Section 7, this
Section 7 shall no longer apply after the occurrence
of a Change of Control; for purposes hereof, a
"Change of Control" shall have occurred at such time
as (x) a transaction or related series of
transactions has been completed whereby more than 50%
of the Company's outstanding voting securities are
owned by a third party or an affiliated group (other
than Robert I. Toll, his wife and children and trusts
or other entities principally for their benefit), or
(y) a merger, consolidation or similar transaction
has occurred pursuant to which members of the
Company's management (including, for this purpose,
Bruce), their spouses and children, and trusts and
other entities principally for their benefit,
directly or indirectly, collectively and in the
aggregate, cease to own more voting stock of the
Company than any third party or affiliated group
(other than institutional investors listed in Rule
13d-1(b)(1) filing S.E.C. Schedule 13G with respect
to their ownership of voting stock of the Company).
Bruce shall take all steps necessary to ensure
that Bruce's Affiliates are bound by the provisions
of this Section 7 in the same manner as Bruce with
respect to any Company Common Stock acquired by such
Affiliates, by sale, gifts or otherwise, directly or
indirectly from Bruce after the date of this
Agreement.
8. Right of First Refusal on
Certain Stock Sales by Bruce.
Until such time, if any, that Bruce owns fewer
than 500,000 shares of the Company common stock,
Bruce shall, on each occasion that he desires to sell
any of his shares, first offer in writing such shares
to the Company for purchase. The Company shall have
two business days after receipt of such notice
("Response Period") within which to advise Bruce
whether it will purchase such shares, in which event
all such shares so offered shall be purchased by the
Company for cash at the closing market price of the
Company's common stock on the New York Stock Exchange
on the last business day immediately preceding the
date of receipt of the notice. Prior to such
purchase, the Company shall have obtained such
approval of Bruce's sale to the Company as is
necessary to satisfy the conditions of Rule 16b-3(e)
under the Exchange Act, if Bruce is then an officer
or director of the Company. Payment shall be made
upon delivery of the certificates representing such
shares, which delivery shall be no later than two
business days after the Company advised Bruce that it
will purchase such shares. In the event the Company
elects not to purchase such shares and Bruce fails to
sell such shares within fifteen business days after
the aforementioned two business day period (or, in
case Bruce offers the shares to the Company in
connection with his intention to sell his shares in
an underwritten public offering, within 15 business
days following the effectiveness of the registration
statement, except that shares subject to an
underwriter's overallotment option may be sold within
65 days following such effectiveness), Bruce may not
sell any shares of Company stock for three months
after such fifteen business day (or in the case of an
underwritten offering, such respective 15 business
day) period (the "No-Sale Term").
Notwithstanding anything to the contrary
hereinabove, Bruce shall not be required to offer to
the Company his shares, and shall not be prohibited
from selling shares during the No-Sale Term, in
connection with:
(a) transactions effected in accordance with
Rule 144 under the Act, or pursuant to an effective
registration statement under the Act provided,
however, that cumulative transactions pursuant to
this exception shall not exceed 300,000 shares in any
calendar quarter;
(b) sales made by a reputable bank or insurance
company or other similar institution pursuant to an
agreement with Bruce in which Bruce has placed any of
his shares as collateral or in pledge in connection
with a bona fide loan obligation (but which agreement
shall not relate to a derivative or forward sale
securities transaction), provided, however, that such
institution is otherwise entitled to sell such shares
in compliance with the Act, and
(c) a sale of shares which were intended to be
sold by Bruce under circumstances wherein (i) Bruce
has received a bona fide written offer from a third
party to purchase shares of Company common stock from
Bruce (a copy of which Bruce shall provide to the
Company with his initial notice), (ii) the Company
determines not to purchase such shares pursuant to
this Section 8, and (iii) such sale to the offeror is
not completed within fifteen business days promptly
after expiration of the Company's right to purchase
under this Section 8; provided that this subparagraph
(c) does not apply to any more than one such offer
during any three (3) month calendar period that does
not result in a sale by Bruce to the offeror of the
affected shares.
(d) Bruce shall take all steps necessary to
ensure that Bruce's Affiliates are bound by the
provisions of this Section 8 in the same manner as
Bruce with respect to any Company Common Stock
acquired by such Affiliates, by sale, gifts or
otherwise, directly or indirectly from Bruce after
the date of this Agreement.
9. Miscellaneous.
(a) Indulgences, Etc. Neither the failure
nor any delay on the part of either party to exercise
any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or
further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any
other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party
asserted to have granted such waiver.
(b) Controlling Law. This Agreement and
all questions relating to its validity,
interpretation, performance and enforcement
(including, without limitation, provisions concerning
limitations of actions), shall be governed by and
construed in accordance with the laws of the
Commonwealth of Pennsylvania, notwithstanding any
conflict-of-laws doctrines of such state or any other
jurisdiction to the contrary, and without the aid of any
canon, custom or rule of law requiring construction against
the draftsman.
(c) Notices. All notices, requests,
demands and other communications required or
permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and
received only (i) when personally delivered, or (ii)
on the day specified for delivery when deposited with
an overnight courier service such as Federal Express
for delivery to the intended addressee, or (iii) two
days following the day when deposited in the United
States mails, registered or certified mail, postage
prepaid, return receipt requested, addressed as set
forth below:
(i) If to the Company:
Toll Brothers, Inc.
3103 Philmont Avenue
Huntingdon Valley, PA 19006
Attention: Chairman of the Board
With a copy to:
Kenneth J. Gary, General Counsel
Toll Brothers, Inc.
3103 Philmont Avenue
Huntingdon Valley, PA 19006
(ii) If to Bruce:
Mr. Bruce E. Toll
1477 Rydal Road
Rydal, PA 19046
With a copy to:
Michael Banks, Esquire
Morgan Lewis and Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
In addition, notice by mail shall be by
air mail if posted outside of the continental United
States.
Either party may alter the address to
which communications or copies are to be sent by
giving notice of such change of address in conformity
with the provisions of this paragraph for the giving
of notice.
(d) Binding Nature of Agreement; No
Assignment. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
heirs, personal representatives, successors and
assigns, except that neither party may assign or
transfer its rights or obligations under this
Agreement without the prior written consent of the
other party hereto; provided, however, that the
Company may, without the consent of Bruce, assign its
rights and obligations under this Agreement to any
person in conjunction with an acquisition or a merger
with the Company or the acquisition of a majority of
the Company's business.
(e) Execution in Counterparts. This
Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original as against any party whose signature appears
thereon, and all of which shall together constitute
one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof,
individually or taken together, shall bear the
signatures of both of the parties reflected hereon as
the signatories.
(f) Provisions Separable. The provisions
of this Agreement are independent of and separable
from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the
fact that for any reason any other or others of them
may be invalid or unenforceable in whole or in part.
(g) Paragraph Headings. The paragraph
headings in this Agreement are for convenience only;
they form no part of this Agreement and shall not
affect its interpretation.
(h) Words Words used herein, regardless
of the number and gender specifically used, shall be
deemed and construed to include any other number,
singular or plural, and any other gender, masculine,
feminine or neuter, as the context indicates is
appropriate.
(i) Number of Days. Except as otherwise
specifically provided in this Agreement, 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 on which Federal banks are or may
elect to be closed, then the final day shall be
deemed to be the next day which is not a Saturday,
Sunday or such holiday.
(j) Information. So long as Bruce remains
President or a Vice Chairman of the Company, he will
be entitled to receive Company information of the
following type: Weekly Deposit and Traffic Analyses,
Sunday Night Sales Reports, Weekly Cash Analyses and
Price List Changes. Moreover, as long as he elects
to receive such information pursuant to this
Agreement, Bruce shall preclear any sales of the
Company's (or any affiliate's) securities in the same
manner as an employee is required under the Company's
policies and procedures relating to trading of
securities.
(k) Legended Certificates. Bruce agrees that
all of the certificates for shares of common stock of
the Company currently owned by him, his wife and
children and trusts or other entities for the benefit
of any such persons shall be submitted to the Company
for the placement of a legend thereon which states as
follows: "The shares represented by this certificate
are subject to the terms of an Agreement dated March
5, 1998 between the Company and Bruce E. Toll."
(l) Effective Date. This Agreement shall not
become effective unless and until it is approved by
the Board and unless and until the Board has approved
all amendments to Options under the 1995 Plan and to
the Cash Bonus Plan required by this Agreement in a
manner that satisfies the conditions of Rules
16b-3(d)(1) and 16b-3(e) promulgated under the
Exchange Act.
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement in Philadelphia,
Pennsylvania on the date first above written.
TOLL BROTHERS, INC.
By:___________________________
Bruce E. Toll
SCHEDULE A
[OUTSTANDING OPTIONS]