EXHIBIT A
TOLL BROTHERS, INC.
CASH BONUS PLAN
1. PURPOSE
The purpose of the Plan is to provide, subject to
shareholder approval and approval by the Committee (as defined
below), performance-based cash bonus compensation for Robert I.
Toll and Bruce E. Toll in accordance with a formula that is based
on the financial success of Toll Brothers, Inc., a Delaware
corporation (the "Company") as part of an integrated compensation
program which is intended to assist the Company in motivating and
retaining employees of superior ability, industry and loyalty.
2. DEFINITIONS
The following words and phrases as used herein shall
have the following meanings, unless a different meaning is
plainly required by the context:
"Board of Directors" shall mean the Board of Directors
of the Company.
"Committee" shall mean the committee appointed by the
Board of Directors consisting of two or more Outside Directors to
act as the Committee with respect to the Plan.
"Company" shall mean Toll Brothers, Inc., a Delaware
Corporation, and any successor thereto.
"Outside Director" shall mean a member of the Board of
Directors who (i) is not a current employee of the Company or any
affiliate, (ii) is not a former employee of the Company or any
affiliate who is receiving compensation for services (other than
benefits under a tax-qualified retirement plan), (iii) was not an
officer of the Company or any affiliate at any time, and (iv) is
not currently receiving compensation for services from the
Company or any affiliate in any capacity other than as a member
of the Board of Directors.
"Participant" shall mean those persons eligible to
participate in the Plan in accordance with Section 3.
"Plan" shall mean the Toll Brothers, Inc. Cash Bonus
Plan.
3. PARTICIPATION
Robert I. Toll and Bruce E. Toll are the participants
in the Plan.
4. Term of Plan
Subject to approval of the Plan by the Committee and
the shareholders of the Company, the Plan shall be in effect as
of November 1, 1993 and shall continue until terminated by the
Board of Directors.
5. Bonus Entitlement
Each Participant shall be entitled to receive a bonus
in accordance with the provisions of Section 6 of the Plan only
after certification by the Committee that the performance goals
set forth in Section 6 have been satisfied. The bonus payment
under the Plan shall be paid to each Participant during the last
week of December or the first week of January after the close of
the fiscal year with respect to which the bonus is to be paid.
No bonus shall be payable under the Plan without the prior
disclosure of the terms of the Plan to the shareholders of the
Company and the approval of the Plan by such shareholders.
6. Amount of Performance-Based Compensation Bonus
(a) Each Participant in the Plan is entitled to a bonus
which is equal to the sum of the following amounts:
(i) 1.5% of all Income Before Income Taxes in
excess of 10% and up to 20% of Shareholders Equity of the Company
as of the end of the last fiscal year of the Company;
(ii) 2% of all Income Before Income Taxes in
excess of 20% and up to 30% of Shareholders Equity of the Company
as of the end of the last fiscal year of the Company; and
(iii) 2.25% of all Income Before Income Taxes in
excess of 30% of Shareholders Equity of the Company as of the end
of the last fiscal year of the Company.
(b) For purposes of Section 6(a) above, the term
"Income Before Income Taxes" shall mean that amount which, except
for the recognition of bonuses to Participants under the Plan
would be reported in conformity with generally accepted
accounting principles in the Company's audited consolidated
financial statements for the fiscal year of the Company, and the
term "Shareholders' Equity" shall mean the amount reported in
conformity with generally accepted accounting principles in the
Company's audited consolidated financial statements as of the
appropriate date.
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7. COMMITTEE
(a) Powers. The Committee shall have the power
and duty to do all things necessary or convenient to effect the
intent and purposes of the Plan and not inconsistent with any of
the provisions hereof, whether or not such powers and duties are
specifically set forth herein, and, by way of amplification and
not limitation of the foregoing, the Committee shall have the
power to:
(i) provide rules and regulations for the
management, operation and administration of the Plan, and, from
time to time, to amend or supplement such rules and regulations;
(ii) construe the Plan, which construction,
as long as made in good faith, shall be final and conclusive upon
all parties hereto; and
(iii) correct any defect, supply any omission,
or reconcile any inconsistency in the Plan in such manner and to
such extent as it shall deem expedient to carry the same into
effect, and it shall be the sole and final judge of when such
action shall be appropriate.
The resolution of any questions with respect to
payments and entitlements pursuant to the provisions of the Plan
shall be determined by the Committee, and all such determinations
shall be final and conclusive.
(b) Indemnity. No member of the Committee shall
be directly or indirectly responsible or under any liability by
reason of any action or default by him as a member of the
Committee, or the exercise of or failure to exercise any power or
discretion as such member. No member of the Committee shall be
liable in any way for the acts or defaults of any other member of
the Committee, or any of its advisors, agents or representatives.
The Company shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising
out of his own membership on the Committee.
(c) Compensation and Expenses. Members of the
Committee shall receive no separate compensation for services
other than compensation for their services as members of the
Board of Directors, which compensation can include compensation
for services at any committee meeting attended in their capacity
as members of the Board of Directors. Members of the Committee
shall be entitled to receive their reasonable expenses incurred
in administering the Plan. Any such expenses, as well as
extraordinary expenses authorized by the Company, shall be paid
by the Company.
(d) Participant Information. The Company shall
furnish to the Committee in writing all information the Company
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deems appropriate for the Committee to exercise its powers and
duties in administration of the Plan. Such information shall be
conclusive for all purposes of the Plan and the Committee shall
be entitled to rely thereon without any investigation thereof;
provided, however, that the Committee may correct any errors
discovered in any such information.
(e) Inspection of Documents. The Committee shall
make available to each Participant and his Designated
Beneficiary, for examination at the principal office of the
Company (or at such other location as may be determined by the
Committee), a copy of the Plan and such of its records, or copies
thereof, as may pertain to any benefits of such Participant and
beneficiary under the Plan.
8. EFFECTIVE DATE, TERMINATION AND AMENDMENT
(a) Effective Date of Participation in Plan.
Subject to shareholder and Committee approval of the Plan,
participation in this Plan shall be effective as of November 1,
1993 and shall continue thereafter until the Plan is terminated.
(b) Amendment and Termination of the Plan. The
Plan may be terminated or revoked by the Company at any time and
amended by the Company from time to time, provided that neither
the termination, revocation or amendment of the Plan may, without
the written approval of the Participant, reduce the amount of a
bonus payment that is due, but has not yet been paid, and
provided further that no changes that would increase the amount
of bonuses determined under the formula contained in Section 6(a)
of the Plan shall be effective without approval by the Committee
and without disclosure to and approval by the shareholders of the
Company in a separate vote prior to payment of such bonuses. In
addition, the Plan may be modified or amended by the Committee,
as it deems appropriate, in order to comply with any rules,
regulations or other guidance promulgated by the Internal Revenue
Service with respect to applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), as they relate to
the exemption for "performance-based compensation" under the
limitations on the deductibility of compensation imposed under
Code Section 162(m).
9. MISCELLANEOUS PROVISIONS
(a) Unsecured Creditor Status. A Participant
entitled to a bonus payment hereunder, shall rely solely upon the
unsecured promise of the Company, as set forth herein, for the
payment thereof, and nothing herein contained shall be construed
to give to or vest in a Participant or any other person now or at
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any time in the future, any right, title, interest, or claim in
or to any specific asset, fund, reserve, account, insurance or
annuity policy or contract, or other property of any kind
whatever owned by the Company, or in which the Company may have
any right, title, or interest, nor or at any time in the future.
(b) Other Company Plans. It is agreed and
understood that any benefits under this Plan are in addition to
any and all benefits to which a Participant may otherwise be
entitled under any other contract, arrangement, or voluntary
pension, profit sharing or other compensation plan of the
Company, whether funded or unfunded, and that this Plan shall not
affect or impair the rights or obligations of the Company or a
Participant under any other such contract, arrangement, or
voluntary pension, profit sharing or other compensation plan.
(c) Separability. If any term or condition of
the Plan shall be invalid or unenforceable to any extent or in
any application, then the remainder of the Plan, with the
exception of such invalid or unenforceable provision, shall not
be affected thereby, and shall continue in effect and application
to its fullest extent.
(d) Continued Employment. Neither the
establishment of the Plan, any provisions of the Plan, nor any
action of the Committee shall be held or construed to confer upon
any Participant the right to a continuation of employment by the
Company. The Company reserves the right to dismiss any employee
(including a Participant), or otherwise deal with any employee
(including a Participant) to the same extent as though the Plan
had not been adopted.
(e) Incapacity. If the Committee determines that
a Participant or Beneficiary is unable to care for his affairs
because of illness or accident, or is a minor, any benefit due
such Participant or Beneficiary under the Plan may be paid to his
spouse, child, parent, or any other person deemed by the
Committee to have incurred expense for such Participant or
Beneficiary (including a duly appointed guardian, committee, or
other legal representative), and any such payment shall be a
complete discharge of the Company's obligation hereunder.
(g) Jurisdiction. The Plan shall be construed,
administered, and enforced according to the laws of the
Commonwealth of Pennsylvania, except to the extent that such laws
are preempted by the Federal laws of the United States of
America.
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(h) Claims. If, pursuant to the provisions of
the Plan, the Committee denies the claim of a Participant for
benefits under the Plan, the Committee shall provide written
notice, within 60 days after receipt of the claim, setting forth
in a manner calculated to be understood by the claimant:
(i) the specific reasons for such denial;
(ii) the specific reference to the Plan
provisions on which the denial is based;
(iii) a description of any additional material
or information necessary to perfect the claim and an explanation
of why such material or information is needed; and
(iv) an explanation of the Plan's claim
review procedure and the time limitations of this subsection
applicable thereto.
A Participant whose claim for benefits has been denied
may request review by the Committee of the denied claim by
notifying the Committee in writing within 60 days after receipt
of the notification of claim denial. As part of said review
procedure, the claimant or his authorized representative may
review pertinent documents and submit issues and comments to the
Committee in writing. The Committee shall render its decision to
the claimant in writing in a manner calculated to be understood
by the claimant not later than 60 days after receipt of the
request for review, unless special circumstances require an
extension of time, in which case decision shall be rendered as
soon after the sixty-day period as possible, but not later than
120 days after receipt of the request for review. The decision
on review shall state the specific reasons therefor and the
specific Plan references on which it is based.
(i) Withholding. The Participant or the
Designated Beneficiary shall make appropriate arrangements with
the Company for satisfaction of any federal, state or local
income tax withholding requirements and Social Security or other
tax requirements applicable to the accrual or payment of benefits
under the Plan. If no other arrangements are made, the Company
may provide, at its discretion, for any withholding and tax
payments as may be required.
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