TERMS AGREEMENT
January 22, 1999
TOLL CORP.
TOLL BROTHERS, INC.
3103 Philmont Avenue
Huntingdon Valley, PA 19006
Dear Sirs:
We understand that Toll Corp., a Delaware corporation ("the "Issuer"),
proposes to issue and sell $170,000,000 aggregate principal amount of its debt
securities (the "Underwritten Securities"), to be guaranteed by Toll Brothers,
Inc. (the "Guarantor"). Subject to the terms and conditions set forth herein or
incorporated by reference herein, Salomon Smith Barney Inc. offers to purchase
90% of the Underwritten Securities and Warburg Dillon Read LLC offers to
purchase 10% of the Underwritten Securities. The Closing Date shall be January
27, 1999, at 10:00 a.m., at the offices of Cahill Gordon & Reindel, 80 Pine
Street, New York, New York.
All of the provisions contained in the Underwriting Agreement Basic
Provisions of the Issuer and the Guarantor (the "Basic Provisions"), a copy of
which you have previously received, are herein incorporated by reference in
their entirety and shall be deemed to be a part of this Terms Agreement to the
same extent as if the Basic Provisions had been set forth in full herein. Terms
defined in the Basic Provisions are used herein as therein defined.
The Underwritten Securities shall have the following terms:
Title: 8 1/8% Senior Subordinated Notes due 2009.
Maturity: February 1, 2009.
Interest Rate: 8 1/8%.
Interest payment dates: February 1 and August 1 of each year, commencing
August 1, 1999.
Interest will accrue from January 27, 1999.
Interest record dates: January 15 and July 15.
Redemption provisions:
The Underwritten Securities may be redeemed at the option of the Issuer,
in whole or in part, at any time on or after February 1, 2004, at the redemption
prices (together with accrued and unpaid interest) set forth below, if redeemed
during the 12-month period beginning February 1 of the following years:
Years Percentage
----- ----------
2004 ........................... 104.063%
2005 ........................... 102.708%
2006 ........................... 101.354%
2007 and thereafter ............ 100.000%
Purchase Price: 99.158% of the principal amount thereof.
Public Offering: At the market.
Additional Terms:
The Issuer and the Guarantor will be subject to the same covenants
contained in the 7 3/4% Senior Subordinated Notes of the Issuer and as set forth
in the Prospectus Supplement.
The Notes and the Guarantee will be subordinated in right of payment to
Senior Indebtedness of the Issuer and Senior Indebtedness of the Guarantor,
respectively, as set forth in the Prospectus Supplement and the accompanying
Prospectus.
For a period of 90 days from the date hereof, each of the Issuer and the
Guarantor agree not to sell or otherwise dispose of any Debt Securities to the
public without the Underwriters' prior written consent. For the avoidance of
doubt, for the purpose of this paragraph, the term "Debt Securities" shall not
include any indebtedness incurred to a Bank or indebtedness assumed in the
acquisition of the Silverman Companies. The obligations of the several
Underwriters to purchase and pay for the Notes are subject to the condition that
subsequent to the date of this Terms Agreement, there shall not have been any
decrease in the rating, or change in outlook, of any of the Guarantor's debt
securities by Moody's Investors Service, Inc. or Standard & Poor's Corporation
or any notice given of any intended or potential decrease in any such rating or
outlook.
The Issuer and the Guarantor agree that the Chief Financial Officer of
the Guarantor will participate, as mutually agreed, in either "road shows" or
conference calls for not more than two days in order to facilitate the
distribution of the Underwritten Securities upon reasonable request of the
Underwriters.
Please accept this offer no later than 11:00 a.m. on January 22, 1999, by
signing a copy of this Terms Agreement in the space set forth below and
returning the signed copy to us.
Very truly yours,
SALOMON SMITH BARNEY INC.
By:/s/ Richard L. Moriarty
-----------------------------
Name: Richard L. Moriarty
Title: Managing Director
WARBURG DILLON READ LLC
By: /s/ Warren M. Eckstein
------------------------------
Name: Warren M. Eckstein
Title: Managing Director
Accepted
TOLL CORP.
By: /s/ Joseph R. Sicree
-----------------------------
Name: Joseph R. Sicree
Title: Vice President
TOLL BROTHERS, INC.
By: /s/ Joseph R. Sicree
-----------------------------
Name: Joseph R. Sicree
Title: Vice President