TERMS AGREEMENT
August 13, 2003
TOLL BROTHERS, INC.
3103 Philmont Avenue
Huntingdon Valley, PA 19006-4298
Dear Sirs:
We understand that Toll Brothers, Inc., a Delaware corporation
(the "Issuer"), proposes to issue and sell 3,000,000 shares of its common stock
(the "Underwritten Securities"). Subject to the terms and conditions set forth
herein or incorporated by reference herein, Citigroup Global Markets Inc. (the
"Underwriter") offers to purchase all of the Underwritten Securities. The
Closing Date shall be August 18, 2003, at 10:00 a.m., at the offices of Cahill
Gordon & Reindel LLP, 80 Pine Street, New York, New York.
All of the provisions contained in the Underwriting Agreement
Basic Provisions of the Issuer (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 Offered Securities shall have the following terms:
Title: common stock, par value $0.01 per
share ("Common Stock").
Number of Shares: 3,000,000.
Over allotment Option: The Issuer hereby grants an option
to the Underwriter to purchase up to
300,000 additional shares of Common
Stock at the same terms as the
Underwritten Securities (the "Option
Securities"). This option may be
exercised only to cover
over-allotments in the sale of the
Underwritten Securities by the
Underwriter. The option may be
exercised in whole or in part at any
time on or before the 30th day after
the date of the Prospectus
Supplement prepared in connection
with the issuance of the
Underwritten Securities upon written
or telegraphic notice by the
Underwriter to the Issuer setting
forth the number of such shares as
to which the Underwriter is
exercising the option and the
settlement date.
If settlement for the Option
Securities occurs after the Closing
Date, the Issuer will deliver to the
Underwriter on the settlement date
for the Option Securities, and the
obligation of the Underwriter to
purchase the Option Securities shall
be conditioned upon receipt of,
supplemental opinions, certificates
and letters confirming as of such
date the opinions, certificates and
letters delivered on the Closing
Date pursuant to Section 8 of the
Basic Provisions.
Purchase Price: $28.80 per share.
Public Offering: $28.95 per share, subject to change
by the Underwriter.
Listing: New York Stock Exchange.
Additional Representations
and Warranties: There is and has been no failure on
the part of the Issuer and any of
the Issuer's directors or officers,
in their capacities as such, to
comply with any provision of the
Sarbanes Oxley Act of 2002 and the
rules and regulations promulgated in
connection therewith, including
Section 402 related to loans and
Sections 302 and 906 related to
certifications.
Additional Covenants: The Issuer will not, without the
prior written consent of the
Underwriter, offer, sell, contract
to sell, pledge, or otherwise
dispose of (or enter into any
transaction which is designed to, or
might reasonably be expected to,
result in the disposition (whether
by actual disposition or effective
economic disposition due to cash
settlement or otherwise) by the
Issuer or any affiliate of the
Issuer or any person in privity with
the Issuer or any affiliate of the
Issuer) directly or indirectly,
including the filing (or
participation in the filing) of a
registration statement with the
Commission in respect of, or
establish or increase a put
equivalent position or liquidate or
decrease a call equivalent position
within the meaning of Section 16 of
the Exchange Act, any other shares
of Common Stock or any securities
convertible into, or exercisable, or
exchangeable for, shares of Common
Stock; or publicly announce an
intention to effect any such
transaction, for a period of 45 days
after the date of this Agreement,
provided, however, that the Issuer
may (i) issue and sell Common Stock
pursuant to any employee stock
option plan, stock ownership plan or
dividend reinvestment plan of the
Issuer in effect at the date hereof,
(ii) issue Common Stock issuable
upon the conversion of securities or
the exercise of options or warrants
outstanding at the date hereof and
(iii) issue Common Stock with an
aggregate market value not to exceed
$200,000,000 in connection with and
as consideration for the acquisition
or other purchase by the Issuer of
property or assets.
-2-
Additional Closing
Conditions: (a) The certificate required by the
provisions of Section 8(f)(i) of the
Basic Provisions shall provide that
the representations and warranties
in this Agreement and the Basic
Provisions are true and correct as
if made on the Closing Date and the
Issue has complied with all
agreements and satisfied all
conditions under this Agreement and
the Basic Provisions on its part to
be performed or satisfied at or
prior to the Closing Date.
(b) All opinions required to be
delivered in connection with the
closing shall be in form and
substance that is consistent with
the forms of opinions set for in the
Underwriter's form underwriting
agreement and shall be reasonably
satisfactory to the Underwriter and
its counsel.
(c) Subsequent to the date hereof
(and on or prior to the Closing
Date, or the date of settlement of
any purchase of Optional Securities,
as applicable), there shall not have
been any decrease in the rating of
any of the Issuer's debt securities
by any "nationally recognized
statistical rating organization" (as
defined for purposes of Rule 436(g)
under the Act) or any notice given
of any intended or potential
decrease in any such rating or of a
possible change in any such rating
that does not indicate the direction
of the possible change.
(d) The Underwritten Securities and
the Option Securities, as
applicable, shall have been listed
and admitted and authorized for
trading on the New York Stock
Exchange, and satisfactory evidence
of such actions shall have been
provided to the Underwriter.
(e) Each of Robert I. Toll and Bruce
E. Toll shall have executed and
delivered a lock-up letter
substantially in the form of Exhibit
A hereto and such letter shall be in
full force and effect.
Additional Terms: The Issuer agrees that the Chief
Financial Officer of the Issuer will
participate, as mutually agreed, in
conference calls for not more than
one day in order to facilitate the
distribution of the Underwritten
Securities upon reasonable request
of the Underwriter.
Address of the Underwriter: Citigroup Global Markets Inc
388 Greenwich Street
New York, New York 10013
Attention: Richard Moriarty
-3-
Please accept this offer no later than 5:00 p.m. on August 13,
2003, by signing a copy of this Terms Agreement in the space set forth below and
returning the signed copy to us.
Very truly yours,
CITIGROUP GLOBAL MARKETS INC
By: Michael S. Weiss
---------------------------
Name: Michael S. Weiss
Title: Vice President
Accepted
TOLL BROTHERS, INC.
By: Joel H. Rassman
---------------------------------
Name: Joel H. Rassman
Title: Chief Financial Officer
[Form of Lock-Up Agreement] EXHIBIT A
[Letterhead]
August 13, 2003
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Re. Toll Brothers, Inc. Offering of Common Stock
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Terms Agreement (the "Terms Agreement"), between Toll Brothers, Inc., a Delaware
corporation (the "Issuer"), and you, relating to an underwritten public offering
of Common Stock, $0.01 par value (the "Common Stock"), of the Issuer.
In order to induce you to enter into the Terms Agreement, the
undersigned will not, without the prior written consent of Citigroup Global
Markets Inc., offer, sell, contract to sell or otherwise dispose of (or enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the undersigned or any
affiliate of the undersigned or any person in privity with the undersigned or
any affiliate of the undersigned), directly or indirectly, including the filing
(or participation in the filing) of a registration statement with the Securities
and Exchange Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of capital stock of the Issuer or any securities
convertible into or exercisable or exchangeable for such capital stock, or
publicly announce an intention to effect any such transaction, for a period of
45 days after the date of the Terms Agreement, other than shares of Common Stock
disposed of as bona fide gifts approved by Citigroup Global Markets Inc.
If for any reason the Terms Agreement shall be terminated prior to the
Closing Date (as defined in the Terms Agreement), the agreement set forth above
shall likewise be terminated.
Yours very truly,
[Name]
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