EXHIBIT 10.32
THE TOLL BROTHERS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I - ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT. The Company hereby establishes a defined benefit
pension plan known as the Toll Brothers, Inc. Supplemental Executive Retirement
Plan (the "Plan") effective as of September 1, 2004 (the "Effective Date").
1.2 PURPOSE. The principal purposes of the Plan are to provide certain
executives and consultants or advisors, as defined in Article III, with
competitive retirement benefits, protect against reductions in retirement
benefits due to tax law limitations on qualified plans, and encourage the
continued employment or service of such individuals with the Company.
ARTICLE II - DEFINITIONS
2.1 BOARD. "Board" means the Board of Directors of the Company.
2.2 CAUSE. "Cause" means conduct by the Participant reasonably likely
to cause material harm to the Company that consists of proven gross negligence,
wanton or willful disregard of duties, acts of fraud, embezzlement, theft or the
commission of a felony in the course of his employment or service, as determined
by the Board after full consideration of the facts presented on behalf of both
the Company and the Participant.
2.3 COMPANY. "Company" means the Toll Brothers, Inc., a Delaware
corporation.
2.4 EMPLOYMENT. "Employment" means the period or periods during which a
Participant is an employee of the Company, or, in the case of a consultant or
advisor to the Company, is providing services to the Company.
2.5 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor act thereto.
2.6 NORMAL RETIREMENT AGE. "Normal Retirement Age" shall mean age 62.
2.7 PARTICIPANT. "Participant" means an eligible executive, consultant
or advisor of the Company selected to receive benefits under the Plan as
provided in Article III of this Plan.
2.8 SCHEDULE OF RETIREMENT BENEFITS. "Schedule of Retirement Benefits"
means the schedule of Participants and retirement benefits attached hereto, as
that may be amended from time to time.
2.9 TERMINATION BY THE COMPANY. "Termination by the Company" means
either a termination by the Company of a Participant's employment, or a
termination by the Participant of his employment with the Company by reason of:
(a) a material diminution in his title, position, reporting relationship,
status, duties or responsibilities; (b) the assignment of duties and
responsibilities that are inconsistent, in a material respect, with the scope of
duties and responsibilities associated with his position; (c) a material
reduction to his base salary; or (d) a material reduction to incentive,
retirement and welfare plans available to the Participant; provided, however,
that a Participant's termination of employment shall only be treated as a
Termination by the Company if the Participant has provided notice to the Company
of the basis for his determination that he intends to terminate his employment
and the Company has not corrected the situation within thirty (30) days.
2.10 TOP HAT PLAN. "Top Hat Plan" means a nonqualified, unfunded plan
maintained primarily to provide deferred compensation benefits to a Participant
who falls within a select group of "management or highly compensated employees"
within the meaning of Section 201, 301 and 401 of ERISA.
ARTICLE III - RETIREMENT
3.1 ELIGIBILITY. Only those key executives, consultants or advisors who
are designated as eligible to participate in the Plan on the Schedule of
Retirement Benefits shall be eligible for benefits hereunder.
3.2 PARTICIPATION. The Board, or such person or entity designated by
the Board, acting in its discretion, may designate any eligible employee,
consultant or advisor as a Participant under this Plan, and may designate any
conditions applicable to any such Participant. Such designation shall be in
writing and shall be effective as of the date contained therein. Participation
in the Plan is terminable by the Board, in its discretion, upon written notice
to the Participant, and termination shall be effective as of the date contained
therein, but in no event earlier than the date of such notice, provided that no
such termination shall in any material manner reduce or adversely affect any
Participant's rights to vested benefits hereunder without the consent of the
Participant.
3.3 NONCOMPETITION. Notwithstanding any other provisions hereof,
neither a Participant nor a Participant's spouse nor any other beneficiary of a
Participant shall receive any further benefits hereunder if the Participant,
without prior written consent of the Board, prior to attaining age 65, engages
in (as a principal, partner, director, officer, agent, employee, consultant,
owner, independent contractor of otherwise), or acquires a material financial
interest in, any business that is a direct competitor of the Company under
circumstances where the Participant's actions or interests with respect to such
competitor are reasonably likely to cause material harm to the Company;
provided, however, that this Section 3.3 shall cease to be applicable with
respect to any Participant, upon the Termination by the Company of the
Participant's employment without Cause.
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ARTICLE IV - AMOUNT, FORM, AND PAYMENT OF SUPPLEMENTAL BENEFIT
4.1 NORMAL RETIREMENT BENEFIT. Subject to the terms of this Plan, a
Participant who retires from Employment shall be entitled to receive an annual
retirement benefit as set forth in the Schedule of Retirement Benefits starting
as of the date of the Participant's retirement on or after attaining Normal
Retirement Age.
4.2 FORM OF BENEFIT. The benefit payable to a Participant shall be paid
at the time and in the manner set forth in the Schedule of Retirement Benefits.
4.3 DEATH BENEFIT AND DISABILITY. If a Participant who is credited with
twenty (20) or more years of service dies before such Participant has terminated
employment, or terminates employment because of the onset of a disability prior
to attaining Normal Retirement Age, the benefit that would have been payable to
the Participant shall be paid to the Participant or to the Participant's
designated beneficiary, if any (and otherwise to the Participant's estate), as
the case may be, at the time and in the manner provided for in the Schedule of
Retirement Benefits commencing as of the date the Participant attains (or would
have attained) his Normal Retirement Age. If a Participant dies after payment of
benefits under the Plan has commenced, the remaining installments, if any, shall
be paid to the Participant's designated beneficiary, if any, and otherwise to
the Participant's estate. For purposes of this Section 4.3, a determination of
whether a Participant's employment has terminated because of the onset of a
disability shall be made by the Board, at its discretion, or by such committee
as may be established by the Board pursuant to Section 5.1, below, to act on its
behalf with respect to the Plan.
4.4 VESTING. Except as otherwise provided in the Schedule of Retirement
Benefits, a Participant's benefit under the Plan shall be forfeited if the
Participant's employment terminates for any reason prior to his or her (a)
completion of twenty (20) years of service with the Company and (b) attainment
of Normal Retirement Age. For these purposes, periods of service prior to the
adoption of the Plan shall be taken into account. Notwithstanding the foregoing,
for purposes of this Section 4.4, a Participant shall be vested in his benefit
if his termination of employment occurs by reason of his death or the onset of a
disability, as provided in Section 4.3, above, and in the event there is a
Termination by the Company of the Participant's employment without Cause prior
to Participant's attainment of Normal Retirement Age, and the Participant is
credited with at least twenty (20) years of service with the Company as of the
date of such termination, the Participant shall be fully vested, and shall be
entitled to commence receipt of benefits hereunder upon attainment of Normal
Retirement Age and to any other benefit provided hereunder with respect to a
vested Participant. The intent of this Section 4.4, as it applies to a
Termination by the Company without Cause, is to fully vest any Participant who
has twenty (20) years of service but who is terminated without Cause, but not to
accelerate the time at which benefit payments with respect to such Participant
commence.
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ARTICLE V - ADMINISTRATION
5.1 AUTHORITY OF THE BOARD. This Plan shall be administered by the
Board or any committee designated by the Board to administer the Plan. Subject
to the provisions of the Plan, the Board or applicable committee shall have the
authority to make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan and to decide or resolve any and
all questions, including interpretations of this Plan, as may arise in
connection with this Plan. Notwithstanding the foregoing, the Company shall act
as the plan administrator for purposes of any filings with any governmental
entity or in the event claims for benefits are made by any Participant.
5.2 AGENTS. In the administration of this Plan, the Board may, from
time to time, employ agents and delegate to such agents such administrative
duties as it deems advisable and allowable under the terms of the Plan.
5.3 DECISIONS BINDING. The decision or action of the Board with respect
to any question arising out of or in connection with the administration,
interpretation, and application of this Plan and any rules or guidelines made in
connection with this Plan shall be final and conclusive, and shall be binding
upon all persons and entities having any interest in this Plan.
5.4 INDEMNITY OF BOARD. The Company shall indemnify and hold harmless
the Board and its individual members along with any other committee that may be
established to administer the Plan pursuant to Paragraph 5.1 and any members
thereof, against any and all claims, loss, damage, expense, or liability arising
from any action or failure to act with respect to this Plan.
5.5 COST OF ADMINISTRATION. The Company shall bear all expenses of
administration of this Plan.
5.6 CLAIMS.
(a) A Participant or a Participant's beneficiary for benefits
under the Plan may file a written claim for benefits under the Plan with the
Plan Administrator, if he believes that he is entitled to receive benefits under
the Plan but is not receiving benefits under the Plan or if he is receiving
benefits under the Plan, but disputes the amount and/or form of benefits
received. Such written claim for benefits shall set forth the nature of the
claim and/or dispute, and set forth all facts and circumstances which are
relevant to the claim.
(b) If, pursuant to the provisions of the Plan, the Company
denies the claim of the Participant or the Participant's beneficiary for
benefits under the Plan, the Company shall provide written notice, within ninety
(90) 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;
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(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.
(c) The Participant or the Participant's beneficiary whose
claim for benefit has been denied may request review by the Company of the
denied claim by notifying the Company in writing within sixty (60) days after
receipt of the notification of claim denial. As part of said review procedure,
the claimant or the claimant's authorized representative may review pertinent
documents and submit issues and comments to the Company in writing. The Company
shall render its decision to the claimant in writing in a manner calculated to
be understood by the claimant not later than sixty (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 one hundred and twenty (120) days after
receipt of the request for review. The decision on review shall state the
specific reasons therefor and the specific Plan reference on which it is based.
ARTICLE VI - AMENDMENT AND TERMINATION
6.1 The Company hereby reserves the right to amend, modify, or
terminate the Plan (and the Schedule of Retirement Benefits) at any time, and
from time to time, by action of a majority of the members of the Board. Except
as described below in this Article VI, no such amendment or termination shall in
any material manner reduce or adversely affect any Participant's rights to
benefits hereunder without the consent of such Participant.
6.2 The Board may terminate the Plan and commence termination payout
for all Participants, or remove certain employees as Participants, if it is
determined by the United States Department of Labor or a court of competent
jurisdiction that the Plan constitutes an employee pension benefit plan within
the meaning of Section 3(2) of ERISA which is not exempt from the provisions of
Parts 2, 3 and 4 of Title I of ERISA; provided, however, that if the Plan is
terminated pursuant to this sentence, then all Participants shall be deemed to
be fully vested in the benefits described in Article IV as of the date
immediately preceding such termination and shall be paid in a single lump-sum
the actuarially equivalent present value of such benefit as soon as practicable
(but in no case more than 90 days) after such termination.
ARTICLE VII - MISCELLANEOUS
7.1 UNFUNDED PLAN. This Plan is intended to be a Top Hat Plan and
therefore exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.
Such status shall not be adversely affected by the establishment of any trust
pursuant to Paragraph 7.4 below.
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7.2 UNSECURED GENERAL CREDITOR. Each Participant and his or her
beneficiaries, heirs, successors, and assigns shall have no secured legal or
equitable rights, interests, or claims in any property or assets of the Company,
nor shall any such persons have any rights, interests or claims in any life
insurance policies, annuity contracts, or the proceeds therefrom owned or which
may be acquired by the Company. Except as provided in Paragraph 7.4, such
policies, annuity contracts, or other assets of the Company shall not be held
under any trust for the benefit of a Participant, his or her beneficiaries,
heirs, successors or assigns, or held, in any way, as collateral security for
the fulfilling of any obligations of the Company under this Plan. Any and all of
the Company's assets and policies shall be, and shall remain for purposes of
this Plan, the general, unpledged, unrestricted assets of the Company. The
Company's obligation under this Plan shall be that of an unfunded and unsecured
promise to pay money in the future.
7.3 SUPPLEMENTAL BENEFITS. As of the Effective Date, the Plan is the
intended to be a supplemental source of Company paid retirement benefits for
Participants and not the sole source of such benefits. The benefit payable
hereunder shall, therefore, not be subject to any reduction because of benefits
that may be paid or otherwise provided to a Participant, except to the extent
that an offset is explicitly provided for in a contractual arrangement with a
particular Participant.
7.4 TRUST FUND.
(a) At its discretion, the Company may establish one or more
grantor trusts, with such trustees as the Board may approve, for the purpose of
providing for the payment of benefits under this Plan. Such trust or trusts may
be irrevocable, but the assets thereof shall be subject to the claims of the
Company's general creditors. To the extent any benefits provided under this Plan
are actually paid from any such trust, the Company shall have no further
obligation with respect thereto, but to the extent not so paid, such benefits
shall remain the obligation of, and shall be paid by, the Company.
(b) At its discretion, the Company may, in addition to or in
lieu of establishing one or more grantor trusts as described in clause (a)
above, take other actions to fund the benefits provided for under this Plan, but
in no event shall the Company establish any funding mechanism which would result
in the Plan failing to qualify as a Top Hat Plan exempt from the provisions of
Parts 2, 3, and 4 of Title I of ERISA.
7.5 NONASSIGNABILITY. Neither a Participant nor any other person shall
have any right to sell, assign, transfer, pledge, anticipate, mortgage, or
otherwise encumber, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be nonassignable and nontransferable,
provided that a Participant may assign the right to receive such amounts to
trusts or limited partnerships established for the benefit of the Participant's
spouse, children or their issue. No part of the amount payable shall, prior to
actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any
other person, nor shall such amounts or rights to such amounts be transferable
by operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency.
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7.6 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between the Company
and any Participant, and Participants (and Participants' beneficiaries) shall
have no rights against the Company except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of the Company or to
interfere with the right of the Company to discipline or discharge any
Participant at any time.
7.7 VALIDITY. If any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
7.8 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of the Company and its successors and assigns, and the Company shall
require all its successors and assigns to expressly assume its obligations
hereunder. The term "successors," as used herein, shall include any corporate or
other business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of the
Company.
7.9 TAX WITHHOLDING. The Company shall have the right to require
Participants to remit to the Company an amount sufficient to satisfy federal,
state, and local tax withholding requirements, or to deduct from payments made
pursuant to the Plan amounts sufficient to satisfy such tax withholding
requirements.
7.10 GOVERNING LAW. The provisions of this agreement shall be construed
and interpreted according to the laws of the State of Pennsylvania except as
preempted by Federal law.
7.11 FORFEITURE. All benefits hereunder shall be subject to forfeiture
in their entirety in the event that Participant's employment is terminated for
Cause.
IN WITNESS WHEREOF, the Company has caused the Plan to be adopted as of
the Effective Date.
TOLL BROTHERS, INC.
JOEL H. RASSMAN
By: Joel H. Rassman
Executive Vice President
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SCHEDULE OF RETIREMENT BENEFITS
The Participants in the Plan and the annual benefit payable to each
Participant are as set forth below:
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PARTICIPANT ANNUAL BENEFIT
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Robert Toll $500,000
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Zvi Barzilay $260,000
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Joel Rassman $250,000
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Wayne Patterson $125,000
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Bruce E. Toll* $230,000
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The annual benefit shall be payable for twenty (20) years, commencing
as soon as practicable following the Participant's retirement at any time after
the Participant has attained Normal Retirement Age, or at the date the
Participant attains or would have attained Normal Retirement Age in the case of
a Participant who has terminated employment prior to that date and who is vested
in his benefit. Payments shall be made in a manner and at times consistent with
the Company's normal payroll practices as in effect from time to time.
* Bruce Toll's participation is subject to his execution of his Advisory and
Noncompetition Agreement with the Company.
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