EXHIBIT 10.1
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ADVISORY AND NON-COMPETITION AGREEMENT
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This Advisory and Non-Competition Agreement (hereinafter sometimes
referred to as the "Agreement"), as of November 1, 2004, is by and between Toll
Brothers, Inc. (hereinafter "Company") and Xxxxx X. Toll (hereinafter "BET").
WHEREAS, BET, a founder of the Company, was employed by the Company for
many years as its President, Chief Operating Officer and Secretary and in
various capacities with respect to the Company's subsidiaries, and, more
recently, has been and continues to be retained under a Consulting and
Non-Competition Agreement, dated March 5, 1998, as amended by an Amendment
Agreement, dated June 6, 2000 (sometimes referred to herein collectively as
"Original Consulting Agreement").
WHEREAS, BET's term under the Original Consulting Agreement expires as
of October 31, 2004;
WHEREAS, the Company desires to have the valuable and special
knowledge, expertise and services of BET available to the Company on a
continuing basis after expiration of the Original Consulting Agreement, and the
Company further desires that BET preserve the Company's confidences and not
compete with the Company upon termination of his services under this Agreement
or otherwise; and
WHEREAS, BET, during his many years of service with the Company in
executive and other capacities, has gained knowledge and received information
concerning the Company's business and operations of a proprietary and
confidential nature;
WHEREAS, in recognition of BET's continuing contributions to the
Company and in exchange for BET's covenants contained herein, the Company
desires to employ BET and provide him with the benefits contained in this
Agreement.
NOW, therefore, in consideration of the mutual obligations and promises
contained herein, and intending to be legally bound, Company and BET hereby
agree as follows:
1. Recitals. The foregoing recitals are hereby incorporated by
reference as if set forth fully herein.
2. Services; Term, and Title. During the three (3) year period
commencing November 1, 2004 and ending October 31, 2007 (hereinafter "Term,"
which shall include any written extensions), the Company agrees to employ BET as
follows: BET agrees to make himself available to the Company and, in particular,
to the Chairman of the Board and Chief Executive Officer of the Company
("Chairman"), on a reasonable basis and at reasonable times and places so as not
to interfere with BET's other business interests, to consult with the Company
and the Chairman concerning matters within his knowledge or expertise. BET's
services shall, among other things, include providing advice, assistance,
information and recommendations with regard to suitable investments to be made
by the Company relating to or compatible with the real estate industry. BET's
title, in connection with his services hereunder, shall be Special Advisor to
the Chairman.
3. Compensation. In consideration of BET's continued availability and
services to the Company, as provided in Paragraph 2, hereof, and in further
consideration other agreements of BET herein, including BET's covenants as set
forth in Paragraphs 6, 7, 8 and 9, hereof, the Company agrees to pay BET the sum
of $675,000 during each year of the Term, payable in accordance with the
Company's regular pay schedule (which is currently every two weeks).
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4. Health Insurance. BET will continue to be entitled during the term
of this Agreement to group health insurance of the type and amount currently
being provided to Company executives.
5. Termination.
(a) Except as provided in Paragraph 5(b), hereof, in the event, and
at such time as, (i) BET's services are terminated by the Company before the end
of the Term or (ii) this Agreement is not renewed or extended on terms mutually
acceptable to the Company and BET, BET shall be entitled, so long as BET is in
compliance with the provisions of Paragraphs 6, 7, 8 and 9 of this Agreement, to
payment of the annual amount payable to him pursuant to Section 3, hereof, over
the three year period starting as of the Termination Date, defined below, in the
same manner as payments are to be made pursuant to Section 3 hereof. For these
purposes, the term Termination Date means the date as of which BET's services
hereunder are terminated by the Company or the last day of the Term of this
Agreement (or any written extension thereof).
(b) The payments provided for under Section 5(a), hereof, shall not
be made if (i) the termination of BET's services or the non-renewal or
non-extension of this Agreement is in connection with BET's death or disability,
(ii) the termination of BET's services or the non-renewal or non-extension of
this Agreement is for Cause, or (iii) BET voluntarily terminates this Agreement.
For these purposes, the term "Cause" shall mean any act that constitutes
embezzlement, theft, commission of a felony or proven dishonesty in the course
of BET's services with the Company, any material violation of Paragraphs 6, 7,
8, or 9 of this Agreement, or any willful refusal to perform the normal duties
of BET's position.
(c) BET agrees that his benefit under the Company's Supplemental
Executive Retirement Plan ("SERP") shall commence to be paid to him by reason
of, and following, his separation from service, as provided for under the terms
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of the SERP, as amended to comply with applicable provisions of the Internal
Revenue Code (the "Code") and applicable Treasury Regulations, including new
Code Section 409A added by the American Jobs Creation Act of 2004; provided,
however, that such payments on account of BET's separation from service shall
not commence until the third anniversary of his separation from service (which
is intended to coincide with the three year non-competition period(s) referred
to in Paragraphs 6(i) and (ii) hereof).
6. Non-Compete. During the longer of (i) the Term and for a period of
three years thereafter, (ii) three years after any other termination of this
Agreement, regardless of the reason; and (iii) the term of BET's service as a
Vice Chairman of the Company, BET shall not, without the written consent of the
Company, engage in any of the following prohibited activities (which shall be in
addition to any restrictions or prohibitions contained in any other agreement
between Xxxxx X. Toll and the Company):
(a) BET shall not (as an individual, principal, agent, employee,
advisor or otherwise) directly or indirectly, engage in activities relating to
or render services:
(i) to any firm or business in the homebuilding business, or
(ii) so long as BET (including any immediate family members,
trusts or other entities for the benefit of any such persons) is an officer,
director, partner or limited partner of, or otherwise actively, directly or
indirectly, engaged in the operation or activities of, a real estate investment
trust (or related operating partnership) formed or sponsored by the Company, to
any real estate investment trust (whether in corporate, trust or partnership
form) or operating partnership (or other similar entity) affiliated with a real
estate investment trust; provided that BET shall not be deemed to be an officer,
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director, partner or limited partner of a Company formed or sponsored real
estate investment trust or related operating partnership by reason of his status
or conduct as a shareholder or a director of the Company.
(iii) so long as Dulles Green, L.P. (or its property), or its
general partner, continues to be controlled or jointly controlled by BET, to any
real estate investment trust (whether in corporate, trust or partnership form)
or operating partnership (or other similar entity) affiliated with a real estate
investment trust.
These restrictions shall not prohibit BET from holding an interest in
any public corporation or real estate investment trust in an amount less than 1%
of any class of any such entity's outstanding equity securities.
(b) BET shall not solicit, induce or encourage any employee,
independent contractor, consultant or advisor to the Company to terminate his or
her employment or other relationship with the Company;
(c) BET shall not solicit, induce or encourage any customer or
vendor of the Company to terminate its relationship with the Company, to cease
doing business with the Company or to refrain from giving new business or
additional business to the Company.
Given the breadth of BET's responsibilities, the above restrictions
shall apply (i) in all foreign countries in which the Company owned property or
engaged in business during BET's service, and (ii) in any geographical area of
the United States.
BET further acknowledges that these restrictions, in view of his long
employment, consulting, advisory and other relationships with the Company and
the nature of the business in which the Company is engaged, are reasonable and
necessary in order to protect the legitimate interests of the Company, and that
any violation thereof would result in irreparable injuries to the Company, as to
which the Company has no adequate remedy at law. BET, therefore, acknowledges
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that in the event of his violation of any of these restrictions, the Company
shall be entitled to obtain from any court of competent jurisdiction preliminary
and permanent injunctive relief to restrain any such violation, plus reasonable
legal fees, costs and expenses, incurred in connection with any such action
which rights shall be cumulative to and in addition to any other rights or
remedies to which the Company may be entitled to the extent permissible by the
laws of the Commonwealth of Pennsylvania.
7. Confidential Information. BET shall not, either during the Term or
at any time thereafter, use for his own personal benefit, or disclose,
communicate or divulge or use for the direct or indirect benefit of any person,
firm, association or company other than the Company, any confidential
information regarding the business methods, plans, policies, procedures,
techniques, research or development projects or results, financial results and
projections, trade secrets or other confidential knowledge or confidential
processes or information of or developed by the Company, any confidential
information furnished to the Company by customers or clients or any names and
addresses of customers or clients or any data on or relating to past, present or
prospective customers or clients or any other confidential information relating
to or dealing with the business condition, operations or activities of the
Company made known to BET or learned or acquired by him either while in the
employ of the Company or during the Term or the term of the Original Consulting
Agreement.
8. Limitation on Authority. BET shall have no authority during the Term
to enter into binding obligations on behalf of the Company without the express
written consent of the Company, and shall not represent to any to any third
party that he has such authority.
9. Name Confusion. BET shall not use, in any personal or business
venture with which he is associated, at any time during or after the Term of
this Agreement, the name "Toll Brothers", or, for a period of two years
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following the execution of this Agreement, the name "Toll", in connection with
any business name, nor shall he conduct, at any time during or after the Term of
this Agreement, any business in a manner that may cause confusion with the
Company name or business. Notwithstanding the above, this paragraph will not
prohibit BET from conducting personal or business ventures (a) using the name
Xxxxx Xxxx, Xxxxx X. Toll or Toll Management or (b) using the name "Toll" in
conjunction with the name "Reedman" in connection with the automobile business.
10. Death. This Agreement shall terminate upon the death of BET.
11. Delegation; Assignability. BET's duties under this Agreement are
not delegable by BET. This Agreement may be assigned by the Company to any
successor in ownership of all or any part of the Company's business.
12. Miscellaneous.
(a) 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) 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.
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(c) 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. The
paragraph headings in this document are descriptive only and shall not be deemed
to be a complete summary of the contents of such paragraph.
(d) This Agreement, in addition to an "Agreement" dated June 6,
2000, between the parties (which was amended in the aforementioned Amendment
Agreement, dated June 6, 2000), contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein contained or
as provided in Paragraphs 9 and 12(e), hereof. The express terms hereof control
and supersede any course of performance of the trade and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.
(e) This Agreement shall replace the Original Consulting Agreement
and the Amendment Agreement, dated June 6, 2000 (except for Paragraph 1 of such
Amendment Agreement), effective November 1, 2005, and the Original Consulting
Agreement and Amendment Agreement, dated June 6, 2000 (except for Paragraph 1 of
the Amendment Agreement), shall terminate effective that date, except that any
rights existing as of 12 o'clock midnight, October 31, 2004 under the provisions
of Sections 5, 6, 7 or 8 of the Original Consulting Agreement, as amended, may
be enforced.
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WHEREFORE, with the intention of being legally bound, BET and Company
hereby execute this Agreement on the date set forth below.
TOLL BROTHERS, INC.
Xxxx X. Xxxxxxx
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By: XXXX X .XXXXXXX
Executive Vice President
and Chief Financial Officer
Xxxxx X. Toll
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XXXXX X. TOLL
Executed: February 3, 2005
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