Exhibit 10.16
TOLL BROTHERS, INC.
NON-QUALIFIED STOCK OPTION GRANT
THIS NON-QUALIFIED STOCK OPTION is granted as of [DATE] (the “Effective Date”)
by TOLL BROTHERS, INC., a Delaware corporation (the “Company”) under the Toll
Brothers, Inc. Stock Incentive Plan for Employees (____) (the “Plan”), to [NAME]
(the “Optionee”).
W I T N E S S E T H :
1.    Grant. As of the Effective Date, the Company granted to the Optionee an
option (the “Option”) to purchase on the terms and conditions hereinafter set
forth all or any part of an aggregate of ______ shares of the Company’s Common
Stock, par value $0.01 per share, (the “Option Shares”), at the purchase price
of $ __ per share (the “Option Price”). Subject to Section 2 below, the Optionee
shall have the cumulative right to exercise the Option, and the Option is only
exercisable, with respect to the following number of Option Shares on or after
the following dates:
Number of Option Shares
that may be purchased on
or after [DATE]

 
Total
Option Shares

[DATE]
[DATE]
[DATE]
[DATE]
 
______

_______
_______
_______
_______

The Committee may, in its sole discretion, accelerate the date on which the
Optionee may purchase Option Shares.
2.    Term. The Option granted hereunder shall expire in all events at 5:00 p.m.
(local Philadelphia, Pennsylvania time) on [DATE], unless sooner terminated as
provided in Subparagraphs (a), (b), (c), (d), (e) or (f) below.
(a)    Voluntary Termination or Dismissal for Cause. Except as otherwise
provided herein or in any separate provisions applicable to this Option, the
Option shall immediately terminate upon termination of the Optionee’s employment
with the Company and its Affiliates (as defined below) if (i) Optionee
voluntarily terminates his or her employment with the Company and its Affiliates
or (ii) the Optionee is dismissed from employment with the Company and the
Committee (as defined below) finds, after full consideration of the facts
presented on behalf of both the Company and the Optionee, that the Optionee was
dismissed for Cause (as defined below). In addition to the immediate termination
of the Option, if the Optionee is found by the Committee to have been dismissed
for Cause, the Optionee shall automatically forfeit all Option Shares for which
the Company has not yet delivered the share certificates upon refund by the
Company of the Option Price for such Option Shares.
(b)    Dismissal Without Cause. The Option shall terminate two (2) weeks after
the Optionee’s employment with the Company and its Affiliates is terminated by
reason of dismissal without Cause. During such two-week period the Optionee may
purchase any remaining Option Shares which could have been purchased on the date
Optionee’s employment terminated, but may not purchase any Option Shares which
would otherwise first become purchasable during such two-week period.

1

--------------------------------------------------------------------------------

(c)    Disability or Death. Except as otherwise provided herein or in any
separate provisions applicable to this Option, the Option shall terminate one
(1) year after the Optionee’s employment with the Company and/or its Affiliates
is terminated by reason of the Optionee’s Disability or by death. During such
one year period the Optionee (or, as applicable, the Optionee’s heirs or legal
representative) may purchase any remaining Option Shares which could have been
purchased on the date Optionee’s employment terminated, but may not purchase any
Option Shares which would otherwise become purchasable during such one year
period.
(d)    Change in Accounting Treatment. If the Committee finds that a change in
the financial accounting treatment for options granted under the Plan from that
in effect on [DATE], when the Plan was adopted, adversely affects the Company
or, in the determination of the Committee, may adversely affect the Company in
the foreseeable future, the Committee may, in its discretion, set an accelerated
termination date for the Option. In such event, the Committee may take whatever
other action, including acceleration of any exercise provisions, it deems
necessary.
(e)    Change in Control. In the event of a Change in Control (as defined in the
Plan) the Option shall become immediately exercisable in full. In addition, in
such event the Committee may accelerate the termination date of the Option to a
date no earlier than thirty (30) days after notice of such acceleration is given
to the Optionee. Upon the giving of any such acceleration notice, the Option
shall become immediately exercisable in full.
(f)    Definitions. For purposes of this Option: (i) the term “Affiliate” shall
mean a corporation which is a parent corporation or a subsidiary corporation
with respect to the Company within the meaning of section 425(e) or (f) of the
Internal Revenue Code of 1986, as amended (the “Code”); (ii) the term “Cause”
shall mean a breach by the Optionee of his or her employment or service contract
with the Company or an Affiliate, or an act by the Optionee involving any sort
of disloyalty to the Company or an Affiliate, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his or her employment or service or a disclosure of trade secrets of
the Company or an Affiliate; (iii) the term “Committee” shall refer to the
Committee designated to administer the Plan; and (iv) the term “Disability”
shall means any condition that constitutes a “disability” as that term is
defined in section 22(e)(3) of the Code.
3.    Blackout Periods. The Committee reserves the right to suspend or limit the
Optionee’s rights to exercise and sell shares acquired through the exercise of
options to comply with the Company’s Insider Trading Policy, any applicable law,
or at any other times that it deems appropriate.
4.    General Rules. To the extent otherwise exercisable, this Option may be
exercised in whole or in part except that (a) any partial exercise of this
Option must be for a round lot of 100 Option Shares or a whole number multiple
thereof and (b) this Option may in no event be exercised (i) with respect to
fractional shares or (ii) after the expiration of the Option term for any reason
under Paragraph 2 hereof.
5.    Transfers.     Except as otherwise provided herein or in any separate
provisions applicable to this Option, the Option is transferable by the Optionee
only by will or pursuant to the laws of descent and distribution in the event of
the Optionee’s death, in which event the Option may be exercised by the heirs or
legal representatives of the Optionee. Notwithstanding the foregoing, a
Non-qualified Stock Option may be transferred pursuant to the terms of a
“qualified domestic relations order,” within the meaning of Sections 401(a)(13)
and 414(p) of the Code or within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended. Any attempt at assignment,
transfer, pledge or disposition of the Option contrary to the provisions hereof
or the levy of any execution, attachment or similar process upon the Option

2

--------------------------------------------------------------------------------

shall be null and void and without effect. Any exercise of the Option by a
person other than the Optionee shall be accompanied by appropriate proofs of the
right of such person to exercise the Option.
6.    Method of Exercise and Payment.
(a)    Method of Exercise. When exercisable under Paragraphs 1, 2 and 3, the
Option may be exercised by written notice, pursuant to Paragraph 10, to the
Committee specifying the number of Option Shares to be purchased and, unless the
Option Shares are covered by a then-current registration statement or a
Notification under Regulation A under the Securities Act of 1933 (the “Act”) and
current registrations under all applicable state securities laws, containing the
Optionee’s acknowledgement, in form and substance satisfactory to the Company,
that the Optionee (a) is purchasing such Option Shares for investment and not
for distribution or resale (other than a distribution or resale which, in the
opinion of counsel satisfactory to the Company, may be made without violating
the registration provisions of the Act), (b) has been advised and understands
that (i) the Option Shares have not been registered under the Act and are
“restricted securities” within the meaning of Rule 144 under the Act and are
subject to restrictions on transfer and (ii) the Company is under no obligation
to register the Option Shares under the Act or to take any action which would
make available to the Optionee any exemption from such registration, and (c) has
been advised and understands that such Option Shares may not be transferred
without compliance with all applicable federal and state securities laws. The
notice shall be accompanied by payment of the aggregate Option Price of the
Option Shares being purchased. Such exercise shall be effective upon the actual
receipt by the Committee of such written notice and payment. For these purposes,
the Optionee shall be deemed to have made the payment required for exercise of
the Option at such time as it is determined that satisfactory arrangements have
been made to ensure payment of all amounts as are required to be paid by
Optionee in connection with the exercise of the Option.
(b)    Medium of Payment. An Optionee may pay for Option Shares, and the amount
of any tax withholding required under Paragraph 6(c) below, (i) in cash, (ii) by
certified check payable to the order of the Company, (iii) by means of arranging
through a broker designated by the Company to have the broker remit sufficient
proceeds from the sale of such shares, (iv) by means of a net issuance (as
described below), (v) by a combination of the foregoing, or (vi) by such other
method as the Committee may determine to be appropriate from time to time.
Furthermore, subject to the restrictions described below, payment of the Option
Price of the Option Shares being purchased may be made all or in part in shares
of the Common Stock of the Company held by the Optionee for more than one year.
If payment is made in whole or in part in shares of the Common Stock, then the
Optionee shall deliver to the Company certificates registered in the name of
such Optionee representing shares of Common Stock legally and beneficially owned
by such Optionee, free of all liens, claims and encumbrances of every kind and
having a fair market value on the date of delivery of such notice that is not
greater than the product of the Option Price and the number of Option Shares
with respect to which such Option is to be exercised, accompanied by stock
powers duly endorsed in blank by the record holder of the shares represented by
such certificates. Notwithstanding the foregoing, the Board of Directors, in its
sole discretion, may refuse to accept shares of Common Stock in payment of the
Option Price. In that event, any certificates representing shares of Common
Stock which were delivered to the Company shall be returned to the Optionee with
notice of the refusal of the Board of Directors to accept such shares in payment
of the Option Price. The Board of Directors may impose such limitations and
prohibitions on the use of shares of the Common Stock to exercise an Option as
it deems appropriate.
The Optionee may arrange for exercise of an Option and payment of the Option
Price by means of a net issuance of shares as described below, provided,
however, that exercise by means of a net issuance shall be permitted only as
follows: (x) if the Optionee is an officer (as defined for purposes of Section
16 of

3

--------------------------------------------------------------------------------

the Securities Exchange Act of 1934, as amended) at the time of exercise, then a
net issuance must be approved in advance by the Committee, and (y) if the
Optionee is not an officer (as defined for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended) at the time of exercise, then a net
issuance must be approved in advance by the Committee or, if and to the extent
the Committee so determines, the Company’s General Counsel or other officer of
the Company. If a net issuance of shares is so approved and the Optionee chooses
to exercise in that manner, the exercise of the Option shall be treated as
follows: Upon notice of exercise, the Optionee shall be deemed, as of the date
of exercise, to have received all of the shares of Common Stock subject to the
Option (or such portion of such shares as corresponds to the portion of the
Option being exercised), and shall simultaneously be deemed to have delivered
back to the Company that number of such shares as have a fair market value
(determined as of the date of exercise) equal to the Option Price required to be
paid on exercise of the Option (or portion being exercised) and any additional
amounts required to be paid by the Optionee in connection with the exercise of
the Option.
(c)    Withholding. In addition to payment of the Option Price for the Option
Shares being purchased, as a condition to the issuance of Option Shares and the
delivery of any certificate for such Option shares, the Optionee shall be
required to remit to the Company an amount sufficient to satisfy any federal,
state and/or local tax withholding requirements arising in connection with the
exercise of the Option. If the Company for any reason does not require the
Optionee to make a payment sufficient to satisfy such withholding requirements,
any tax withholding payments made by the Company or any Affiliate to any
federal, state or local tax authority with respect to the exercise of the Option
shall constitute a personal obligation of the Optionee to the Company, payable
upon demand or, at the option of the Company, by deduction from future
compensation payable to the Optionee. In addition, at the request of the
Optionee, with consent of the committee (which may be unreasonably withheld), or
to the extent it is determined by the Committee to be necessary or appropriate
in connection with any applicable federal, state or local tax withholding
obligations, the Company may withhold a portion of the Option Shares that would
otherwise be issuable to the Optionee on the exercise of the Option. In such
event, the portion of the withholding obligation thus satisfied shall be equal
to the fair market value of the Option Shares so withheld determined as of the
date the Option is exercised.
7.    Adjustments on Changes in Common Stock. In the event that, prior to the
delivery by the Company of all of the Option Shares in respect of which the
Option is granted, there shall be an increase or decrease in the number of
issued shares of Common Stock of the Company as a result of a subdivision or
consolidation of shares or other capital adjustment, or the payment of a stock
dividend or other increase or decrease in such shares, effected without receipt
of consideration by the Company, the remaining number of Option Shares still
subject to the Option and the Option Price therefor shall be adjusted in a
manner determined by the Committee so that the adjusted number of Option Shares
and the adjusted Option Price shall be the substantial equivalent of the
remaining number of Option Shares still subject to the Option and the Option
Price thereof prior to such change. For purposes of this Paragraph no adjustment
shall be made as a result of the issuance of Common Stock upon the conversion of
other securities of the Company which are convertible into Common Stock.
8.    Legal Requirements. If the listing, registration or qualification of the
Option Shares upon any securities exchange or under any federal or state law, or
the consent or approval of any governmental regulatory body is necessary as a
condition of or in connection with the purchase of such Option Shares, the
Company shall not be obligated to issue or deliver the certificates representing
the Option Shares as to which the Option has been exercised unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained. If registration is considered unnecessary by the Company
or its counsel, the Company may cause a legend to be placed on the Option Shares
being issued calling attention to the fact that they have been acquired for
investment and have not been registered.

4

--------------------------------------------------------------------------------

9.    Administration. The Option has been granted pursuant to, and is subject to
the terms and provisions of, the Plan. All questions of interpretation and
application of the Plan and the Option shall be determined by the Committee, and
such determination shall be final, binding and conclusive. The Option shall not
be treated as an incentive stock option (as such term is defined in section
422(b) of the Code) for federal income tax purposes.
10.    Notices. Any notice to be given to the Company shall be addressed to the
Committee at its principal executive office, and any notice to be given to the
Optionee shall be addressed to the Optionee at the address then appearing on the
personnel records of the Company or the Affiliate of the Company by which he is
employed, or at such other address as either party hereafter may designate in
writing to the other. Any such notice shall be deemed to have been duly given
when deposited in the United States mail, addressed as aforesaid, registered or
certified mail, and with proper postage and registration or certification fees
prepaid.
11.    Employment. Nothing herein contained shall affect the right of the
Company or any Affiliate to terminate the Optionee’s employment, services,
responsibilities, duties, or authority to represent the Company or any Affiliate
at any time for any reason whatsoever.
IN WITNESS WHEREOF, the Company has granted this Option as of the day and year
first above written.

TOLL BROTHERS, INC.

By:    ____________________

5

--------------------------------------------------------------------------------

ADDENDUM TO NON-QUALIFIED STOCK OPTION

Special Rules Applicable to Continuation of Option Following Optionee's Death or
Disability, and Providing for Certain Permissible Transfers.
This addendum, applicable to the Option granted to [NAME], the Optionee, as of
[DATE], and effective as of the Effective Date, for the purpose of providing for
continued exercisability and vesting of the Option in certain circumstances (set
forth below under the heading “Continuation of Option”) and for certain limited
rights to transfer the Option (as set forth below under the heading
“Transferability”) has been provided with respect to the Option in connection
with and as consideration for Optionee's agreement not to engage in certain
activities following his or her termination of employment with the Company (as
set forth below under the heading “Non-Competition Provisions”). In recognition
of these mutual agreements as set forth herein, and intending to be legally
bound, the Company and the Optionee hereby agree as follows:
Continuation of Option
Notwithstanding the provisions of Paragraph 2 of this Option, if the Optionee
terminates his or her employment with the Company by reason of his or her death
or Disability:
A.    The Optionee shall not be treated as having voluntarily terminated his or
her employment with the Company;
B.     The Option shall continue to be exercisable and to vest pursuant to the
provisions of this Addendum and;
C.    The Option shall continue in effect following the death or Disability of
the Optionee, and shall continue to vest and be exercisable pursuant to the
terms of Paragraphs 1 and 2 of the Option, except that Optionee’s termination of
employment by reason of death or Disability shall not be taken into account.
The provisions of Paragraph 2, other than Paragraphs 2(a), (b) and (c) shall
continue to apply.
Transferability
Notwithstanding the limitations on transfers otherwise applicable to this
Option, the Option may be transferred by the Optionee in a transaction that
qualifies as a Family Transfer (as that term is defined in the Plan), and the
Option shall, thereafter, be exercisable by the person or entity receiving the
Option pursuant to such Family Transfer. Notwithstanding the foregoing, this
Option shall only be exercisable by a transferee to the same extent and subject
to the same terms and conditions as would have applied had no Family Transfer
been made.
Non-Competition Provisions
In order to induce the Company to agree to the terms of this Stock Option Grant,
as modified by this Addendum, Optionee agrees that Optionee shall not, except
upon a waiver by the Committee in writing of these requirements, at any time
after the Optionee's Disability engage directly or indirectly, as a proprietor,
equity holder, investor (except as a passive investor holding not more than ten
percent (10%) of the outstanding capital stock of a publicly held company),
lender, partner, director, officer, employee, consultant or representative or in
any other capacity in the “Home Building Business”. As used herein, the term
“Home Building Business” shall mean any business involved in the acquisition,
development or improvement of any real estate for potential residential use or
the purchase, construction, development, marketing or sale of

--------------------------------------------------------------------------------

single or multi-family residential units or any other business which competes
with the Company in the determination of the Committee.
This Option shall immediately terminate upon a finding by the Committee, after
full consideration of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has breached terms of this Addendum. In such event,
in addition to immediate termination of the Option, the Optionee shall
automatically forfeit all Option Shares for which the Company has not yet
delivered the share certificates upon refund by the Company of the amount paid
for such Option Shares.
TOLL BROTHERS, INC.

By:    __________________

--------------------------------------------------------------------------------

ADDENDUM TO NON-QUALIFIED STOCK OPTION

Special Rules Applicable to Continuation of Option Following Optionee's
Retirement, Death or Disability, and Providing for Certain Permissible
Transfers.
This addendum, applicable to the Option granted to [NAME], the Optionee, as of
[DATE], and effective as of the Effective Date, for the purpose of providing for
continued exercisability and vesting of the Option in certain circumstances (set
forth below under the heading “Continuation of Option”) and for certain limited
rights to transfer the Option (as set forth below under the heading
“Transferability"”) has been provided with respect to the Option in connection
with and as consideration for Optionee's agreement not to engage in certain
activities following his or her termination of employment with the Company (as
set forth below under the heading “Non-Competition Provisions”). In recognition
of these mutual agreements as set forth herein, and intending to be legally
bound, the Company and the Optionee hereby agree as follows:
Continuation of Option
Notwithstanding the provisions of Paragraph 2 of this Option, if the Optionee
terminates his or her employment with the Company on or after attainment of age
62 (“Retirement”), or by reason of his or her death or Disability:
A.    The Optionee shall not be treated as having voluntarily terminated his or
her employment with the Company;
B.     The Option shall continue to be exercisable and to vest pursuant to the
provisions of this Addendum and;
C.    The Option shall continue in effect following the death, Disability or
Retirement of the Optionee, and shall continue to vest and be exercisable
pursuant to the terms of Paragraphs 1 and 2 of the Option, except that
Optionee’s termination of employment by reason of death, Disability or
Retirement shall not be taken into account.
The provisions of Paragraph 2, other than Paragraphs 2(a), (b) and (c) shall
continue to apply.
Transferability
Notwithstanding the limitations on transfers otherwise applicable to this
Option, the Option may be transferred by the Optionee in a transaction that
qualifies as a Family Transfer (as that term is defined in the Plan), and the
Option shall, thereafter, be exercisable by the person or entity receiving the
Option pursuant to such Family Transfer. Notwithstanding the foregoing, this
Option shall only be exercisable by a transferee to the same extent and subject
to the same terms and conditions as would have applied had no Family Transfer
been made.
Non-Competition Provisions
In order to induce the Company to agree to the terms of this Stock Option Grant,
as modified by this Addendum, Optionee agrees that Optionee shall not, except
upon a waiver by the Committee in writing of these requirements, at any time
after the Optionee's Disability or Retirement engage directly or indirectly, as
a proprietor, equity holder, investor (except as a passive investor holding not
more than ten percent (10%) of the outstanding capital stock of a publicly held
company), lender, partner, director, officer, employee,

--------------------------------------------------------------------------------

consultant or representative or in any other capacity in the “Home Building
Business”. As used herein, the term “Home Building Business” shall mean any
business involved in the acquisition, development or improvement of any real
estate for potential residential use or the purchase, construction, development,
marketing or sale of single or multi-family residential units or any other
business which competes with the Company in the determination of the Committee.
This Option shall immediately terminate upon a finding by the Committee, after
full consideration of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has breached terms of this Addendum. In such event,
in addition to immediate termination of the Option, the Optionee shall
automatically forfeit all Option Shares for which the Company has not yet
delivered the share certificates upon refund by the Company of the amount paid
for such Option Shares.
TOLL BROTHERS, INC.

By:    ____________________