Exhibit 10.45
TOLL BROS., INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Amended and Restated effective as of November 1, 2008
RECITALS
     This Toll Bros., Inc. Nonqualified Deferred Compensation Plan (the “Plan”)
is adopted by Toll Bros., Inc., a Pennsylvania Corporation (the “Employer”) for
certain of its eligible employees. The purpose of the Plan is to offer those
employees an opportunity to elect to defer the receipt of compensation in order
to provide deferred compensation, post- employment, supplemental retirement and
related benefits taxable pursuant to Section 451 of the Internal Revenue Code of
1986, as amended (the “Code”), and to provide a deferred compensation vehicle to
which the Employer may credit certain amounts on behalf of participants. The
Plan is intended to be a “top-hat” plan (i.e., an unfunded deferred compensation
plan maintained for a select group of management or highly- compensated
employees) under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 (“ERISA”).
ARTICLE 1
DEFINITIONS

1.1   409A BENEFIT means any portion of a Participant’s Account that is
attributable to deferrals that were or are made after December 31, 2004, that
first became or becomes vested after December 31, 2004, or otherwise is
determined to be subject to Code Section 409A.   1.2   ACCOUNT means the balance
credited to a Participant’s or Beneficiary’s Plan account, including amounts
credited under the Compensation Deferral Account and the Employer Contribution
Credit Account and deemed income, gains and losses (as determined by the
Employer, in its discretion) credited thereto. A Participant’s or Beneficiary’s
Account shall be determined as of the date of reference.   1.3   BENEFICIARY
means any person or persons so designated in accordance with the provisions of
Article 7.   1.4   BOARD means the Board of Directors of Toll Bros., Inc., a
Pennsylvania corporation, and its successors and assigns, or any other
corporation or business organization which, with the consent of Toll Bros.,
Inc., or its successors or assigns, assumes the obligations of Toll Bros., Inc.,
hereunder.   1.5   CHANGE IN CONTROL means a transaction or series of
transactions occurring after the Effective Date, which results in one of the
following events: (i) Toll Bros., Inc. is no longer a subsidiary of Toll
Brothers, Inc.; (ii) the consummation of a plan or other arrangement pursuant to
which Toll Brothers, Inc. will be dissolved or liquidated; (iii) the
consummation of a sale or other disposition of all or substantially all of the
assets of Toll

1

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

 

    Brothers, Inc.; (iv) the consummation of a merger or consolidation of Toll
Brothers, Inc. (either directly or through a wholly-owned subsidiary) with or
into another corporation, other than, in either case, a merger or consolidation
of Toll Brothers, Inc. in which holders of shares of the Toll Brothers, Inc.’s
common stock immediately prior to the merger or consolidation will hold at least
a majority of the ownership of common stock of the surviving corporation (and,
if one class of common stock is not the only class of voting securities entitled
to vote on the election of directors of the surviving corporation, a majority of
the voting power of the surviving corporation’s voting securities) immediately
after the merger or consolidation, which common stock (and, if applicable,
voting securities) is to be held in the same proportion as such holders’
ownership of Toll Brothers, Inc. common stock immediately before the merger or
consolidation; (v) the date any entity, person or group, (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended), (other than (A) Toll Brothers, Inc. or any of its subsidiaries or any
employee benefit plan (or related trust) sponsored or maintained by Toll
Brothers, Inc. or any of its subsidiaries or (B) any person who, on the date the
Plan is effective, shall have been the beneficial owner of at least fifteen
percent (15%) of the outstanding Toll Brothers, Inc. common stock), shall have
become the beneficial owner of, or shall have obtained voting control over, more
than fifty percent (50%) of the outstanding shares of Toll Brothers, Inc. common
stock; or (vi) the first day after the date this Plan is effective when
directors are elected such that a majority of the Board of Directors of Toll
Brothers, Inc. shall have been members of the Board of Directors of Toll
Brothers, Inc. for less than twenty-four (24) months, unless the nomination for
election of each new director who was not a director at the beginning of such
twenty-four (24) month period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning of such
period.   1.6   CODE means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.   1.7   COMMON STOCK means Toll
Brothers, Inc.’s voting common stock.   1.8   COMPENSATION means the total
current cash remuneration, including regular salary, bonus payments, sales bonus
compensation, profit sharing distributions and other compensation as defined by
the Plan Committee and paid by the Employer to an Eligible Employee with respect
to his or her service for the Employer (as determined by the Employer, in its
discretion).   1.9   COMPENSATION DEFERRALS are defined in Section 3.1(a).  
1.10   COMPETITION means the Employer’s reasonable determination that the
Participant has (i) engaged in, become interested in, directly or indirectly, as
a sole proprietor, as a partner in a partnership, or as a substantial
shareholder in a corporation, or become associated with, in the capacity of an
employee, director, officer, principal, agent, trustee or in any other capacity
whatsoever, any enterprise conducted in the geographic area of the business of
the Employer which enterprise is, or may be deemed to be, competitive with any
business carried on by Toll Brothers, Inc. and its subsidiaries; (ii) solicited,
induced or attempted to induce, in connection with any business competitive with
that of Toll Brothers, Inc. and its subsidiaries,

2

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

 

    any customers or employees of Toll Brothers, Inc. and its subsidiaries to
curtail or discontinue their relationship with Toll Brothers, Inc. and its
subsidiaries; or (iii) disclosed, communicated or misused, to the detriment or
injury of Toll Brothers, Inc. and its subsidiaries, any confidential and
proprietary information relating to the business and operations of Toll
Brothers, Inc. and its subsidiaries to any person or entity not associated with
Toll Brothers, Inc. and its subsidiaries.   1.11   DEFERRAL ELECTION FORM means
the form or forms on which a Participant elects to defer Compensation hereunder
and on which the Participant makes certain other designations as required
thereon.   1.12   DESIGNATION DATE means the date or dates as of which a
designation of deemed investment directions by an individual pursuant to
Section 4.5, or any change in a prior designation of deemed investment
directions by an individual pursuant to Section 4.5, shall become effective. The
Designation Dates in any Plan Year shall only be the first day of any calendar
month as designated by the Plan Committee.   1.13   EFFECTIVE DATE means the
effective date of the Plan, which shall be November 15, 2001.   1.14   ELIGIBLE
EMPLOYEE means, for any Plan Year (or applicable portion thereof), a person
employed by the Employer where compensation is paid on a United States payroll,
who is determined by the Plan Committee in its sole discretion to be a member of
a select group of management or highly compensated employees eligible to
participate in the Plan. By each November 1, the Plan Committee shall notify
those individuals, if any, who will be Eligible Employees for the next Plan
Year. If the Plan Committee determines that an individual first becomes an
Eligible Employee during a Plan Year, the Plan Committee shall notify such
individual of its determination and of the date during the Plan Year on which
the individual shall first become an Eligible Employee.   1.15   EMPLOYER means
Toll Bros., Inc., a Pennsylvania corporation, and its successors and assigns
unless otherwise herein provided, or any other corporation or business
organization which, with the consent of Toll Bros., Inc., or its successors or
assigns, assumes the Employer’s obligations hereunder, and any other corporation
or business organization which agrees, with the consent of Toll Bros., Inc., to
become a party to the Plan.   1.16   EMPLOYER CONTRIBUTION CREDIT ACCOUNT is
defined in Section 3.2.   1.17   EMPLOYER CONTRIBUTION CREDITS is defined in
Section 3.2.   1.18   ENTRY DATE with respect to an individual means 30 days
following the date on which the individual first becomes an Eligible Employee.  
1.19   FORM AND TIMING OF PAYMENT ELECTION FORM means the form or forms on which
a Participant elects the form and timing of the Participant’s Plan benefit.

3

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

 

1.20   PARTICIPANT means any person so designated in accordance with the
provisions of Article 2, including, where appropriate according to the context
of the Plan, any former employee who is or may become eligible to receive a
benefit under the Plan.   1.21   PLAN means this Toll Bros., Inc. Nonqualified
Deferred Compensation Plan set forth herein, as amended from time to time.  
1.22   PLAN COMMITTEE refers to the officers and employees of the Employer
appointed by the Board to administer the Plan on behalf of the Employer.   1.23
  PLAN YEAR means the twelve (12) month period ending on December 31 of each
year during which the Plan is in effect.   1.24   RETIREMENT AGE with respect to
any Participant means the date on which the Participant’s equals or exceeds 61.
  1.25   TOTAL AND PERMANENT DISABILITY means the classification of a
Participant as “disabled” pursuant to the group long term disability plan
maintained by the Employer, or a successor to such plan (or, if there is no such
plan, as reasonably determined by the Employer).   1.26   TRUST means the Trust
described in Article 11.   1.27   TRUSTEE means the trustee of the Trust
described in Article 11.   1.28   VALUATION DATE means the last day of each Plan
Year; the date of distribution; or any other date that the Plan Committee, in
its sole discretion, designates as a Valuation Date.

ARTICLE 2
ELIGIBILITY AND PARTICIPATION

2.1   REQUIREMENTS. Every Eligible Employee on the Effective Date shall be
eligible to become a Participant on the Effective Date. Every other Eligible
Employee shall be eligible to become a Participant on the first Entry Date
occurring on or after the date on which he or she becomes an Eligible Employee.
No individual shall become a Participant, however, if he or she is not an
Eligible Employee on the date his or her participation is to begin.      
Participation in the Compensation Deferral portion of the Plan is voluntary. In
order to participate in that portion of the Plan, an otherwise Eligible Employee
must make written application in such manner as may be required by Section 3.1
and by the Employer and must agree to make Compensation Deferrals as provided in
Article 3.       Participation in the Employer Contribution Credit Account
portion of the Plan is automatic.

4

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

 

2.2   RE-EMPLOYMENT. If a Participant whose employment with the Employer is
terminated is subsequently re-employed, he or she shall become a Participant in
accordance with the provisions of Section 2.1.   2.3   CHANGE OF EMPLOYMENT
CATEGORY. During any period in which a Participant remains in the employ of the
Employer but ceases to be an Eligible Employee, he or she shall not be eligible
to make Compensation Deferrals or to receive Employer Contribution Credits
hereunder.

ARTICLE 3
CONTRIBUTIONS AND CREDITS

3.1   PARTICIPANT CONTRIBUTIONS AND CREDITS.

  a)   COMPENSATION DEFERRALS. In accordance with rules established by the
Employer, a Participant may elect to defer Compensation which is due to be
earned and which would otherwise be paid to the Participant, as a percentage of
Compensation or in any fixed periodic dollar amounts designated by the
Participant. Amounts so deferred will be considered a Participant’s
“Compensation Deferrals.” A Participant shall make such an election with respect
to the coming twelve (12) month period during the period beginning on January 1
and ending on December 31 of each Plan Year following the initial Plan Year (or
during such other period as may be established by the Plan Committee) by
completing and delivering to the Plan Committee a Deferral Election Form in a
form prescribed by the Plan Committee. Should a Participant become newly
eligible during a Plan Year, their election will apply from the date of
participation to the next December 31.         Compensation Deferrals shall be
made through regular payroll deductions or through an election by the
Participant to defer the payment of a bonus, sales bonus compensation or profit
sharing distribution not yet payable to him or her at the time of the election,
which election shall be set forth on such Participant’s Deferral Election Form.
Compensation deferrals will be limited to the extent necessary to satisfy
applicable tax withholding or benefit plan contribution requirements. The
participant may make an irrevocable election during the Plan Year to cease
contributions to the Plan with written notice given to the Committee. The
Participant will then be ineligible to return to the Plan until the next Plan
Year. The Participant may change his or her regular payroll deduction
Compensation Deferral amount as of, and by written notice delivered to the Plan
Committee during the periods described in the preceding paragraph, with such
change being first effective for Compensation to be earned following the next
December 31.         Once made, a Compensation Deferral Election Form with
respect to a payroll deduction election shall continue in force indefinitely,
until changed as provided above. A Deferral Election Form with respect to
deferrals of bonuses, sales bonus compensation, profit sharing distribution
proceeds, or other compensation payments shall continue in force only for the
Plan Year for which the Deferral Election Form is first effective. Compensation
Deferrals shall be deducted by the Employer from the pay of a deferring

5

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

 

      Participant and shall be credited to the Compensation Deferral Account of
the deferring Participant.     b)   PARTICIPANT COMPENSATION DEFERRAL ACCOUNT.
There shall be established and maintained by the Employer a separate
Compensation Deferral Account in the name of each Participant to which shall be
credited or debited, as applicable: (a) amounts equal to the Participant’s
Compensation Deferrals; (b) amounts equal to any deemed earnings and/or losses
(to the extent realized, based upon deemed fair market value of the Compensation
Deferral; and (c) any withdrawals or distributions therefrom. A Participant
shall at all times be 100% vested in amounts credited to his or her Compensation
Deferral Account.     c)   COMPLIANCE WITH CODE SECTION 409A. Notwithstanding
anything to the contrary in this Section 3.1, any election by a Participant to
defer base compensation shall become effective with respect to base compensation
that is payable for services performed during a Plan Year only if such election
is filed prior to such deadline as is established by the Plan Committee for such
deferral elections, which in all cases shall be no later than December 31 of the
prior Plan Year, and any such deferral election shall become irrevocable as of
such deadline and may not thereafter be modified until December 31 of the Plan
Year following the Plan Year in which such election became irrevocable. Any
election by a Participant to defer an annual bonus that is determined by
reference to the Employer’s fiscal year shall be effective only if such election
is filed prior to such deadline as is established by the Plan Committee for such
deferral elections, which in all cases shall be no later than October 31 of the
Employer’s prior fiscal year, and any such deferral election shall become
irrevocable as of such deadline and may not thereafter be modified until
October 31 of the Employer’s fiscal year following the fiscal year in which such
election became irrevocable. Except as otherwise provided in this Plan or in the
Participant’s Deferral Election Form, a Participant’s election to defer
Compensation shall remain in effect from one Plan Year to the next, unless
otherwise changed by the Participant. The provisions of this Section 3.1(c) are
intended to be consistent with the requirements of Treasury
Regulation Section 1.409A-2(a). In addition, and notwithstanding any other
provisions of this Section 3.1, at the discretion of the Plan Committee, an
Eligible Employee may elect to defer Compensation within 30 days after the date
the Eligible Employee first becomes eligible to participate in the Plan;
provided, however, that any such election shall only be effective with respect
to Compensation paid for services to be performed after such 30 day period,
consistent with the requirements of Treasury Regulation Section 1.409A-2(a)(7)..

3.2   EMPLOYER CONTRIBUTION CREDITS. Apart from Compensation Deferral
Contributions, the Employer shall retain the right to make discretionary
contributions for any Participant under this Plan. If applicable, there shall be
established and maintained a separate Employer Contribution Credit Account in
the name of each Participant which shall be credited or debited, as applicable,
(a) amounts equal to the Employer’s Contribution Credits; and (b) any deemed
earnings and/or losses (as determined by the Employer, in its discretion)
allocated to the Employer Contribution Credit Account. The Participant’s
Employer Contribution Credits for a Plan Year, if any, shall be determined by
the Employer’s Board of

6

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

 

    Directors in its sole discretion. The Employer shall credit such
Contributions on behalf of such individuals, in such amounts and with such
frequency, as the Board determines in its sole discretion. A Participant shall
become vested in amounts (if any) credited to his or her Employer Contribution
Credit Account according to any vesting schedule(s) adopted by the Employer’s
Board of Directors, in its sole discretion, provided, however, that a
Participant shall become fully vested in amounts (if any) credited to his or her
Employer Contribution Credit Account upon the occurrence during the
Participant’s employment with the Employer of: (i) the Participant’s death or
Total and Permanent Disability or (ii) a Change in Control of the Employer.  
3.3   CONTRIBUTIONS TO THE TRUST. An amount may be contributed, if and when
applicable, by the Employer to the Trust maintained under Section 11 equal to
the amount(s) required to be credited to the Participant’s Account under
Section 3.1 and 3.2. The Employer shall make a good faith effort to contribute
these amounts to the Trust as soon as practicable following the date on which
the contribution credit amount(s) are determined.

ARTICLE 4
ALLOCATION OF FUNDS

4.1   ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. Subject to such
limitations as may from time to time be required by law, imposed by the Employer
or the Trustee or contained elsewhere in the Plan (including Section 4.6), and
subject to such operating rules and procedures as may be imposed from time to
time by the Employer, prior to the date on which a direction will become
effective, the Participant shall have the right to direct the Employer as to how
amounts in his or her Account shall be deemed to be invested. The Employer shall
direct the Trustee to invest the account maintained in the Trust on behalf of
the Participant pursuant to the deemed investment directions the Employer has
properly received from the Participant.       The value of the Participant’s
Account shall be equal to the value of the account maintained under the Trust on
behalf of the Participant. As of each Valuation Date of the Trust, the
Participant’s Account will be credited or debited to reflect the Participant’s
deemed investments of the Trust. The Participant’s Account will be credited or
debited with the increase or decrease in the realizable net asset value or
credited interest, as applicable, of the designated deemed investments, as
follows: As of each Valuation Date, an amount equal to the net increase or
decrease in realizable net asset value or credited interest, as applicable (as
determined by the Trustee), of each deemed investment option within the Account
since the preceding Valuation Date shall be allocated among all Participants’
Accounts deemed to be invested in that investment option in accordance with the
ratio which the portion of the Account of each Participant which is deemed to be
invested within that investment option, determined as provided herein, bears to
the aggregate of all amounts deemed to be invested within that investment
option.   4.2   ACCOUNTING FOR DISTRIBUTIONS. As of the date of any distribution
hereunder, the distribution made hereunder to the Participant or his or her
Beneficiary or Beneficiaries shall be charged to such Participant’s Account.

7

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

 

4.3   SEPARATE ACCOUNTS. A separate bookkeeping account under the Plan shall be
established and maintained by the Employer to reflect the Account for each
Participant with bookkeeping sub-accounts to show separately the Participant’s
Compensation Deferral and the Participant’s Employer Contribution Credit
Account. Each sub-account will separately account for the credits and debits
described in Article 3 and Section 4.2.   4.4   DEEMED INVESTMENT DIRECTIONS OF
PARTICIPANTS. Subject to such limitations as may from time to time be required
by law, imposed by the Employer or the Trustee or contained elsewhere in the
Plan (including Section 4.5), and subject to such operating rules and procedures
as may be imposed from time to time by the Employer prior to and effective for
each Designation Date, each Participant may communicate to the Employer a
direction (in accordance with (a), below) as to how his or her Plan Accounts
should be deemed to be invested among such categories of deemed investments as
may be made available by the Employer hereunder. Such direction shall designate
the percentage (in any whole percent multiples) of each portion of the
Participant’s Plan Accounts which is requested to be deemed to be invested in
such categories of deemed investments, and shall be subject to the following
rules:

  a)   Any initial or subsequent deemed investment direction shall be in
writing, on a form supplied by and filed with the Employer, and/or, as required
or permitted by the Employer, shall be by oral designation and/or electronic
transmission designation. A designation shall be effective as of the Designation
Date next following the date the direction is received and accepted by the
Employer on which it would be reasonably practicable for the Employer to effect
the designation.     b)   All amounts credited to the Participant’s Account
shall be deemed to be invested in accordance with the then effective deemed
investment direction, and as of the Designation Date with respect to any new
deemed investment direction, all or a portion of the Participant’s Account at
that date shall be reallocated among the designated deemed investment funds
according to the percentages specified in the new deemed investment direction
unless and until a subsequent deemed investment direction shall be filed and
become effective. An election concerning deemed investment choices shall
continue indefinitely as provided in the Participant’s most recent investment
direction form provided by and filed with the Employer.     c)   If the Employer
receives an initial or revised deemed investment direction which it deems to be
incomplete, unclear or improper, the Participant’s investment direction then in
effect shall remain in effect (or, in the case of a deficiency in an initial
deemed investment direction, the Participant shall be deemed to have filed no
deemed investment direction) until the next Designation Date, unless the
Employer provides for, and permits the application of, corrective action prior
thereto.     d)   If the Employer possesses (or is deemed to possess as provided
in (c), above) at any time directions as to the deemed investment of less than
all of a Participant’s Account, the Participant shall be deemed to have directed
that the undesignated portion of the Account

8

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

 

      be deemed to be invested in a money market, fixed income or similar fund
made available under the Plan as determined by the Employer in its discretion.  
  e)   Each Participant hereunder, as a condition to his or her participation
hereunder, agrees to hold the Employer and its agents and representatives
harmless, for any losses or damages of any kind relating to the investment of
the Participant’s Account hereunder, other than such losses or damages that
result directly from gross negligence or intentional malfeasance on the part of
the Employer or its agents or representatives.     f)   Each reference in this
Section to a Participant shall be deemed to include, where applicable, a
reference to a Beneficiary.

4.5   EXPENSES AND TAXES. Expenses associated with the administration or
operation of the Plan including Trustee fees, shall be paid by the Employer from
its general assets. Any taxes allocable to an Account (or portion thereof)
maintained under the Plan which are payable prior to the distribution of the
Account (or portion thereof), as determined by the Employer, shall be paid by
the Employer.

ARTICLE 5
ENTITLEMENT TO BENEFITS

5.1   FIXED PAYMENT DATES; TERMINATION OF EMPLOYMENT. On his or her Form and
Timing of Payment Election Form, a Participant shall select the manner of
payment (as described in Section 6.2(b)) and shall select a fixed payment date
for the payment or commencement of payment of his or her Account (or the
Participant may select fixed payment dates for the payment or commencement of
payment of portions of his or her Account), which will be valued and payable
according to the provisions of Article 6. Such payment dates may be extended to
later dates so long as elections to so extend the payment dates are made by the
Participant at least six (6) months prior to the date on which the distribution
is scheduled to be made or commence. Such payment dates may not be accelerated,
except as provided in Section 5.2. A Participant may elect on his or her Form
and Timing of Payment Election an election each year they are eligible to
participate.       A Participant who selects payment or commencement of payment
of his or her Account (or portions thereof) on a fixed date or dates shall
receive payment of his or her Account at the earlier of such fixed payment date
or dates (as extended, if applicable) or his or her termination of employment
with the Employer.       If a Participant’s employment with the Employer is
terminated for any reason (other than by reason of Total and Permanent
Disability) prior to attainment of Retirement Age or if a Participant does not
make an election as provided above for any particular amounts hereunder, and the
Participant terminates employment with the Employer for any reason, the
Participant’s Account at the date of such termination shall be valued and
payable at or commencing at such termination according to the provisions of
Article 6.

9

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

 

    Notwithstanding anything herein to the contrary, any election by a
Participant regarding the time and manner of payment of any 409A Benefit must be
made at the same time as the deferral election to which such 409A Benefit is
attributable (or at such later time as may be permitted by the Plan Committee,
consistent with applicable IRS guidance regarding compliance with Code
Section 409A).   5.2   IMMEDIATE DISTRIBUTION ELECTION; TEN PERCENT PENALTY. In
addition to a Participant’s option to have payment or commencement of payment of
his or her Account occur on the fixed payment date or on the Participant’s
termination of employment as described in Section 5.1, a Participant may elect
to have his or her Account (or a portion thereof) paid or commence to be paid as
soon as possible upon his or her election. For purposes of this Section, the
value of the Participant’s Account shall be determined as of the date of the
distribution. Any amount paid pursuant to this Section shall be subject to a ten
percent (10%) penalty, with the amount of the penalty permanently forfeited from
the Participant’s Account and returned to the Employer on or about the date of
the distribution. In addition, the Participant will be ineligible to participant
in any manner in the Plan for a period not less than the balance of the Plan
Year within which the distribution is made and the subsequent Plan Year.      
Any Participant wishing to elect an immediate distribution pursuant to this
Section must complete an Immediate Distribution Election Form. The distribution
shall occur or commence as soon as is administratively feasible following the
Employer’s receipt and approval of the Immediate Distribution Election Form.    
  Notwithstanding anything to the contrary in this Section 5.2, no distribution
of any 409A Benefit shall be permitted pursuant to this Section 5.2.   5.3  
HARDSHIP DISTRIBUTIONS. In the event of financial hardship of the Participant,
as hereinafter defined, the Participant may apply to the Employer for the
distribution of all or any part of his or her Account, without penalty. The
Employer shall consider the circumstances of each such case, and the best
interests of the Participant and his or her family, and shall have the right, in
its sole discretion, if applicable, to allow such distribution, or, if
applicable, to direct a distribution of part of the amount requested, or to
refuse to allow any distribution. Upon a finding of financial hardship, the
Employer shall direct the appropriate distribution to the Participant from
amounts held by the Trust in respect of the Participant’s vested account. In no
event shall the aggregate amount of the distribution exceed either the full
value of the Participant’s vested account or the amount determined by the
Employer to be necessary to alleviate the Participant’s financial hardship
(which financial hardship may be considered to include any taxes due as a result
of the distribution occurring because of this Section), and which is not
reasonably available from other resources of the Participant. For purposes of
this Section, the value of the Participant’s Account shall be determined as of
the date of the distribution. “Financial hardship” means (a) a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent (as defined in Code
Section 152(a)) of the Participant, (b) loss of the Participant’s property due
to casualty, or (c) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the

10

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

 

    control of the Participant, each as determined to exist by the Employer. A
distribution may be made under this Section only with the consent of the
Employer.       Notwithstanding anything to the contrary in this Section 5.3, no
distribution of any 409A Benefit shall be permitted pursuant to this
Section 5.3, except to the extent that it is determined that the financial
hardship of a Participant also qualifies as an “unforeseeable emergency” as that
term is used for purposes of Code Section 409A(a)(2)(B)(ii), and Treasury
Regulation Section 1.409A-3(i)(3).   5.4   RE-EMPLOYMENT OF RECIPIENT. If a
Participant receiving installment distributions pursuant to Section 6.2 is
re-employed by the Employer, the remaining distributions due to the Participant
shall be suspended until such time as the Participant (or his or her
Beneficiary) once again becomes eligible for benefits under Section 5.1 or 5.2,
at which time such distribution shall commence, subject to the limitations and
conditions contained in the Plan.   5.5   REDEFERRALS. In the event a
Participant desires to extend a previously elected payment date that is
applicable to the Participant’s 409A Benefit to a subsequent date, such election
shall be permitted only if the election to make such modification to such
elected payment date is filed at least 12 months prior to the date the
distribution would have been paid (or the date the first distribution would have
been paid out of a series of distributions), and such modification results in a
deferral of payment (or distribution commencement) for at least five years. For
these purposes, a distribution of benefits in a series of installments shall be
treated, consistent with applicable guidance issued pursuant to Code
Section 409A, as a single payment distributed as of the date such series of
payments is to commence.

ARTICLE 6
DISTRIBUTION OF BENEFITS

6.1   AMOUNT. A Participant (or his or her Beneficiary) shall become entitled to
receive, within ninety (90) days following the earlier of the Participant’s
termination of employment with the Employer or the date or dates selected by the
Participant on his or her Form and Timing of Payment Election Form, with the
Committee’s consent (or, if no such selection is made, on or about the date of
the Participant’s termination of employment with the Employer), a distribution
in an aggregate amount equal to the Participant’s vested Account. A Participant
may alternatively elect to receive an immediate distribution, subject to a ten
percent (10%) penalty, of all or a portion of his or her Account pursuant to
Section 5.2. Any payment due hereunder from the Trust, which is not paid by the
Trust for any reason, will be paid by the Employer from its general assets.
Notwithstanding the foregoing, to the extent payment of a Participant’s 409A
Benefit cannot be paid upon termination of employment without violating Code
Section 409A, payment of such 409A Benefit shall be deferred as required, either
by reason of the provisions of Section 6.6, below, or if required in connection
with the Participant’s election to elect a new payment date pursuant to
Section 5.5, above.

11

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

 

6.2   METHOD OF PAYMENT.

  a)   PAYMENTS. Payments under the Plan shall be made in cash as elected by the
Participant and as permitted by the Employer and the Trustee in their sole and
absolute discretion subject, however, to Section 12.4 and any other applicable
restrictions on transfer as may be applicable legally or contractually.     b)  
TIMING AND MANNER OF PAYMENT. Except as otherwise provided herein, in the case
of distributions to a Participant or his or her Beneficiary by virtue of an
entitlement pursuant to Sections 5.1 or 5.2, an aggregate amount equal to the
Participant’s vested Account will be paid by the Trust or the Employer, as
provided in Section 6.1, in a lump sum or in bi-weekly, monthly, quarterly or
annual substantially equal installments for a period not to exceed ten
(10) years (adjusted for gains and losses), as selected by the Participant as
provided in Article 5. If a Participant fails to designate properly the manner
of payment of the Participant’s benefit under the Plan, such payment will be in
a lump sum.         If the whole or any part of a payment hereunder is to be in
installments, the balance of the Participant’s Account not yet distributed shall
continue to be deemed to be invested pursuant to Sections 4.1 and 4.5 under such
procedures as the Employer may establish, in which case any deemed income, gain,
loss or expense or tax allocable thereto (as determined by the Trustee, in its
discretion) shall be reflected in the installment payments in such equitable
manner as the Trustee shall determine.         Notwithstanding the preceding, if
at any time up to twenty- four (24) months following the Participant’s
termination of employment with the Employer the Participant enters in
Competition with Toll Brothers, Inc. and/or its subsidiaries, the Employer may
accelerate the payment of the Participant’s benefits hereunder.     c)  
COMPLIANCE WITH CODE SECTION 409A. Notwithstanding anything to the contrary in
this Section 6.2, no distribution of any 409A Benefit shall be made at a time or
in a manner that is not consistent with a valid election in effect at the time
the deferral to which such 409A Benefit is attributable was made (or at such
later time as may be permitted by the Plan Committee, consistent with applicable
IRS guidance regarding compliance with Code Section 409A), or pursuant to a
valid modification of the time and manner of distribution as permitted under
Section 5.1.

6.3   DEATH BENEFITS. If a Participant dies before terminating his or her
employment with the Employer and before the commencement of payments to the
Participant hereunder, the entire value of the Participant’s Account shall be
paid, within ninety (90) days following the Participant’s death, in a lump sum,
to the person or persons designated in accordance with Section 7.1. Upon the
death of a Participant after payments hereunder have begun but before he or she
has received all payments to which he or she is entitled under the Plan, the
remaining benefit payments shall be paid to the person or persons designated in
accordance with Section 7.1, in the time and manner in which such benefits were
otherwise to be payable

12

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

 

    to the Participant, or the Beneficiary may make an irrevocable election to
receive the remaining balance in a lump sum.       Notwithstanding the foregoing
provisions of this Section 6.3, no election to modify the manner of payment of
any 409A Benefit under this Section 6.3 shall be permitted except to the extent
such election is made at the time the deferral to which such 409A Benefit is
attributable was made, or at such later time as may be permitted by the Plan
Committee, consistent with applicable IRS guidance regarding compliance with
Code Section 409A.   6.4   DISABILITY BENEFITS. If a Participant experiences a
Total and Permanent Disability before terminating his or her employment with the
Employer and before the commencement of payments to the Participant hereunder,
the Participant shall become fully vested in his or her Account, and shall
become entitled to receive (or to commence receiving) the entire balance of his
or her Account in a single lump sum payment on the thirtieth (30th) day
following the Total and Permanent Disability (or as soon thereafter as is
administratively feasible). Notwithstanding the preceding, the Participant may
irrevocably elect, prior to the end of such thirty (30) day period, to waive his
or her right to a single lump sum payment and instead to receive his or her
Account in installments as provided hereunder or pursuant to an alternative
payment schedule offer by the Employer, including a schedule which takes into
account the payments the Participant receives under the group long term
disability plan maintained by the Employer. If such waiver election is timely
made, the Participant shall receive his or her entire Account balance at the
time and in the manner designated by the Participant on the form supplied by the
Employer on which such waiver election is made.       Notwithstanding the
foregoing provisions of this Section 6.4, no election to modify the manner of
payment of any 409A Benefit under this Section 6.4 shall be permitted except to
the extent such election is made at the time the deferral to which such 409A
Benefit is attributable was made, or at such later time as may be permitted by
the Plan Committee, consistent with applicable IRS guidance regarding compliance
with Code Section 409A. In addition, no distribution of any 409A Benefit shall
be made by reason of a Participant’s Total and Permanent Disability under this
Section 6.4 unless such Participant’s condition also qualifies as “disabled” as
that term is defined in Code Section 409A(a)(2)(C) and Treasury Regulation
Section 1.409A-3(i)(4).   6.5   CHANGE IN CONTROL. Notwithstanding anything
herein to the contrary, upon a Change in Control of Toll Brothers, Inc., each
Participant shall become fully vested in his of her Account, and shall become
entitled to receive the entire balance of his of her Account in a single lump
sum payment on the thirtieth (30th) day following the Change in Control (or as
soon as administratively feasible). Notwithstanding the preceding, the
Participant may irrevocably elect, prior to the end of such thirty (30) day
period, to waive his or her right to receive such a Change in Control
distribution. If such waiver election is timely made, the Participant shall
receive his or her entire Account balance at the time designated in the most
recent Participant Enrollment and Election Form received by the Committee from
the Participant, or, if no election as to timing of Account distribution has
been made on the Participant’s Enrollment and Election Form, at the time the
Participant terminates employment with the Employer.

13

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

 

    Notwithstanding the foregoing provisions of this Section 6.5, each
Participant’s 409A Benefit shall be distributed on the thirtieth (30th) day
following the Change in Control (or as soon as administratively feasible) but
only if the event that constitutes a Change in Control also qualifies as a
“change in the ownership or effective control of the corporation” as that phrase
is used for purposes of Code Section 409A, and then only to the extent and in
the manner permissible under Code Section 409A(a)(2)(A)(v), and applicable
regulations promulgated thereunder. In addition, no Participant shall be
permitted at the time of a Change in Control to waive or defer receipt of his or
her 409A Benefit distributable by reason of such Change in Control. Waiver of a
right to receive the Change in Control distribution of a Participant’s 409A may,
however, be permitted if such waiver is made at the time the deferral to which
such 409A Benefit is attributable was made, or at such later time as may be
permitted by the Plan Committee, consistent with applicable IRS guidance
regarding compliance with Code Section 409A.   6.6   SPECIAL DEFERRAL OF
DISTRIBUTIONS TO SPECIFIED EMPLOYEES. Distribution of any 409A Benefit made on
account of a Participant’s termination of employment that would be paid prior to
the date that is six months after such Participant’s termination of employment,
shall be deferred and paid out as soon as practicable following the six month
anniversary of such Participant’s termination of employment; provided, however,
that this Section 6.6 shall only be applicable to a Participant who is a
“specified employee,” as that term is defined in Code Section 409A(a)(2)(B)(i)
and Treasury Regulation Section 1.409A-1(i)). To the extent any payment of
benefits to a Participant is delayed by reason of this Section 6.6, such
Participant’s Compensation Deferral Account shall continue to be credited with
deemed investment returns, earning, gains and losses in the same manner as
Compensation Deferral Accounts are credited for Participants who have not
terminated employment with the Employer.

ARTICLE 7
BENEFICIARIES; PARTICIPANT DATA

7.1   DESIGNATION OF BENEFICIARIES. Each Participant from time to time may
designate any person or persons (who may be named contingently or successively)
to receive such benefits as may be payable under the Plan upon or after the
Participant’s death, and such designation may be changed from time to time by
the Participant by filing a new designation. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Employer, and will be effective only when filed in writing with the Employer
during the Participant’s lifetime.       In the absence of a valid Beneficiary
designation, or if, at the time any benefit payment is due to a Beneficiary,
there is no living Beneficiary validly named by the Participant, the Employer
shall pay any such benefit payment to the Participant’s spouse, if then living,
but otherwise to the Participant’s estate. In determining the existence or
identity of anyone entitled to a benefit payment, the Employer may rely
conclusively upon information supplied by the Participant’s personal
representative, executor or administrator. If a question arises as to the
existence or identity of anyone entitled to receive a benefit payment as
aforesaid, or if

14

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

 

    a dispute arises with respect to any such payment, then, notwithstanding the
foregoing, the Employer, in its sole discretion, may distribute such payment to
the Participant’s estate without liability for any tax or other consequences
which might flow therefrom, or may take such other action as the Employer deems
to be appropriate.   7.2   INFORMATION TO BE FURNISHED BY PARTICIPANTS AND
BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES. Any
communication, statement or notice addressed to a Participant or to a
Beneficiary at his or her last post office address as shown on the Employer’s
records shall be binding on the Participant or Beneficiary for all purposes of
the Plan. The Employer shall not be obliged to search for any Participant or
Beneficiary beyond the sending of a registered letter to such last known
address. If the Employer notifies any Participant or Beneficiary that he or she
is entitled to an amount under the Plan and the Participant or Beneficiary fails
to claim such amount or make his or her location known to the Employer within
three (3) years thereafter, then, except as otherwise required by law, the
Employer may direct distribution of such amount to the Participant’s estate. If
the location of none of the foregoing persons can be determined, the Employer
shall have the right to direct that the amount payable shall be deemed to be a
forfeiture, except that the dollar amount of the forfeiture, unadjusted for
deemed gains or losses in the interim, shall be paid by the Employer if a claim
for the benefit subsequently is made by the Participant or the Beneficiary to
whom it was payable. If a benefit payable to an unlocated Participant or
Beneficiary is subject to escheat pursuant to applicable state law, the Employer
shall not be liable to any person for any payment made in accordance with such
law.

ARTICLE 8
ADMINISTRATION

8.1   PLAN COMMITTEE. Notwithstanding any other provision of the Plan document,
any member of the Plan Committee or any other officer or employee of the
Employer who exercises discretion or authority on behalf of the Employer shall
not be a fiduciary of the Plan merely by virtue of his or her exercise of such
discretion or authority. The Board shall identify the Employer’s officers and
employees who shall serve as members of the Plan Committee. Because this Plan is
a “top hat” arrangement, the Plan Committee shall not be subject to the duties
imposed by the provisions of Part 4 of Title I of ERISA.   8.2   ADMINISTRATIVE
AUTHORITY. Except as otherwise specifically provided herein, the Plan Committee
shall have the sole responsibility for and the sole discretion over the
operation and administration of the Plan, and shall have the power and authority
to take all action and to make all decisions and interpretations which may be
necessary or appropriate in order to administer and operate the Plan, including,
without limiting the generality of the foregoing, the power, duty, discretion
and responsibility to:

  a)   Resolve and determine all disputes or questions arising under the Plan,
and to remedy any ambiguities, inconsistencies or omissions in the Plan.

15

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

 

  b)   Adopt such rules of procedure and regulations as in its opinion may be
necessary for the proper and efficient administration of the Plan and as are
consistent with the Plan.     c)   Implement the Plan in accordance with its
terms and the rules and regulations adopted as described above.     d)   Make
determinations with respect to the eligibility of any Eligible Employee to be or
continue as a Participant and make determinations concerning the crediting of
Accounts.     e)   Appoint any persons or firms, or otherwise act to secure
specialized advice or assistance, as it deems necessary or desirable in
connection with the administration and operation of the Plan, and the Employer
shall be entitled to rely conclusively upon, and shall be fully protected in any
action or omission taken by it in good faith reliance upon, the advice or
opinion of such firms or persons. The Employer shall have the power and
authority to delegate from time to time by written instrument all or any part of
its duties, powers or responsibilities under the Plan, both ministerial and
discretionary, as it deems appropriate, to any person or committee, and in the
same manner to revoke any such delegation of duties, powers or responsibilities.
Any action of such person or committee in the exercise of such delegated duties,
powers or responsibilities shall have the same force and effect for all purposes
hereunder as if such action had been taken by the Employer. Further, the
Employer may authorize one or more persons to execute any certificate or
document on behalf of the Employer, in which event any person notified by the
Employer of such authorization shall be entitled to accept and conclusively rely
upon any such certificate or document executed by such person as representing
action by the Employer until such notified person shall have been notified of
the revocation of such authority.

8.3   UNIFORMITY OF DISCRETIONARY ACTS. Whenever in the administration or
operation of the Plan discretionary actions by the Employer are required or
permitted, such actions shall be consistently and uniformly applied to all
persons similarly situated, and no such action shall be taken which shall
discriminate in favor of any particular person or group of persons.   8.4  
LITIGATION. Except as may be otherwise required by law, in any action or
judicial proceeding affecting the Plan, no Participant or Beneficiary shall be
entitled to any notice or service of process, and any final judgment entered in
such action shall be binding on all persons interested in, or claiming under,
the Plan.   8.5   CLAIMS PROCEDURE. Any person claiming a benefit under the Plan
(a “Claimant”) shall present the claim, in writing, to the Employer, and the
Employer shall respond in writing. If the claim is denied, the written notice of
denial shall state, in a manner calculated to be understood by the Claimant:

  a)   The specific reason or reasons for the denial, with specific references
to the Plan provisions on which the denial is based;

16

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

 

  b)   A description of any additional material or information necessary for the
Claimant to perfect his or her claim and an explanation of why such material or
information is necessary; and     c)   An explanation of the Plan’s claims
review procedure.

    The written notice denying or granting the Claimant’s claim shall be
provided to the Claimant within ninety (90) days after the Employer’s receipt of
the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension is required, written notice of the
extension shall be furnished by the Employer to the Claimant within the initial
ninety (90) day period and in no event shall such an extension exceed a period
of ninety (90) days from the end of the initial ninety (90) day period. Any
extension notice shall indicate the special circumstances requiring the
extension and the date on which the Employer expects to render a decision on the
claim. Any claim not granted or denied within the period noted above shall be
deemed to have been denied.       Any Claimant whose claim is denied, or deemed
to have been denied under the preceding sentence (or such Claimant’s authorized
representative), may, within sixty (60) days after the Claimant’s receipt of
notice of the denial, or after the date of the deemed denial, request a review
of the denial by notice given, in writing, to the Employer. Upon such a request
for review, the claim shall be reviewed by the Employer (or its designated
representative) which may, but shall not be required to, grant the Claimant a
hearing. In connection with the review, the Claimant may have representation,
may examine pertinent documents, and may submit issues and comments in writing.
      The decision on review normally shall be made within sixty (60) days of
the Employer’s receipt of the request for review. If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Employer, and the time limit for the decision on review shall be
extended to one hundred twenty (120) days. The decision on review shall be in
writing and shall state, in a manner calculated to be understood by the
Claimant, the specific reasons for the decision and shall include references to
the relevant Plan provisions on which the decision is based. The written
decision on review shall be given to the Claimant within the sixty (60) day (or,
if applicable, the one hundred twenty (120) day) time limit discussed above. If
the decision on review is not communicated to the Claimant within the sixty
(60) day (or, if applicable, the one hundred twenty (120) day) period discussed
above, the claim shall be deemed to have been denied upon review. All decisions
on review shall be final and binding with respect to all concerned parties.

ARTICLE 9
AMENDMENT

9.1   RIGHT TO AMEND. The Employer, by action of its Board of Directors, shall
have the right to amend the Plan, at any time and with respect to any provisions
hereof, and all parties hereto or claiming any interest hereunder shall be bound
by such amendment; provided, however, that no such amendment shall deprive a
Participant or a Beneficiary of a right accrued hereunder prior to the date of
the amendment.

17

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

 

9.2   AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN. Notwithstanding the
provisions of Section 9.1, the Plan may be amended by the Employer, by action of
its Board of Directors, at any time, retroactively if required, if found
necessary, in the opinion of the Employer, in order to ensure that the Plan is
characterized as “top-hat” plan of deferred compensation maintained for a select
group of management or highly compensated employees as described under ERISA
Sections 201(2), 301(a)(3), and 401(a)(1), and to conform the Plan to the
provisions and requirements of any applicable law (including ERISA and the
Code). No such amendment shall be considered prejudicial to any interest of a
Participant or a Beneficiary hereunder.

ARTICLE 10
TERMINATION

10.1   EMPLOYER’S RIGHT TO TERMINATE OR SUSPEND PLAN. The Employer reserves the
right to terminate the Plan and/or its obligation to make further credits to
Plan Accounts, by action of its Board of Directors. The Employer also reserves
the right to suspend the operation of the Plan for a fixed or indeterminate
period of time, by action of its Board of Directors.   10.2   AUTOMATIC
TERMINATION OF PLAN. The Plan automatically shall terminate upon the dissolution
of the Employer, or upon its merger into or consolidation with any other
corporation or business organization if there is a failure by the surviving
corporation or business organization to specifically adopt and agree to continue
the Plan.   10.3   SUSPENSION OF DEFERRALS. In the event of a suspension of the
Plan, the Employer shall continue all aspects of the Plan, other than
Compensation Deferrals, during the period of the suspension, in which event
payments hereunder will continue to be made during the period of the suspension
in accordance with Articles 5 and 6.   10.4   ALLOCATION AND DISTRIBUTION. This
Section shall become operative on a complete termination of the Plan. The
provisions of this Section also shall become operative in the event of a partial
termination of the Plan, as determined by the Employer, but only with respect to
that portion of the Plan attributable to the Participants to whom the partial
termination is applicable. Upon the effective date of any such event,
notwithstanding any other provisions of the Plan, no persons who were not
theretofore Participants shall be eligible to become Participants, the value of
the interest of all Participants and Beneficiaries shall be determined and paid
to them as soon as is practicable after such termination in a lump sum payment.
  10.5   SUCCESSOR TO EMPLOYER. Any corporation or other business organization
which is a successor to the Employer by reason of a consolidation, merger or
purchase of substantially all of the assets of the Employer shall have the right
to become a party to the Plan by adopting the same by resolution of the entity’s
board of directors or other appropriate governing body. If, within ninety
(90) days from the effective date of such consolidation, merger or sale of
assets, such new entity does not become a party hereto, as above provided,

18

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

 

    the Plan shall be automatically terminated, and the provisions of
Section 10.4 shall become operative.

ARTICLE 11
THE TRUST
The Employer may establish the Trust with the Trustee pursuant to such terms and
conditions as are set forth in the Trust agreement to be entered into between
the Employer and the Trustee, or the Employer shall cause to be maintained one
or more separate sub-accounts in an existing Trust maintained with the Trustee
with respect to one or more other plans of the Employer, which sub-account or
sub-accounts represent Participants’ interests in the Plan. Any such Trust shall
be intended to be treated as a “grantor trust” under the Code and the
establishment of the Trust or the utilization of any existing Trust for Plan
benefits, as applicable, shall not be intended to cause any Participant to
realize current income on amounts contributed thereto, and the Trust shall be so
interpreted.
ARTICLE 12
MISCELLANEOUS

12.1   STATUS OF PARTICIPANTS.

  a)   Employees, Participants and Inactive Participants under this Plan shall
have the status of general unsecured creditors of the Employer;     b)   This
Plan constitutes a promise by the Employer to make benefit payments in the
future;     c)   Any trust to which this Plan refers (i.e. any trust created by
the Employer and any assets held by the trust to assist the Employer in meeting
its obligations under the Plan) shall be based on the terms of the model trust
described in Revenue Procedure 92-64; and     d)   It is the intention of the
parties that the arrangements under this Plan shall be unfunded for tax purposes
and for purposes of Title I of ERISA.

12.2   LIMITATIONS ON LIABILITY OF EMPLOYER. Neither the establishment of the
Plan nor any modification thereof, nor the creation of any account under the
Plan, nor the payment of any benefits under the Plan shall be construed as
giving to any Participant or other person any legal or equitable right against
the Employer, or any officer or employer thereof except as provided by law or by
any Plan provision. The Employer does not in any way guarantee any Participant’s
Account from loss or depreciation, whether caused by poor investment performance
of a deemed investment or the inability to realize upon an investment due to an
insolvency affecting an investment vehicle or any other reason. In no event
shall the Employer, or any successor, employee, officer, director or stockholder
of the Employer, be liable to any person on account of any claim arising by
reason of the provisions of the Plan or of any instrument or instruments
implementing its provisions, or for the failure of any Participant, Beneficiary
or other person to be entitled to any particular tax consequences with respect
to the Plan, or any credit or distribution hereunder.

19

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

 

12.3   CONSTRUCTION. If any provision of the Plan is held to be illegal or void,
such illegality or invalidity shall not affect the remaining provisions of the
Plan, but shall be fully severable, and the Plan shall be construed and enforced
as if said illegal or invalid provision had never been inserted herein. For all
purposes of the Plan, where the context admits, the singular shall include the
plural, and the plural shall include the singular. Headings of Articles and
Sections herein are inserted only for convenience of reference and are not to be
considered in the construction of the Plan. The laws of the State of
Pennsylvania shall govern, control and determine all questions of law arising
with respect to the Plan and the interpretation and validity of its respective
provisions, except where those laws are preempted by the laws of the United
States. Participation under the Plan will not alter the Participant’s status as
an (at will) employee nor give any Participant the right to be retained in the
service of the Employer nor any right or claim to any benefit under the Plan
unless such right or claim has specifically accrued hereunder.       The Plan is
intended to be and at all times shall be interpreted and administered so as to
qualify as an unfunded deferred compensation plan, and no provision of the Plan
shall be interpreted so as to give any individual any right in any assets of the
Employer which right is greater than the rights of a general unsecured creditor
of the Employer.   12.4   SPENDTHRIFT PROVISION/QUALIFIED DOMESTIC RELATIONS
ORDER.

  a)   Except as set forth in subsection (b), no amount payable to a Participant
or a Beneficiary under the Plan will, except as otherwise specifically provided
by law, be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process,
and any attempt to do so will be void; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled thereto. Further, (i) the withholding of taxes from Plan
benefit payments, (ii) the recovery under the Plan of overpayments of benefits
previously made to a Participant or Beneficiary, (iii) if applicable, the
transfer of benefit rights from the Plan to another plan, or (iv) the direct
deposit of benefit payments to an account in a banking institution (if not
actually part of an arrangement constituting an assignment or alienation) shall
not be construed as an assignment or alienation. In the event that any
Participant’s or Beneficiary’s benefits hereunder are garnished or attached by
order of any court, the Employer or Trustee may bring an action or a declaratory
judgment in a court of competent jurisdiction to determine the proper recipient
of the benefits to be paid under the Plan. During the pendency of said action,
any benefits that become payable shall be held as credits to the Participant’s
or Beneficiary’s Account or, if the Employer or Trustee prefers, paid into the
court as they become payable, to be distributed by the court to the recipient as
the court deems proper at the close of said action.     b)   Subsection
(a) shall not apply to the creation, assignment or recognition of a right of an
“alternate payee,” as defined in ERISA Section 206(d)(3)(K) (the “Alternate
Payee”), to all or any portion of a Participant’s Account pursuant to a
“qualified domestic relations order,” as defined in ERISA
Section 206(d)(3)(B)(i) (a “QDRO”), and all or such portion

20

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

 

      of such Participant’s Account shall be distributed to such Alternate Payee
in accordance with this subsection (b), Article 5 and Article 6 and the terms of
such QDRO. Such Alternate Payee shall be treated as a Participant for all
purposes of Articles 5 and 6 with respect to the amounts that are to be
distributed to such Alternate Payee under the terms of the QDRO. Except as
provided in paragraph (b)(iii), below, or under the terms of the QDRO, all or
such portion of a Participant’s Accounts that is to be distributed to the
Alternate Payee shall be distributed in accordance with the Participant’s Form
and Timing of Payment Election Form(s) in effect on the date of the creation,
assignment or recognition of such Alternate Payee’s right to all or such portion
of such Accounts under the terms of the QDRO. Notwithstanding the foregoing, to
the extent provided under the terms of the QDRO:

  i)   The Plan Committee shall establish an Account for the Alternate Payee, to
which shall be credited the amounts allocated thereto under the terms of the
QDRO. The amounts so credited shall be debited from the Participant’s Account
under the terms of the QDRO.     ii)   The Alternate Payee may make elections
regarding the deemed investment of the amounts credited to such Alternate
Payee’s Account in accordance with Section 4.3.     iii)   The Alternate Payee
may change the distribution election applicable to the amounts credited to such
Alternate Payee’s Account by filing a Form and Timing of Payment Election Form
in accordance with Section 5.1. The Alternate Payee’s Form and Timing of Payment
Election Form, and the manner and timing of payments to the Alternate Payee
shall be subject to the requirements and limitations of Section 5.1 and Article
6.     iv)   The Alternate Payee may designate a Beneficiary or Beneficiaries to
receive the amount credited to the Alternate Payee’s Account in the event of the
death of the Alternate Payee. Designation or redesignation of a Beneficiary or
Beneficiaries must be made in accordance with the procedures set forth in
Section 7.1 as if the Alternate Payee was the Participant for all purposes
thereunder.

12.5   INTENT TO COMPLY WITH CODE SECTION 409A. The Plan, as amended, is
intended to comply with Code Section 409A and applicable Treasury Regulations or
other guidance as may be issued by the Treasury Department or the Internal
Revenue Service interpreting such requirements so as to avoid the imposition of
tax on participants under Code Section 409A(a), and shall in all instances be
interpreted in a manner consistent with such intent. The provisions of the Plan
that relate to Code Section 409A are intended to be applicable only to benefits
under the Plan that are attributable to deferrals that are made or that become
vested on or after January 1, 2005, and no material modification to the Plan is
intended to have been made with respect to deferrals made and vested prior to
January 1, 2005 for the express purpose of preserving the status of such
benefits as grandfathered, or otherwise exempt from the applicability of Code
Section 409A.

21