TOLL BROTHERS INC, PRE 14A, 2001-01-19

TOLL BROTHERS INC
PRE 14A, 2001-01-19
OPERATIVE BUILDERS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:

|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

Toll Brothers
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)

________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

|X| No Fee Required

|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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2. Aggregate number of securities to which transaction applies:

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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

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4. Proposed maximum aggregate value transaction:

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|_| Fee paid previously with preliminary materials.

|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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the Form or Schedule and the date of its filing.

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PRELIMINARY COPY

[LOGO]

TOLL BROTHERS, INC.
3103 PHILMONT AVENUE
HUNTINGDON VALLEY, PA 19006

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MARCH 22, 2001

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

The Annual Meeting of Stockholders (the "Meeting") of Toll Brothers, Inc.
(the "Company") will be held on Thursday, March 22, 2001 at 11:30 a.m., at the
offices of the Company, 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania
19006, for the following purposes:

1. To elect four directors to hold office until the 2004 Annual
Meeting of Stockholders and until their respective successors are duly
elected and qualified. (The terms of office of the other directors do not
expire until 2002 or 2003.)

2. To consider and act upon approval of proposed amendments to the
Company's Certificate of Incorporation to increase the number of
authorized shares of the Company's capital stock.

3. To consider and act upon approval of a proposed amendment to the
Toll Brothers, Inc. Cash Bonus Plan.

4. To consider and act upon approval of the Toll Brothers, Inc.
Executive Officer Cash Bonus Plan.

5. To transact such other business as may properly come before the
Meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on January 26, 2001
as the record date for the Meeting. Only stockholders of record at that time are
entitled to notice of and to vote at the Meeting and any adjournment or
postponement thereof.

The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the Meeting. The Board of Directors
urges you to sign, date and return the enclosed proxy promptly, although you are
cordially invited to attend the Meeting in person. The return of the enclosed
proxy will not affect your right to vote in person if you do attend the Meeting.

MICHAEL I. SNYDER
Secretary

February , 2001

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TOLL BROTHERS, INC.
3103 PHILMONT AVENUE
HUNTINGDON VALLEY, PA 19006

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

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MARCH 22, 2001

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

GENERAL

This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Toll Brothers, Inc., a Delaware corporation
(the "Company"), for use at the Company's Annual Meeting of Stockholders (the
"Meeting"), which will be held on the date, at the time and place, and for the
purposes set forth in the foregoing notice, and any adjournment or postponement
thereof. This proxy statement, the foregoing notice and the enclosed proxy are
first being sent to stockholders of the Company (the "Stockholders") on or about
February , 2001.

The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before the
Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters. If the
enclosed proxy is properly executed and returned to, and received by, the
Company prior to voting at the Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon. In the absence of
instructions, the shares will be voted "FOR" the nominees of the Board of
Directors in the election of the four directors whose terms of office will
extend until the 2004 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified, "FOR" the approval of the proposed
amendments to the Company's Certificate of Incorporation to increase the number
of shares of the Company's capital stock, "FOR" the proposed amendment to the
Toll Brothers, Inc. Cash Bonus Plan and "FOR" the approval of the Toll Brothers,
Inc. Executive Officer Cash Bonus Plan.

Any proxy may be revoked at any time prior to its exercise by notifying
the Secretary in writing, by delivering a duly executed proxy bearing a later
date, or by attending the Meeting and voting in person.

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VOTING SECURITIES AND SECURITY OWNERSHIP

SHARES ENTITLED TO VOTE, REQUIRED VOTE AND QUORUM

At the close of business on January 26, 2001, there were shares of the
Company's common stock outstanding. The Company has no other class of voting
securities outstanding. The record date fixed by the Board of Directors for the
determination of Stockholders entitled to notice of and to vote at the Meeting
is January 26, 2001. At the Meeting, Stockholders will be entitled to one vote
for each share of common stock owned of record at the close of business on the
record date. The presence at the Meeting, in person or by proxy, of persons
entitled to cast the votes of a majority of such outstanding shares of common
stock will constitute a quorum for consideration of the matters expected to be
voted on at the Meeting. Abstentions and broker non-votes(i.e., shares held of
record by a broker which are not voted because the broker has not received
voting instructions from the beneficial owner of the shares and lacks the
authority to vote the shares in its discretion) represented by submitted proxies
will be included in the calculation of the number of shares present at the
Meeting for the purposes of determining a quorum.

Proposal One: Directors are elected by a plurality and the four nominees
who receive the most votes will be elected. Abstentions and broker non-votes
will not be taken into account in determining the outcome of the election.

Proposal Two: To be approved, the proposed amendments to the Company's
Certificate of Incorporation to increase the number of authorized shares of the
Company's capital stock must receive the affirmative vote of a majority of the
outstanding shares of common stock entitled to vote thereon. Abstentions and
broker non-votes will have the effect of negative votes on this proposal.

Proposal Three: To be approved, the amendment to the Cash Bonus Plan must
receive the affirmative vote of a majority of the outstanding shares of common
stock present in person or by proxy at the Meeting and entitled to vote. Broker
non-votes will not affect the outcome of the vote on this matter. Abstentions
will have the effect of negative votes.

Proposal Four: To be approved, the approval of the Toll Brothers, Inc.
Executive Officer Cash Bonus Plan must receive the affirmative vote of a
majority of the outstanding shares of common stock present in person or by proxy
at the Meeting and entitled to vote. Broker non-votes will not affect the
outcome of the vote on this matter. Abstentions will have the effect of negative
votes.

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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table sets forth certain information respecting the holdings
of: (i) each person who was known to the Company to be the beneficial owner of
more than 5% of the common stock of the Company; (ii) each director and nominee
for director of the Company and each executive officer named in the Summary
Compensation Table under "Executive Compensation"; and (iii) all directors and
executive officers of the Company as a group. This information is as of January
15, 2001, except as otherwise indicated. Each of the persons named in the table
below as beneficially owning the shares set forth therein has sole voting power
and sole investment power with respect to such shares, unless otherwise
indicated.

PERCENT OF
AMOUNT AND NATURE OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) STOCK(1)
----------------------------------- ------------------------- ------------

Robert I. Toll......................... 7,642,271(2)(3) 20.1
Bruce E. Toll.......................... 5,341,530(2) 14.3
Wellington Management Company, LLP ... 3,846,716(4) 10.5
Lazard Freres & Co. LLC................. 2,618,340(5) 7.2
Zvi Barzilay............................ 561,249 1.5
Robert S. Blank......................... 109,023 *
Edward G. Boehne 0
Richard J. Braemer...................... 124,250 *
Roger S. Hillas......................... 128,175 *
Carl B. Marbach......................... 112,150(6) *
Joel H. Rassman......................... 289,487 *
Paul E. Shapiro......................... 110,300 *
All directors and executive officers
as a group(10 persons)............... 14,418,435(3)(6)(7) 35.8

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* Less than 1%.

(1) Shares issuable pursuant to options exercisable within 60 days of January
15, 2001 are deemed to be beneficially owned; accordingly, information
includes the following numbers of shares of common stock underlying
options held by the following individuals, and all directors and executive
officers as a group: Robert I. Toll, 1,606,250 shares; Bruce E. Toll,
913,750 shares; Mr. Barzilay, 534,500 shares; Mr. Blank, 98,250 shares;
Mr. Braemer, 98,250 shares; Mr. Hillas, 97,750 shares; Mr. Marbach,
100,000 shares; Mr. Rassman, 270,800 shares; Mr. Shapiro, 99,750 shares;
and all directors and executive officers as a group, 3,819,300 shares.

(2) The address for Robert I. Toll and Bruce E. Toll is c/o Toll Brothers,
Inc., 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania 19006.

(3) Includes 14,000 shares owned by the Robert and Jane Toll Foundation of
which Robert I. Toll is a trustee, with dispositive power, as to which he
disclaims beneficial ownership.

(4) Based on a Schedule 13G, filed with the SEC on February 11, 2000, which
states that the address of Wellington Management Company, LLP ("WMC") is
75 State Street, Boston, Massachusetts 02109, that WMC has shared voting
power with respect to 203,250 shares and shared dispositive power with
respect to 3,846,716 shares, and that the shares as to which the Schedule
13G is filed by WMC, in its capacity as an investment advisor, are owned
by clients of WMC who have the

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right to receive or the power to direct the receipt of dividends from or
proceeds of such shares. The Schedule 13G filed by WMC further states that
none of such clients, except Vanguard Windsor Fund, Inc. ("Vanguard"), is
known to have such right or power with respect to more than 5% of the
common stock of the Company. In addition, Vanguard filed a Schedule 13G on
February 1, 2000, which the Company assumes relates to shares that are
included in the shares reported by WMC, which states that Vanguard has
sole voting power and shared dispositive power with respect to 3,529,166
shares. The Company believes that Vanguard's address is Post Office Box
2600, Valley Forge, Pennsylvania.

(5) Based on a Schedule 13G filed with the SEC on February 2, 2000 which
states that the address of Lazard Freres & Co, LLC is 30 Rockefeller
Plaza, New York, New York 10020 and that Lazard Freres & Co. LLC has sole
voting power with respect to 2,292,500 shares and sole dispositive power
with respect to 2,618,340 shares.

(6) Includes 2,350 shares beneficially owned by individual retirement accounts
("IRA's") for the benefit of Mr. Marbach and his wife. Mr. Marbach
disclaims beneficial ownership of the 1,175 shares held by his wife's IRA.

(7) The Board of Directors, after reviewing the functions of all of the
Company's officers, both in terms of designated function and functions
actually performed, has determined that, for purposes of Section 16 of the
Securities Exchange Act of 1934 and the rules thereunder, only the Chief
Executive Officer, Chief Operating Officer, and Senior Vice
President/Chief Financial Officer are deemed to be officers or executive
officers of the Company for reporting purposes under such provisions,
respectively.

PROPOSAL ONE

ELECTION OF FOUR DIRECTORS FOR TERMS ENDING 2004

At the Meeting, the Stockholders will elect four directors to hold office
until the 2004 Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified. The Company's Board of
Directors is divided into three classes serving staggered three-year terms, with
the term of one class of directors expiring each year. The directors whose
three-year terms of office expire at the Meeting are Messrs. Zvi Barzilay,
Richard J. Braemer and Carl B. Marbach. Mr. Edward G. Boehne was elected to the
Board of Directors on July 11, 2000 to serve until the 2001 Annual Meeting and
until his successor is duly elected and qualified.

The Board of Directors has nominated Messrs. Zvi Barzilay, Edward G.
Boehne, Richard J. Braemer and Carl B. Marbach to serve again as directors until
the 2004 Annual Meeting of Stockholders and until their respective successors
have been duly elected and qualified. Each nominee has indicated a willingness
to continue to serve as a director. Should a nominee become unavailable to
accept election as a director, the persons named in the enclosed proxy will vote
the shares which such proxy represents for the election of such other person as
the Board of Directors may recommend.

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Set forth below is certain information concerning each nominee for election as a
director at the Meeting and each director whose current term of office will
continue after the Meeting.

DIRECTOR TERM POSITION(S) WITH THE
NAME AGE SINCE EXPIRES COMPANY

Robert I. Toll...... 60 1986 2002 Chairman of the Board and
Chief Executive Officer

Bruce E. Toll....... 57 1986 2002 Vice Chairman of the Board

Zvi Barzilay........ 54 1994 2001 President, Chief Operating
Officer and Director

Robert S. Blank..... 60 1986 2003 Director

Edward G. Boehne.... 60 2000 2001 Director

Richard J. Braemer.. 59 1986 2001 Director

Roger S. Hillas..... 73 1988 2003 Director

Carl B. Marbach..... 59 1991 2001 Director

Joel H. Rassman..... 55 1996 2002 Senior Vice President,
Chief Financial Officer,
Treasurer and Director

Paul E. Shapiro..... 59 1993 2003 Director

Robert I. Toll co-founded the Company's predecessors' operations with his
brother, Bruce E. Toll, in 1967. He has been a member of the Board of Directors
since the Company's inception in May 1986. Mr. Toll is a member of the
Compensation Committee of the Board of Directors, the Employee Stock Purchase
Plan Committee, the Shelf Terms Committee, and the Special Transactions
Committee. His principal occupation since the Company's inception has been
related to his various homebuilding and other real estate related activities.

Bruce E. Toll, the brother of Robert I. Toll, has been a member of the
Board of Directors since the Company's inception in May 1986 and served as its
President until April 1998 and Chief Operating Officer until November 1998. Mr.
Toll is the founder and president of BET Investments, an industrial and
commercial real estate company. Mr. Toll is a member of the Employee Stock
Purchase Plan Committee, the Shelf Terms Committee and the Special Transactions
Committee. Mr. Toll is a member of the Board of Director of UbiquiTel, Inc. and
Assisted Living Concepts, Inc.

Zvi Barzilay has been a member of the Board of Directors since June 1994.
Mr. Barzilay joined the Company's predecessor in 1980 as a project manager, was
appointed a Vice President in 1983 and held the position of Executive Vice
President--Operations of the Company from September 1989 until October 1992 when
he was appointed to the position of Executive Vice President of the Company. In
April 1998, Mr. Barzilay was appointed to the position of Chief Operating
Officer and in November 1998 to the position of President. Mr. Barzilay is a
member of the Compensation Committee of the Board of Directors and the Special
Transactions Committee.

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Robert S. Blank has been a member of the Board of Directors since
September 1986. For more than five years, Mr. Blank has been a partner in
Whitcom Partners, a partnership which owns and operates newspapers and cable
television systems and formerly owned and operated broadcast television stations
and radio stations, in some cases in partnership with others. Mr. Blank is a
member of the Subordinated Debt Repurchase Authorization Committee, the Special
Transactions Committee and the Real Estate Utilization Committee.

Edward G. Boehne has been a member of the Board of Directors since July
2000. From 1981 until his retirement in May 2000, Mr. Boehne was the President
of the Federal Reserve Bank of Philadelphia. Mr. Boehne is a member of the Audit
Committee and the Special Transactions Committee. Mr. Boehne is a member of the
Board of Directors of Rittenhouse Trust Company, Beneficial Savings Bank and AAA
Mid-Atlantic, Inc.

Richard J. Braemer has been a member of the Board of Directors since
September 1986. Since January 1994, Mr. Braemer has been a partner in the
Philadelphia law firm of Ballard, Spahr, Andrews & Ingersoll, LLP. Mr. Braemer
is a member of the Subordinated Debt Repurchase Authorization Committee and the
Real Estate Utilization Committee.

Roger S. Hillas has been a member of the Board of Directors since April
1988. From July 1988 until his retirement in December 1992, Mr. Hillas was
chairman and chief executive officer of Meritor Savings Bank. Prior to July
1988, Mr. Hillas was chairman of PNC Financial Corp. and of Provident National
Bank. Mr. Hillas is a member of the Audit Committee, the Subordinated Debt
Repurchase Authorization Committee and the Special Transactions Committee. Mr.
Hillas is a member of the Board of Directors of P.H. Glatfelter Company and
Millennium Bank.

Carl B. Marbach has been a member of the Board of Directors since December
1991. Since January 1995, Mr. Marbach has been President of Internetwork
Publishing Corp., an electronic publisher, which he founded. Mr. Marbach is a
member of the Compensation Committee of the Board of Directors, the Audit
Committee, the Compensation and Stock Based Compensation Committee for Key
Executives and Non-Employee Directors and the Shelf Terms Committee.

Joel H. Rassman has been a member of the Board of Directors since
September 1996. Mr. Rassman joined the Company's predecessor in 1984 as Senior
Vice President, Treasurer and Chief Financial Officer of the Company. Mr.
Rassman is a member of the Employee Stock Purchase Plan Committee and the
Special Transactions Committee.

Paul E. Shapiro has been a member of the Board of Directors since December
1993. Since June 1998, Mr. Shapiro has been Executive Vice President and Chief
Administrative Officer of Sunbeam Corp. From July 1997 to June 1998, Mr. Shapiro
was Executive Vice President and General Counsel of The Coleman Company, Inc.
and from January 1994 to June 1997, Mr. Shapiro was an Executive Vice
President/Chief Administrative Officer/General Counsel of Marvel Entertainment
Group, Inc., a publicly traded reporting company which, in December 1996, filed
a Chapter 11 bankruptcy petition. Mr. Shapiro is a member of the Audit
Committee, the Compensation and Stock Based Compensation Committee for Key
Executives and Non-Employee Directors and the Special Transactions Committee.

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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors held four meetings during the Company's last fiscal
year and also acted by unanimous written consent in writing.

The Board of Directors currently has an Audit Committee, a Compensation
Committee of the Board of Directors (the "Compensation Committee"), a
Compensation and Stock Based Compensation Committee for Key Executives and
Non-Employee Directors (the "Executive Compensation Committee"), a Subordinated
Debt Repurchase Authorization Committee, a Shelf Terms Committee, an Employee
Stock Purchase Plan Committee, a Special Transactions Committee and a Real
Estate Utilization Committee. The Board of Directors does not have a nominating
committee.

The Audit Committee is composed of Edward G. Boehne, Roger S. Hillas, Carl
B. Marbach and Paul E. Shapiro, each of whom is independent as the term
independence is defined in Section 303.01(B)(2)(a) and (3) of the listing
standards of the New York Stock Exchange. The Audit Committee held four formal
meetings during the last fiscal year, which were attended by the Company's
independent auditors to discuss the scope of the annual audit and questions of
accounting policy and internal controls. The Company's Board of Directors has
adopted a written Audit Committee Charter, a copy of which is attached as
Appendix A.

During the Company's last fiscal year, the Executive Compensation
Committee, which administers the Cash Bonus Plan, the Amended and Restated Stock
Option Plan (1986) (the "1986 Plan"), the Key Executives and Non-Employee
Directors Stock Option Plan (1993) (the "1993 Plan"), the Stock Option and
Incentive Plan (1995) (the "1995 Plan") and the Stock Incentive Plan (1998) (the
"1998 Plan"), held two formal meetings and two telephonic meetings. The
Executive Compensation Committee is composed of Carl B. Marbach and Paul E.
Shapiro, each of whom is a "Non-Employee Director" as defined in Rule 16b-3
under the Securities Exchange Act of 1934.

The Special Transactions Committee held two formal meetings during the
last fiscal year. The Shelf Terms Committee, the Subordinated Debt Repurchase
Authorization Committee, the Employee Stock Purchase Plan Committee and the Real
Estate Utilization Committee did not meet formally during the last fiscal year.

Each director attended at least 75% of the meetings of the Board of
Directors and its committees of which he was a member held during the last
fiscal year.

COMPENSATION OF DIRECTORS

Each non-employee director receives $4,000 for each full-day meeting
attended, $2,000 for each half-day meeting attended and $1,500 for each
telephonic meeting or committee meeting in which he participates. In addition,
each non-employee director receives an annual grant of options for 15,000 shares
of the Company's common stock under the 1993 Plan or the 1998 Plan. Each
non-employee director who is a member of the Audit Committee and participates in
at least one meeting during the year receives an annual grant of options for
1,000 shares of common stock. Each non-employee director who is a member of an
eligible committee (as determined by the Board of Directors from time to time),
other than the Audit Committee, and participates in at least one meeting during
the year receives an annual grant of options for 500 shares of common stock. No
non-employee director may receive grants for service on more than three
committees other than the Audit Committee in any fiscal year. In accordance with
an agreement entered into by Bruce E. Toll and the Company in connection with
Mr. Toll's withdrawal from day-to-day operations of the Company, he was not
entitled to receive any annual or per meeting stipends or stock options for his
services as a director during fiscal 2000.

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On March 5, 1998, the Company and Mr. Bruce E. Toll entered into two
agreements relating to Mr. Toll's withdrawal from day to day operations of the
business (collectively the "Agreements"). The Agreements provided that (among
other items) during the three-year term commencing November 1, 1998 and ending
October 31, 2001 ("Consulting Term"), Mr. Toll would a) make himself available
to the Company on a reasonable basis to consult with the Company concerning
matters within his knowledge and expertise, b) not compete with the Company as
described in the agreements, and c) agree to vote the shares of the Company's
common stock owned by him as recommended by the Company's management or Board of
Directors until the later of March 15, 2002 or until Mr. Toll no longer serves
on the Board of Directors of the Company. The Company agreed to pay Mr. Toll the
sum of $500,000 during each year of the Consulting Term as well as provide group
health insurance of a type and amount consistent with insurance provided to
Company executives for himself, and his beneficiaries who were covered on March
5, 1988, without charge, and for all other children provided that the premium
costs that the Company is permitted to charge under COBRA for such coverage are
paid by Mr. Toll for those children. In June 2000, the Company and Mr. Toll
amended the Agreements to terminate Mr. Toll's obligation to vote the shares of
the Company's common stock owned by him referred to above and to extend the
Consulting Term until October 31, 2004.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF
ZVI BARZILAY, EDWARD G. BOEHNE, RICHARD J. BRAEMER AND CARL B. MARBACH

PROPOSAL TWO

APPROVAL OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S CAPITAL STOCK

Due to the substantial costs to the Company of the Delaware corporate
franchise tax, which is based in part on the number of authorized shares of
capital stock, the stockholders, at the 1993 annual meeting, authorized the
Board of Directors to file certificates of amendment to the Company's
Certificate of Incorporation to reduce the Company's capital stock from
60,000,000 shares of common stock to 40,000,000 shares of common stock and from
15,000,000 shares of preferred stock to 1,000,000 shares of preferred stock, and
thereafter to increase the authorized capital stock back to a maximum of
60,000,000 shares of common stock in one increment or in up to four separate
increments over a five-year period expiring on March 11, 1998 and back to
15,000,000 shares of preferred stock in one increment during the same five-year
period, in each case upon the filing of an appropriate certificate of amendment
by order of the Board of Directors. Pursuant to the action of the stockholders
at the 1993 annual meeting, the Company's capital stock was reduced to
40,000,000 shares of common stock and 1,000,000 shares of preferred stock and
the authorized common stock was subsequently increased to 45,000,000 shares. In
this way, the Company was able to save on its Delaware corporate franchise
taxes, while retaining the flexibility to increase quickly its authorized
capital by action of the Board of Directors.

At the 1998 annual meeting, the stockholders authorized the Board of
Directors to file certificates of amendments to the Certificate of Incorporation
to increase the authorized common stock by up to an additional 55,000,000
shares, or up to a maximum of 100,000,000 authorized shares, and the authorized
preferred stock by an additional 14,000,000 shares, or up to 15,000,000
authorized shares. The 1998 stockholder action authorizes increases in common
and preferred stock to be made, at the sole discretion of the Board of
Directors, in any combination of one or more increments of 5,000,000

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shares of common stock and a single increment of 14,000,000 shares of preferred
stock on or before March 31, 2003 (the "1998 Authorization"). As of the date of
this proxy statement, the Board of Directors has not authorized any additional
common or preferred shares pursuant to the 1998 Authorization.

The Company currently has 45,000,000 shares of common stock authorized. Of
these shares, approximately 36,504,000 are outstanding and there are outstanding
options to purchase an additional 7,004,000 shares.

The Board of Directors, upon review of the Company's current capital
structure, has determined to present to the Stockholders this Proposal Two. If
approved by Stockholders, Proposal Two will rescind the 1998 Authorization and
replace it with a new authorization that, until March 31, 2006, will: (a)
increase from the current 55,000,000 to 155,000,000 the number of additional
shares of common stock the Board of Directors may authorize without further
action by stockholders by filing one or more certificates of amendment to the
Company's Certificate of Incorporation, and (b) preserve the authority of the
Board to increase the number of authorized shares of preferred stock by
14,000,000. While there are no current plans to issue additional shares of the
Company's common stock beyond the limits currently authorized by the Certificate
of Incorporation or to issue shares of the Company's preferred stock, Proposal
Two would authorize amendment of the Certificate of Incorporation to increase
the authorized common stock to 200,000,000 shares and the authorized preferred
stock to 15,000,000 shares. In order to allow the Company to minimize its annual
Delaware corporate franchise taxes, Proposal Two would authorize increases in
common and preferred stock to be made, at the sole discretion of the Board of
Directors, in any combination of one or more increments of 5,000,000 shares of
common stock and/or a single increment of 14,000,000 shares of preferred stock.
The Board believes that Proposal Two would permit the Company to continue to
minimize its annual Delaware corporate franchise taxes while maintaining the
flexibility to increase the authorized capital stock quickly, and without
additional stockholder approval, for possible stock splits, stock dividends,
stock and convertible debt or equity offerings, acquisitions and other corporate
purposes. Notwithstanding stockholder approval of Proposal Two, under Section
242(c) of the Delaware General Corporation Law, the Board of Directors could
decide to abandon the filing of a certificate of amendment as to any authorized
increment.

Based on the foregoing, the Board of Directors has approved and
unanimously recommends to the Stockholders that the Stockholders approve
Proposal Two. Any certificate of amendment authorized by Proposal Two is to be
submitted by the Board of Directors, by action of a duly authorized officer of
the Company, to the Secretary of State for the State of Delaware for filing no
later than March 31, 2006. After March 31, 2006, a further stockholder approval
will be required if the Board of Directors then determines that it still needs
the ability to increase the number of authorized shares of capital stock beyond
the amount then authorized. A vote for Proposal Two will be a vote approving
each certificate of amendment filed in accordance with Proposal Two. APPROVAL OF
PROPOSAL TWO REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" PROPOSAL TWO.

10
<PAGE>

PROPOSAL THREE

APPROVAL OF AMENDMENT TO CASH BONUS PLAN

Background

In 1990, the Board of Directors decided that salary, bonus and option
grants for the Company's Chief Executive Officer, Robert I. Toll, should be
determined pursuant to objective measurements, including appropriate performance
criteria in addition to compensation that reflects market rates for comparable
executives. Since 1995, the base salary for Robert I. Toll has been determined
by a formula intended to increase his base salary by no less than the increase
in the Consumer Price Index (as defined, using U.S. Department of Labor
definitions) and by no more than the average percentage increase in compensation
of the five highest percentage compensation increases of the Company's next ten
most highly compensated employees for the adjustment year. For 1998, Mr. Toll
agreed to limit the increase in his base salary to an amount that would result
in his base salary not exceeding $1,000,000. In addition, for 1999, 2000, and
2001, Mr. Toll waived any increases in his base salary. Had Mr. Toll not waived
his rights, and had he received increases in his base salary according to the
established formula, his base salary would have increased between 1.6% and 14.6%
in 1998 (in 1998 his base salary was increased by 7.9% to $1,000,000), between
1.5% and 11% in 1999, between 3% and 15.6% in 2000 and between 1.7% and 19% in
2001. Had Mr. Toll received the minimum increases for each of 1999, 2000 and
2001, his base salary in 2001 would be $1,063,000 and had he received the
maximum increases in each of those three years, his base salary for 2001 would
be $1,527,000.

Cash bonuses for Robert I. Toll also have been determined since 1990 based
on certain formulae relating to the Company's income before taxes and
stockholders' equity. Originally adopted in 1993, the Cash Bonus Plan, as
amended to date (the "Plan"), is intended to provide a bonus program for Robert
I. Toll which meets the requirements of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), so that amounts payable under the Plan
will be "performance-based" compensation, and, therefore, will be exempt from
the limitations on deductibility under Section 162(m). The Plan also applied to
Bruce E. Toll, the former President and Chief Operating Officer of the Company,
until his retirement from those positions in 1998. The Board of Directors
continues to believe that the Plan assists the Company in motivating and
retaining an individual of superior ability, industry and loyalty as its Chief
Executive Officer, without limiting the Company's ability to take a tax
deduction for the compensation paid to him pursuant to the Plan.

Description of the Plan's Current Terms

The Plan is administered by a committee (the "Plan Committee") which must
consist of at least two members of the Board of Directors, each of whom must be
an "outside" director (as that term is used in Section 162(m)). The Plan
Committee, which is currently comprised of Carl B. Marbach and Paul E. Shapiro,
together with the Audit Committee (currently comprised of Edward G. Boehne,
Roger S. Hillas, Carl B. Marbach and Paul E. Shapiro) determines whether the
various targets established under the Plan have been met.

Under the Plan, Robert I. Toll (the "Participant") is entitled to receive
for each fiscal year during the period the Plan is in effect a bonus equal to
the sum of (i) 1.5% of the Company's income before income taxes (as defined in
the Plan) in excess of 10% and up to 20% of shareholders' equity (as defined in
the Plan) of the Company as of the end of the preceding fiscal year, (ii) 2.0%
of the Company's income before income taxes in excess of 20% and up to 30% of
shareholders' equity of the Company as of the end of the preceding fiscal year,
and (iii) 2.25% of the Company's

11
<PAGE>

income before income taxes in excess of 30% of shareholders' equity of the
Company as of the end of the preceding fiscal year.

Except as otherwise provided in the Plan, the bonus for each fiscal year
the Plan is in effect is payable in cash. The Plan currently provides that each
bonus payment made under the Plan with respect to the fiscal years ending
October 31, 1999, October 31, 2000 and October 31, 2001 is payable in shares of
the Company's common stock, in the form of an award under the Toll Brothers,
Inc. Stock Incentive Plan (1998) (the "1998 Plan"). The number of shares of
common stock awarded for each fiscal year is determined by dividing the dollar
amount of the bonus for that fiscal year (as determined in accordance with the
Plan) by $24.25 (the fair market value of a share of common stock, determined as
of December 10, 1998 in accordance with the provisions of the 1998 Plan).

The Plan, which became effective as of November 1, 1993 and will continue
until terminated by the Board of Directors, may be terminated by the Board of
Directors at any time and may be amended by the Board of Directors from time to
time. The termination or amendment of the Plan may not, without the written
approval of the Participant, reduce the amount of a bonus payment that is due
the Participant but has not yet been paid, and any change in the Plan that
increases the amount of bonuses determined under the formula described above
will be effective only if approved by the Plan Committee and disclosed to and
approved by the Stockholders in a separate vote prior to payment of the bonuses.
In addition, the Plan may be modified or amended by the Plan Committee as it
deems appropriate, in order to comply with any rules, regulations or other
guidance promulgated by the Internal Revenue Service with respect to applicable
provisions of the Code as they relate to the exemption for "performance-based
compensation" under the limitations on the deductibility of compensation imposed
by Section 162(m) or any other applicable provisions of the Code.

The Plan is designed to maintain the deductibility of compensation for the
Participant under the limitation of Section 162(m). Any bonus received by the
Participant under the Plan will be subject to the payment of Federal income tax
on the bonus at the rates applicable to ordinary income, which currently are at
a maximum rate of 39.6%. The Participant is required to make appropriate
arrangements with the Company for satisfaction of any Federal, state or local
income tax withholding requirements and Social Security or other tax
requirements applicable to the accrual or payment of benefits under the Plan. If
no other arrangements are made, the Company may provide, at its discretion, for
any withholding and tax payments as may be required.

Description of the Proposed Amendment

The Plan, by its current terms, will require the payment of the bonus for
fiscal 2002 and subsequent years in cash since the provisions providing for the
payment of bonuses in stock terminate with the payment of the bonus for fiscal
2001. The Plan Committee and the Board of Directors, with the assistance of an
independent compensation consultant, have reviewed the provisions of the Plan to
determine whether the Company's best interests would be served by amending
certain of its provisions. The Plan Committee and the Board of Directors believe
that tying the value of the bonus of the Participant to the stock price is a
valuable incentive to align the interests of the Participant with those of the
Stockholders. Accordingly, the Plan Committee and the Board of Directors amended
the Plan on December 14, 2000, subject to Stockholder approval (which is the
subject matter of this Proposal Three), to (i) amend the Plan's cash bonus
formula, as described in the next paragraph below; (ii) provide that each bonus
payment made under the Plan with respect to the fiscal years ending October 31,
2002, October 31, 2003, and October 31, 2004 be paid in shares of common stock,
and be in the form of an award under the terms of the 1998 Plan; (iii)

12
<PAGE>

provide that the number of shares of common stock awarded pursuant to the Plan
be determined by dividing the dollar amount of each bonus (as determined in
accordance with the Plan's cash bonus formula) by $38.625 (the fair market value
of a share of common stock, determined, as of December 20, 2000, in accordance
with the provisions of the 1998 Plan); (iv) give the Plan Committee the
discretion to terminate at any time, effective no sooner than six months after
the decision to terminate is made by the Plan Committee, in which event all
bonuses payable on or after the effective date of the termination will be
payable in cash only; and (iv) permit the Plan Committee, upon receipt of a
request by the Participant (based on his concerns regarding adverse tax
consequences to him), in its sole discretion and provided that such action will
not cause any increase in the amount or value of a bonus that would otherwise be
payable under the Plan, to suspend the payment of bonuses in shares of common
stock, in which event all subsequent bonuses will be payable only in cash until
such time the Plan Committee determines to reinstate the provisions providing
for payments in shares of common stock. The amendment to the Plan described in
this paragraph constitutes the amendment for which Stockholder approval is being
sought in Proposal Three.

If the proposed amendment to the Plan is approved by Stockholders, the
Participant will be entitled to receive for each of the fiscal years ending
October 31, 2002, October 31, 2003 and October 31, 2004 a bonus in shares of
common stock, determined in the manner described above, based on a cash bonus
amount equal to the sum of (i) 1.5% of the Company's income before income taxes
(as defined in the Plan) in excess of 10% and up to 20% of shareholders' equity
(as defined in the Plan) of the Company as of the end of the preceding fiscal
year, (ii) 3.0% of the Company's income before income taxes in excess of 20% and
up to 30% of shareholders' equity of the Company as of the end of the preceding
fiscal year, and (iii) 6% of the Company's income before income taxes in excess
of 30% of shareholders' equity of the Company as of the end of the preceding
fiscal year.

Robert I. Toll received a bonus under the Plan for the fiscal year ended
October 31, 2000 of 135,792 shares with a fair market value as of October 31,
2000 of $4,413,228 based on the Plan's current cash bonus formula which, but for
the provision requiring payment of the award in shares, would have required a
cash payment of $3,292,947. If the Plan, as proposed to be amended, had been in
effect for the fiscal year ended October 31, 2000, Mr. Toll would have received
150,220 shares with a fair market value as of October 31, 2000 of $4,882,148
based on a cash bonus formula which, but for the provision requiring payment of
the award in shares, would have required a cash payment of $5,802,245.

The Company has been advised that it is the intention of Robert I. Toll to
vote the shares of common stock he beneficially owns in favor of Proposal Three.
See "Voting Securities and Security Ownership -- Security Ownership of Principal
Shareholders and Management."

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" PROPOSAL THREE.

13
<PAGE>

PROPOSAL FOUR

APPROVAL OF THE EXECUTIVE OFFICER CASH BONUS PLAN

Background

Section 162(m) of the Code generally limits to $1,000,000 the compensation
the Company may deduct on its tax return for any fiscal year for amounts paid to
its chief executive officer or any one of its other four highest compensated
executive officers. However, any compensation the Company pays over this
$1,000,000 dollar limit that constitutes "performance-based compensation" under
Section 162(m) is deductible by the Company without regard to this limitation.
The Company currently pays bonuses that qualify as performance-based
compensation to its chief executive officer under the cash bonus plan which is
the subject of Proposal Three. However, that plan does not cover payments to the
Company's other executive officers.

The use of bonuses to compensate the Company's executives is intended to
provide an incentive for superior work and to motivate participating officers
toward even higher achievement and business results, to tie their goals and
interests to those of the Company and Stockholders and to enhance the Company's
ability to attract and retain highly qualified executive officers. In order to
allow the Company to pay bonuses to all of its executive officers that qualify
as performance-based compensation, the Board of Directors adopted an Executive
Officer Bonus Plan (the "Bonus Plan") on January__ ,2001, subject to approval by
Stockholders. At the Meeting, Stockholders are being asked to approve the Bonus
Plan for the purpose of permitting the Company to pay bonuses to its executive
officers (other than the chief executive officer) that constitute
"performance-based compensation" under Section 162(m) of the Code. If approved
by Stockholders, the Bonus Plan will meet the stockholder approval and other
plan requirements of Section 162(m) so that bonuses paid in accordance with the
provisions of the plan in fiscal 2001 and the next four fiscal years should
constitute performance-based compensation.

Description of the Bonus Plan

The Bonus Plan is designed to permit the Company to pay its officers
(other than the chief executive officer) incentive compensation based upon the
achievement of pre-established performance goals. In each fiscal year covered by
the Bonus Plan, any one or more of the Company's officers (other than the chief
executive officer) designated by the Executive Compensation Committee (the
"Bonus Plan Committee") will be eligible to participate in the Bonus Plan. Prior
to, or at the time of, establishment of the performance goals for a performance
period, which will generally be the fiscal year but may be a different period,
the Bonus Plan Committee will designate the specific executive officer(s) who
will participate in the Bonus Plan for that performance period. Subject to the
approval of the Bonus Plan by Stockholders at the Meeting, Zvi Barzilay, the
Company's President and Chief Operating Officer, and Joel H. Rassman, the
Company's Senior Vice President and Chief Financial Officer, have been
designated by the Bonus Plan Committee to participate in the Bonus Plan for the
fiscal year ending October 31, 2001.

At the beginning of each performance period and subject to the
requirements of Section 162(m), the Bonus Plan Committee will establish
performance goals, specific performance objectives and objectively determinable
computation formulae or methods for determining each participant's bonus under
the Bonus Plan for that performance period. The performance goals may include
any one or more of the following corporate business criteria: stock price,
market share, gross revenue, net revenue, pretax income, operating income, cash
flow, earnings per share, return on equity, return on invested capital or
assets, cost reductions and savings, return on revenues or

14
<PAGE>

productivity, or any variations of the preceding criteria, all of which may be
modified at the discretion of the Bonus Plan Committee to take into account
extraordinary items or which may be adjusted to reflect such costs or expense as
the Bonus Plan Committee deems appropriate, and the opening or expanding of new
geographic regions, developing of new business lines, hiring of personnel and
training of personnel. In addition, to the extent consistent with the goal of
providing for deductibility under Section 162(m), performance goals may include
a participant's attainment of personal objectives with respect to any of the
foregoing performance goals or implementing policies and plans, negotiating
transactions and sales, developing long-term business goals or exercising
managerial responsibility.

At or after the end of each performance period, the Bonus Plan Committee
is required by the terms of the Bonus Plan to certify in writing whether the
pre-established performance goals and objectives have been satisfied in the
performance period. The actual bonus award to any participant for a performance
period will then be determined based upon the pre-established computation
formulae or methods. The Bonus Plan Committee has no discretion to increase the
amount of any participant's bonus under the Bonus Plan as so determined, but may
reduce the amount of, or totally eliminate, the bonus if the Bonus Plan
Committee determines, in its absolute and sole discretion, that such a reduction
or elimination is appropriate in order to reflect the participant's performance
or unanticipated factors. The Bonus Plan limits the maximum amount of any
participant's bonus for any fiscal year to the lesser of 250% of the
participant's annual base salary as in effect at the beginning of that fiscal
year or $2,500,000(see limitations as to amounts payable pursuant to this plan
for fiscal 2001 outlined below). It also limits the aggregate amount of all
bonuses payable in any plan year under this Bonus Plan to 10% of the Company's
average annual income before taxes for the preceding five fiscal years.

Generally, approved awards under the Bonus Plan will be payable in cash to
the participant (or to the participant's estate in the event of his death) as
soon as is practicable after the end of the applicable performance period and
after the Bonus Plan Committee has certified in writing that the relevant
performance goals were achieved. The Bonus Plan Committee may, in its
discretion, elect to make such payments in one or more installments over a
period not to exceed seven months following the Bonus Plan Committee's
aforementioned certification, and may require that the payment of any such
installment be subject to the participant's continued employment by the Company.
An award that is otherwise payable to a participant who is not employed by the
Company as of the last day of the applicable performance period will be prorated
or eliminated pursuant to specified provisions of the Bonus Plan. A participant
will recognize ordinary taxable income upon receipt of payments under the Bonus
Plan and the same amount should be deductible for federal tax purposes as a
compensation expense of the Company.

No bonus payments will be made pursuant to the Bonus Plan if the plan is
not approved by Stockholders. The actual amount of bonus payments that will be
made pursuant to the Bonus Plan, if the approval of Stockholders is obtained,
cannot be determined at this time. However, the bonuses that may be paid under
the Bonus Plan to each of Zvi Barzilay and Joel H. Rassman for the current
fiscal year may not exceed $500,000.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" PROPOSAL FOUR.

15
<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the other executive officers of the Company.

<TABLE>
<CAPTION>
Long Term
Compensation
Awards
---------
Annual Compensation Securities
Fiscal ------------------- Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#) All Other
Compensation($)(3) ---- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Robert I. Toll 2000 1,000,000 4,413,228 750,000 8,348
Chairman of the Board and 1999 1,000,000 1,394,505 347,500 8,232
Chief Executive Officer(1) 1998 987,805 2,462,192 352,500 8,292

Zvi Barzilay 2000 872,322 120,000 160,700 8,348
Chief Operating Officer 1999 830,367 120,000 100,000 8,232
(commencing May 1, 1998), 1998 780,369 120,000 100,000 8,292
Executive Vice President
(through October 31, 1998)
and President(commencing
November 1, 1998)

Joel H. Rassman 2000 637,969 140,000 85,000 9,598
Senior Vice President, 1999 604,216 120,000 50,000 9,782
Chief Financial Officer 1998 573,637 120,000 50,000 9,542
And Treasurer(2)
</TABLE>

(1) The bonuses listed for Robert I. Toll for fiscal 2000, 1999 and 1998 were
paid in common stock of the Company pursuant to the terms of the Cash Bonus
Plan, the 1998 Plan and the 1995 Plan. The amounts listed were the fair market
value of the bonus award shares as of October 31, 2000 in the case of the fiscal
2000 bonus, the fair market value of the bonus award shares as of October 31,
1999 in the case of the fiscal 1999 bonus and the fair market value as of
October 31, 1998 in the case of the 1998 bonus. Had the bonuses been paid in
cash, Robert I. Toll would have received $3,292,947 for the 2000 cash bonus,
$1,932,402 for the 1999 cash bonus and $1,818,439 for the 1998 cash bonus.

(2) Under the terms of an agreement dated June 30, 1988 between the Company and
Mr. Rassman, in the event of Mr. Rassman's termination by the Company without
cause (as defined), any material reduction or material adverse change (as
defined) in Mr. Rassman's duties, the removal of fringe benefits (as defined) or
any failure by the Company to provide Mr. Rassman with compensation, including
salary and bonus, in an amount not less than $350,000 and the exercise of an
election by Mr. Rassman to terminate his employment, Mr. Rassman will receive
$250,000, and, in certain instances, an additional amount equal to the
difference between $350,000 and his actual compensation during a specified
period prior to his termination.

(3) The compensation reported represents (a) the Company's contribution and
matching payments under its 401(k) salary deferred plan for each executive
listed and (b) for Joel H. Rassman, directors fees paid to him by a subsidiary
of the Company in the amount of $1,250 per year for each of the three years.

16
<PAGE>

Option Grants in the Last Fiscal Year(1)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Name Number of % of Exercise Expiration Potential Realizable Value at
Securities Total Price Date Assumed Annual Rates of Stock
Underlying Options ($/Sh.) Price Appreciation for Option
Options Granted Term(5)
Granted(#) to
Employees 5%($) 10%($)
in Fiscal
Year
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert I. Toll(2) 250,000 13.30 17.50 12/20/09 2,751,414 6,972,623
Robert I. Toll(3) 500,000 26.60 17.50 12/20/09 5,502,528 13,945,247
Zvi Barzilay(2) 100,000 5.32 17.50 12/20/09 1,100,566 2,789,049
Zvi Barzilay(4) 60,700 3.23 17.50 12/20/09 668,043 1,692,953
Joel H. Rassman(2) 50,000 2.66 17.50 12/20/09 550,283 1,394,525
Joel H. Rassman(4) 35,000 1.86 17.50 12/20/09 385,198 976,167

--------------------------------------------------------------------------------------------------------
</TABLE>

(1) No stock appreciation rights("SARs") were granted.

(2) These options become exercisable starting on the first anniversary of the
grant, with 25% becoming exercisable at that time and 25% becoming exercisable
on each of the second, third and fourth anniversary dates.

(3) These options, when granted, provided that they would become fully
exercisable on the seventh anniversary of the date of the grant or when the
market price target of $35 per share of the Company's common stock is achieved
within four years of the date of grant and is maintained for at least 20 of 30
consecutive trading days. The market price target and 20 day period was reached
on December 6, 2000 and the options became fully exercisable on that date.

(4) These options become fully exercisable on the first anniversary of the date
of the grant.

(5) These amounts represent assumed rates of appreciation and are not intended
to forecast future appreciation in the price of the Company's common stock.
Actual gains, if any, on stock option exercises are dependent on the future
performance of our stock. There can be no assurance that the amounts reflected
in these columns will be achieved or, if achieved, that they will exist at the
time of any option exercise. The aggregate appreciation in value of all shares
of our common stock outstanding on October 31, 2000 based on the assumed 5% and
10% rates of appreciation on the closing price of the common stock on October
31, 2000 that produced the realizable value of the options shown in this table
(based upon the weighted average life of the grants) would be $733,660,610 at
the assumed 5% rate of appreciation and $1,859,240,032 at the assumed 10% rate
of appreciation.

17
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES(1)

The following table sets forth certain information with regard to the
aggregated option exercises in the fiscal year ended October 31, 2000 and the
option values as of the end of that year for the Chief Executive Officer and
other executive officers of the Company.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Name Shares Acquired on Value Realized($) Number of Securities Value of Unexercised
Exercise (#) Underlying In-The-Money Options at
Unexercised Options at Fiscal Fiscal Year-End($)(2)
Year-End(#)
Exercisable(E)
Exercisable(E) Unexercisable(U)
Unexercisable(U)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert I. Toll 29,000 386,063 981,250(E) 11,488,969(E)
937,500(U) 13,053,750(U)

Zvi Barzilay 60,700 1,117,163 440,000(E) 6,480,625(E)
310,700(U) 3,804,000(U)

Joel H. Rassman 27,800 491,725 229,200(E) 3,427,638(E)
160,000(U) 1,971,750(U)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) No SARs were exercised during the last fiscal year or held as of October 31,
2000.

(2) Represents, with respect to each share, the closing price of $32.50 per
share of the Company's common stock as reported on the New York Stock Exchange
on October 31, 2000 less the exercise price payable for the share.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company has two committees that determine the compensation of the
Company's executives, the Executive Compensation Committee and the Compensation
Committee. The only individuals who served as members of either committee during
the fiscal year ended October 31, 2000 are the current members of the
committees.

The current members of the Executive Compensation Committee are Carl B.
Marbach and Paul E. Shapiro, neither of whom is an officer or employee, or
former officer, of the Company or any subsidiary of the Company. The Executive
Compensation Committee administers the Cash Bonus Plan and the Company's stock
option plans, determines the salary of the Chief Executive Officer, determines
the salary and bonus of the Chief Operating Officer and reviews the
recommendations of the Compensation Committee as to the compensation of the
executives of the Company, other than the Chief Executive Officer and Chief
Operating Officer.

The current members of the Compensation Committee are Robert I. Toll, the
Company's Chairman of the Board and Chief Executive Officer, Zvi Barzilay, the
Company's President and Chief Operating Officer, and Carl B. Marbach. The
Compensation

18
<PAGE>

Committee determines the compensation for the Company's executives other than
the Chief Executive Officer and the Chief Operating Officer.

In order to help provide for an orderly market in the Company's common
stock in the event of the death of either Robert I. Toll or Bruce E. Toll (the
"Tolls"), or both of them, the Company and the Tolls have entered into
agreements in which the Company has agreed to purchase from the estate of each
of the Tolls $10 million of the Company's common stock (or a lesser amount under
certain circumstances), at a price equal to the greater of fair market value (as
defined) or book value (as defined). Each of the Tolls has agreed to allow the
Company to purchase $10 million of life insurance on his life. In addition, each
of the Tolls has granted to the Company, at no cost to it, an option to purchase
up to an additional $30 million (or a lesser amount under certain circumstances)
of common stock from his estate. The agreements expire in October 2005.

During fiscal 2000, the Company built and sold a home to an employee who
is married to a daughter of Robert I. Toll for $480,819, representing a 13.9%
discount.

On September 18, 2000 and October 12, 2000, the Company repurchased
200,000 shares and 50,000 shares, respectively, of its common stock from Bruce
E. Toll at $30 per share. The high and low prices of the Company's common stock
on the New York Stock Exchange were $30.50 and $28.875 on September 18, 2000 and
$32.0625 and $29.50 on October 12, 2000.

In addition to the performance of their duties for the Company, the Tolls
have engaged, and continue to engage, in certain other businesses in real
estate. These businesses include the purchase, sale and management of townhome,
apartment, condominium, commercial and industrial real estate projects for
rental. The Company leases, at what it believes to be competitive market rates,
certain office space from a business controlled by Robert I. Toll, Bruce E.
Toll, Zvi Barzilay and Joel H. Rassman. During the last fiscal year, the Company
paid to such business approximately $51,600 in rent. The Company also provided
services to other businesses controlled by the Tolls during the fiscal year,
which were also billed at cost and paid throughout the year. The largest amount
due the Company from these businesses at any time during the year was
approximately $143,000 and the amount due at October 31, 2000 was approximately
$10,000. These transactions are reviewed and monitored by the Audit Committee.

In order to take advantage of commercial real estate opportunities which
may present themselves from time to time, the Company formed Toll Brothers
Realty Trust (the "Trust") in 1998. The Trust is effectively owned one-third by
the Company, one-third by a number of senior executives and/or directors,
including Robert I. Toll, Bruce E. Toll (and certain members of his family), Zvi
Barzilay(and certain members of his family) and Joel H. Rassman, and one-third
by the Pennsylvania State Employees Retirement System(collectively, the
"Trustholders").

In June 2000, the Trustholders entered into an agreement pursuant to which
the owner(s) of each one-third interest agreed to invest additional capital in
an amount not to exceed $9,259,000 if required by the Trust. As of January 31,
2001, no additional capital investment had been required pursuant to this
commitment, which expires in June 2002. As of October 31, 2000, the Company's
investment in the Trust was $7,233,000.

The Company provides development, finance and management services to the
Trust. During fiscal 2000, the Company earned $1,392,000 in fees for these
services. The Company also incurs certain costs on behalf of the Trust for which
the Company is reimbursed by the Trust. These fees and reimbursements were paid
to the Company

19
<PAGE>

throughout the year. The amount due the Company for fees and reimbursements as
of October 31, 2000, was approximately $208,000. The largest amount due the
Company from the Trust at any time during the last fiscal year was approximately
$408,000.

REPORT OF THE COMPENSATION COMMITTEES ON
EXECUTIVE COMPENSATION

BASIC POLICY CONSIDERATIONS

The Company's compensation policies with respect to its executive
officers, as originally established by the Board's Compensation Committee and
the Executive Compensation Committee, are based on the principles that
compensation should, to a significant extent, reflect the financial performance
of the Company and the executive, and that a significant portion of executive
officers' compensation should provide long-term incentives. It is the policy of
these committees to set executive compensation at levels that are sufficiently
competitive so that the Company may attract, retain and motivate the highest
quality individuals to contribute to the Company's goals, objectives and overall
financial success. Methods of compensation are designed to provide incentives
for executive performance that results in continuing improvements in the
Company's financial results or condition, over both the short-term and the
long-term, and to encourage continued service to the Company. A significant
portion of executives' incentive compensation is paid in stock options and stock
awards so that executives have the same interest as Stockholders in increasing
the value of their investment. The compensation of each executive officer is
based largely upon both individual and Company performance.

The compensation program is comprised of two elements: (a) annual salary
and possible short-term incentive awards in the form of cash bonuses, and (b) a
long-term incentive program (principally stock options and a stock based feature
of the Cash Bonus Plan) where the level of compensation is dependent on the
performance of the Company's common stock. The details of this compensation
program, with specific discussion of the programs applicable to the Chief
Executive Officer, are set out below.

ANNUAL COMPENSATION - EXECUTIVE OFFICERS OTHER THAN CHIEF EXECUTIVE OFFICER

The Compensation Committee establishes annual salaries of executives other
than the Chief Operating Officer whose compensation is set by the Executive
Compensation Committee. These committees set compensation by subjective
evaluation of individual performance of executives and by marketplace valuations
of comparable executives, although salary determinations are not based upon any
specific or constant criteria.

Executives are eligible for annual incentive cash bonuses. These bonuses
are granted at the discretion of the Compensation Committee and, in the case of
the Chief Operating Officer, the Executive Compensation Committee. These awards
are not intended to be in addition to market level compensation but instead are
designed to cause a significant part of an executive's annual compensation to be
dependent on the relevant committee's subjective assessment of the executive's
performance. In making this assessment, the committee considers a number of
factors, including the Company's overall financial results; the executive's
contributions to the Company's economic and strategic objectives; the efforts
required of and expended by the executive; the executive's ability to develop,
execute and implement short-term and long-term corporate goals, including
expansion of operations into new areas; and the executive's contributions toward
maximizing Company profitability, managing costs and addressing the impact of
economic and demographic restrictions on Company performance. In

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addition, the Compensation Committee and the Executive Compensation Committee
compare the Company's results of operations, including earnings, margins, return
on equity and other factors, with those of competitors in determining
compensation for the Company's executives.

LONG-TERM COMPENSATION STOCK OPTIONS

The stock option component of the executive officers' compensation has
been designed to provide executives with incentives for the enhancement of
Stockholder value. Options have been granted at fair market value on the date of
grant and generally vest over a number of years, usually not less than four
years. The options have significant restrictions, for a typical period of three
years from the date of grant, on the executive's ability to exercise the options
and sell the shares acquired upon exercise without the consent of the
appropriate stock option subcommittee. As with the grant of cash bonuses, no
constant criteria are used year after year in the granting of stock options.
Instead, the Compensation Committee makes a subjective determination of the
effectiveness of the executive and the extent of the executive's contributions
to the Company's success and, based on that determination, recommends to the
stock option subcommittee the amount of options to be granted, if any, to each
executive officer. Because the options are granted with exercise prices equal to
the fair market value of the underlying common stock on the date of grant, any
value that ultimately accrues to the executive is based entirely upon the
Company's performance, as perceived by investors who establish the market price
for the common stock.

2000 COMPENSATION FOR CHIEF EXECUTIVE OFFICER

Since 1990, cash bonuses for Robert I. Toll have been determined based on
the formula contained in the Company's Cash Bonus Plan approved by Stockholders
in 1992 and amended with Stockholder approval in 1997 and 1999. Under the Cash
Bonus Plan, Mr. Toll received for fiscal 2000 a bonus equal to the sum of (a)
1.5% of the Company's income before income taxes (as defined in the Cash Bonus
Plan) for fiscal 2000 in excess of 10% and up to 20% of Stockholders' equity (as
defined in the Cash Bonus Plan) of the Company as of the end of fiscal 1999,
plus (b) 2.0% of the Company's income before income taxes for fiscal 2000 in
excess of 20% and up to 30% of Stockholders' equity of the Company as of the end
of fiscal 1999, plus (c) 2.25% of the Company's income before income taxes for
fiscal 2000 in excess of 30% of Stockholders' equity of the Company as of the
end of fiscal 1999. This method of

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compensation ties Mr. Toll's compensation to various indicators of the Company's
performance. During the past five years, this method generated cash bonus
calculations that were slightly lower for 1996 than for 1995, 20% higher for
1997 than for 1996, 32% higher for 1998 than for 1997, 6% higher for 1999 than
for 1998 and 70% higher for 2000 than for 1999, before consideration of the
stock award feature described below.

The Executive Compensation Committee and the Board of Directors determined
that tying the value of the bonus of the Chief Executive Officer to the
Company's stock price is a valuable incentive to align the interests of the
Chief Executive Officer with those of the Stockholders. Accordingly, the
Executive Compensation Committee and the Board of Directors amended the Cash
Bonus Plan on December 10, 1998, subject to Stockholder approval, which was
given at the 1999 Annual Meeting of Stockholders, to provide that (a) all bonus
payments made under the Cash Bonus Plan with respect to the Cash Bonus Plan
years ending October 31, 1999, October 31, 2000, and October 31, 2001 will be
paid in shares of common stock, which payments will be in the form of an award
under the terms of the Company's Stock Incentive Plan (1998) (the "1998 Plan");
(b) the number of shares of common stock awarded pursuant to the aforementioned
provisions of the Cash bonus Plan will be determined by dividing the dollar
amount of each bonus (as determined in accordance with the Cash Bonus Plan) by
$24.25 (the fair market value of a share of common stock, determined, as of
December 10, 1998, in accordance with the provisions for determination of fair
market value as set forth in the 1998 Plan); (c) the Executive Compensation
Committee will have the discretion to terminate the application of the provision
of the Cash Bonus Plan described in subparagraphs (a) and (b) of this paragraph
at any time, effective no sooner than six months after such decision to
terminate is made by the Executive Compensation Committee, in which event all
bonuses payable on or after the effective date of such termination will be
payable in cash only; and (d) upon receipt of a request by Robert I. Toll, based
on his concerns regarding adverse tax consequences to him, the Executive
Compensation Committee may, in its sole discretion, suspend the application of
the stock award provisions described in subparagraphs (a) and (b) of this
paragraph, provided that such action will not cause any increase in the amount
or value of a bonus that would otherwise be payable under the Cash Bonus Plan.
In the event of suspension of the stock award provisions, all bonuses will be
payable only in cash until such time as the Executive Compensation Committee
determines to reinstate the stock award provisions. Payment of the Cash Bonus to
Robert I. Toll for the 2000 fiscal year was made in the form of an award of
shares of common stock, which as of the end of the fiscal year had a market
value of $32.50 per share and an aggregate market value of $4,413,228. If this
bonus had been paid in cash instead of stock, Mr. Toll would have received
$3,292,947.

The Cash Bonus Plan is intended to provide bonuses that will be treated as
"performance based compensation" exempt from the limitations on deductibility
imposed under Section 162(m) of the Code.

Under the 1998 Plan, Robert I. Toll was granted options for 750,000 shares
of common stock on December 20, 1999.

COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS

Robert I. Toll
Zvi Barzilay
Carl B. Marbach

COMPENSATION AND STOCK BASED COMPENSATION
COMMITTEE FOR KEY EXECUTIVES AND
NON-EMPLOYEE DIRECTORS

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Carl B. Marbach
Paul E. Shapiro

REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed and discussed the Company's audited financial statements for
the year ended October 31, 2000 with management.

The Audit Committee discussed with the Company's independent auditors, who
are responsible for expressing an opinion on the conformity of the Company's
audited financial statements with generally accepted accounting principles,
their judgments as to the quality, not just the acceptability, of the Company's
accounting principles, the reasonableness of significant judgements, the clarity
of disclosures in the financial statements, as well as the other matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. In addition, the Audit
Committee discussed with the independent auditors the auditors' independence
from the Company and its management, including the matters in the written
disclosures required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and received by the Audit
Committee from the Company's independent auditor's.

Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended
October 31, 2000 for filing with the Securities and Exchange Commission. The
Audit Committee's recommendation was considered and approved by the Board of
Directors.

Respectfully submitted on December 14, 2000, by the members of the Audit
Committee of the Board of Directors.

Paul E. Shapiro, Chairman
Edward G. Boehne
Roger S. Hillas
Carl B. Marbach

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PERFORMANCE GRAPH

The following graph compares the five year cumulative total return
(assuming reinvestment of dividends) from October 31, 1995 to October 31, 2000
for (i) the Company's common stock, (ii) the Standard & Poor's 500 Composite
Stock Index(the "S&P 500") and (iii) the S & P Homebuilding Index:

GRAPHIC

10/95 10/96 10/97 10/98 10/99 10/00
----- ------ ------ ------ ------ ------
Toll Brothers, Inc..... 100 95.10 123.78 129.72 97.90 181.82
S&P 500................ 100 124.10 163.95 200.00 251.35 266.66
S&P Homebuilding....... 100 96.36 138.47 168.51 128.08 185.61

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 and the regulations
thereunder require the Company's officers and directors and persons who own more
than ten percent of a registered class of the Company's equity securities
(collectively, the "reporting persons") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of these reports. Based on the Company's review of the
copies of these reports received by it, and written representations received
from reporting persons, the Company believes that all filings required to be
made by the reporting persons for the period November 1, 1999 through October
31, 2000 were made on a timely basis.

CERTAIN TRANSACTIONS

Ballard, Spahr, Andrews & Ingersoll, LLP, the law firm of which Richard J.
Braemer, a director of the Company, is a partner, acted as counsel to the
Company in various matters during fiscal 2000 and was paid aggregate fees of
$286,305 during that period.

For information regarding certain other transactions, see "Compensation
Committee Interlocks and Insider Participation," elsewhere in this proxy
statement.

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STOCKHOLDER PROPOSALS

Stockholder proposals intended to be presented at the 2002 Annual Meeting
of Stockholders must be submitted in writing and received by the Company at the
address appearing on the first page of this proxy statement by October , 2001
in order to be considered for inclusion in the Company's proxy statement and
form of proxy relating to that meeting.

A Stockholder of the Company may wish to have a proposal presented at the
2002 Annual Meeting of Stockholders, but not to have such proposal included in
the Company's proxy statement and form of proxy relating to that meeting. If
notice of any such proposal is not submitted in writing and received by the
Company at the address appearing on the first page of this proxy statement by
January , 2002, then such proposal shall be deemed "untimely" for purposes of
Rule 14a-4(c) promulgated under the Securities Exchange Act of 1934 and,
therefore, the persons appointed by the Company's Board of Directors as its
proxies will have the right to exercise discretionary voting authority with
respect to such proposal.

SOLICITATION OF PROXIES

The enclosed form of proxy is being solicited on behalf of the Company's
Board of Directors. The Company will bear the cost of the solicitation of
proxies for the Meeting, including the cost of preparing, assembling and mailing
proxy materials, the handling and tabulation of proxies received, and charges of
brokerage houses and other institutions, nominees and fiduciaries in forwarding
such materials to beneficial owners.

In addition to the mailing of the proxy material, such solicitation may by
made in person or by telephone, telegraph or telecopy by directors, officers or
regular employees of the Company, or by a professional proxy solicitation
organization engaged by the Company.

ANNUAL REPORT ON FORM 10-K

THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH
PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULE THERETO) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS
SHOULD BE DIRECTED TO FREDERICK N. COOPER OR JOSEPH R. SICREE, CO-DIRECTORS OF
INVESTOR RELATIONS, AT THE ADDRESS OF THE COMPANY APPEARING ON THE FIRST PAGE OF
THIS PROXY STATEMENT.

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APPENDIX A

AUDIT COMMITTEE CHARTER

Organization

The audit committee of the board of directors shall be comprised of at
least three directors, as designated by the board of directors, who are
independent of management and the Company in accordance with the applicable
listing or regulatory agency. All audit committee members will be financially
literate, and at least one member will have accounting or related financial
management expertise, as the board of directors interprets such qualification in
its business judgment.

Statement of Policy

The audit committee shall provide assistance to the directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the Company, and the quality and integrity of financial reports of the Company.
In so doing, it is the responsibility of the audit committee to maintain free
and open communication between the directors, the independent auditors, the
internal auditors, and the financial management of the Company.

Responsibilities

In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the Company are in accordance
with all requirements and are of the highest quality.

In carrying out these responsibilities, the audit committee will:

Review Procedures

1. Review and reassess this Charter as conditions dictate, including
requirements of the SEC, NYSE or other regulatory agencies. In addition, obtain
the full board of directors' approval of this Charter at least annually.

2. Review with the independent auditors, the Company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any recommendations
for the improvement of such internal controls or particular areas where new or
more detailed controls or procedures are desirable.

3. Inquire of management, the internal auditor, and the independent auditors
about significant risks or exposures and assess the steps management has taken
to minimize such risks to the Company.

4. Review with financial management and the independent auditors the quarterly
financial statements prior to the filing of the Company's quarterly report on
Form 10-Q. The chair of the committee may represent the entire committee for
purposes of this review.

5. Review the audited financial statements with management and the independent
auditors prior to filing or distribution and discuss significant issues
regarding accounting principles, practices and judgments.

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<PAGE>

6. If deemed necessary, review any items from the audit with the board of
directors.

Independent Auditors

7. Review and recommend to the board of directors the independent auditors to be
selected to audit the financial statements of the Company.

8. Have a clear understanding with the independent auditors that they are
ultimately accountable to the board of directors and the audit committee, as the
shareholders' representatives, and that the audit committee has the ultimate
authority in deciding to engage, evaluate, and if appropriate, terminate their
services.

9. Meet with the independent auditors and financial management of the Company as
necessary to review or discuss the audit scope for the current year and audit
procedures to be utilized. At the conclusion of the audit, review the audit
results and approaches and financial information included in the financial
statements and discuss the auditor's judgments about the quality, not just the
acceptability, of the Company's accounting principles as applied in its
financial reporting, including the matters required to be discussed by Statement
on Accounting Standards No. 61.

10. On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional services as
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees. In addition, review with the independent
auditors the nature and scope of any disclosed relationships or professional
services and take, or recommend that the board of directors take, appropriate
action to satisfy itself of the outside auditor's independence.

11. Request assurance from the independent auditors that Section 10A of the
Securities Exchange Act of 1934 has been satisfied.

Internal Audit Department

12. Review and concur with management's appointment, termination, or replacement
of the director of internal audit.

13. Review the internal audit function of the Company including the independence
and authority of its reporting obligations, the proposed audit plans for the
coming year and the coordination of such plans with the independent auditors.

14. Receive prior to each meeting, a progress report on the proposed internal
audit plan, with explanations for any deviations from the original plan.

Other Audit Committee Responsibilities

15. Provide sufficient opportunity for the internal and independent auditors to
meet with the members of the audit committee without members of management
present.

16. Discuss significant activities from the audit committee meeting with the
board of directors.

17. Investigate any matter brought to its attention within the scope of its
duties, with the power to utilize inside or outside counsel, or other persons or
entities having special competence as necessary, for this purpose if, in its
judgment, that is appropriate.

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APPENDIX B

AMENDMENT TO THE TOLL BROTHERS, INC. CASH BONUS PLAN

WHEREAS, the "outside directors" who have been designated to act as the
administrative committee (the "Committee") for the Toll Brothers, Inc. Cash
Bonus Plan (the "Plan") desire to amend the Plan in order to revise the terms of
the formula by which bonuses are determined and to continue to provide for
payment of bonuses in shares of common stock of the Company as well as in cash,
based on a per share price to be fixed at the closing price of such shares on
December 20, 2000; and

WHEREAS, the Company is generally authorized under Section 8(b) of the
Plan to amend the Plan from time to time in such manner as it may deem
advisable, subject to the approval of the Committee, and subject further to
disclosure to and approval by the stockholders of the Company, of any amendment
that could increase the amount that may be payable as bonuses under the Plan.

NOW, THEREFORE, the Plan is hereby amended, subject to shareholder
approval, as follows:

1. Section 5 of the Plan is amended, effective for bonuses paid with
respect the fiscal year of the Company ending October 31, 2002, and thereafter,
to read in its entirety as follows:

"5. Bonus Entitlement

(a) The Participant shall be entitled to receive a bonus in accordance
with the provisions of Section 6 of the Plan only after certification by the
Committee that the performance goals set forth in Section 6 have been satisfied.
The bonus payment under the Plan shall be paid to each Participant during the
last week of December or the first week of January after the close of the fiscal
year with respect to which the bonus is to be paid. No bonus shall be payable
under the Plan without the prior disclosure of the terms of the Plan to the
stockholders of the Company and the approval of the Plan by such stockholders.

(b) The payment of bonuses under the Plan with respect to the fiscal years
ending October 31, 2002, October 31, 2003 and October 31, 2004 shall,
notwithstanding anything contained herein to the contrary, be paid in the form
of shares of the Company's Common Stock, par value $0.01 per share (the
"Shares"), which payments shall be in the form of an award under the terms of
the Toll Brothers, Inc. Stock Incentive Plan (1998) (the "1998 Plan"). The
number of Shares so awarded shall be determined by dividing the dollar amount of
each bonus by the closing price per Share as reported on the New York Stock
Exchange for December 20, 2000.

(c) Notwithstanding the provisions of 5(b) set forth above, the Committee
shall have the discretion at any time to terminate the application of Section
5(b), effective no sooner than six months following the Committee's
determination to act under this Section 5(c). In the event the Committee
terminates the application of Section 5(b), all bonuses payable on or after the
effective date of such action shall be payable in cash only.

(d) Notwithstanding anything to the contrary contained in this Section 5,
the Participant may, if he believes that a payment of his bonus in Shares would,
as a result of a change in Federal tax laws, or in regulations promulgated
thereunder by

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<PAGE>

the IRS, have a material adverse impact on the Participant, request the
Committee to either suspend or terminate the application of Section 5(b). Upon
receipt of such request from both Participants, the Committee may, at its sole
discretion, terminate or suspend the application of Section 5(b), and all
bonuses payable under the Plan shall be payable in cash only in accordance with
Section 6 until such time as the Committee determines to reinstate Section 5(b),
provided, however, that the amount of any such cash payment shall not exceed the
value of the bonus that would have been payable if the bonus had been paid in
Shares under the terms of the Plan as in effect without regard to this Section
5(d)."

2. Section 6(a) of the Plan is hereby amended, effective for bonuses paid with
respect the fiscal year of the Company ending October 31, 2002, and thereafter,
to read in its entirety as follows:

"(a) Each Participant in the Plan is entitled to a bonus which is equal to
the sum of the following amounts:

(i) 1.5% of all Income Before Income Taxes in excess of 10% and up
to 20% of Shareholders Equity of the Company as of the end of the last fiscal
year of the Company;

(ii) 3% of all Income Before Income Taxes in excess of 20% and up to
30% of Shareholders Equity of the Company as of the end of the last fiscal year
of the Company; and

(iii) 6% of all Income Before Income Taxes in excess of 30% of
Shareholders Equity of the Company as of the end of the last fiscal year of the
Company."

3. In all other respects, the provisions of the Plan shall remain in full
force and effect.

APPENDIX C

EXECUTIVE OFFICER CASH BONUS PLAN (Effective November 1, 2000)

PURPOSE

The Toll Brothers Inc. Executive Officer Cash Bonus Plan (the "Plan") is
designed to reward executive officers of Toll Brothers Inc. (the "Company") for
achieving corporate performance objectives. The Plan is intended to provide an
incentive for superior work and to motivate participating officers toward even
higher achievement and business results, to increase shareholder value, to tie
their goals and interests to those of the Company and its shareholders, and to
enable the Company to attract and retain highly qualified executive officers.
The Plan is also intended to secure the full deductibility under the provisions
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
of the bonus compensation paid under the Plan to the Company's Covered Employees
(as hereinafter defined).

ARTICLE I - DEFINITIONS

1.1 "Board" shall mean the Board of Directors of the Company.

1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended
(the "Code").

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1.3 "Committee" shall mean the Compensation and the Stock Based
Compensation Committee for Key Executives and Non- Employee Directors.

1.4 "Company" shall mean Toll Brothers Inc.

1.5 "Covered Employee" shall mean, with respect to any fiscal year
of the Company, each officer, other than the chief executive officer, whose
compensation for such fiscal year is required to be disclosed to shareholders in
the proxy statement relating to the annual meeting of stockholders of the
Company held during the next fiscal year pursuant to the executive compensation
disclosure rules promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.

1.6 "Participant" shall mean, with respect to each Performance
Period, each executive officer, other than the chief executive officer, who has
been designated by the Committee as a Participant in the Plan for such
Performance Period.

1.7 "Performance Goal" shall mean, with respect to a Performance
Period, an objective performance goal or goals that have been established by the
Committee, consistent with the express terms of the Plan, which must be met in
order for any bonus payments to be payable to any Participant in the Plan with
respect to such Performance Period.

1.8 "Performance Period" shall mean the Plan Year or such other
period as may be established as a Performance Period by the Committee from time
to time.

1.9 "Plan" shall mean the Toll Brothers Inc. Executive Officer Bonus
Plan as set forth herein and as may be amended from time to time.

1.10 "Plan Year" shall mean the Company's fiscal year, beginning on
November 1 and ending on October 31.

ARTICLE II - ELIGIBILITY AND PARTICIPATION

2.1 Those executive officers of the Company who are officers at the
level of vice president or above and who are designated as Participants in the
Plan from time to time by the Committee shall be eligible to participate in the
Plan. Prior to or at the time performance objectives are established for a
specified Performance Period, the Committee shall, at its sole discretion,
designate in writing which executive officers are to be Participants in the Plan
with respect to such Performance Period.

2.2 If no specific designation with respect to participation in the
Plan is made by the Committee at the time performance goals are established for
a specified Performance Period, those officers who participated in the Plan with
respect to the immediately prior Performance Period shall be deemed to have been
designated as Participants by the Committee.

ARTICLE III - PERFORMANCE GOALS

3.1 Prior to or within the first ninety (90) days of a Performance
Period the Committee shall establish in writing with respect to such Performance
Period, one or more specific Performance Goals and an objective formula or
method for computing the amount of bonus compensation payable to each
Participant if the specified Performance Goals are attained. Notwithstanding the
foregoing sentence, the Performance Goals for any Performance Period may not be
established after 25 percent of the period of service represented by the
Performance Period has elapsed.

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3.2 Performance goals shall be based upon one or more of the
following business criteria for the Company as a whole or any of its
subsidiaries, operating divisions or other operating units: Stock price, market
share, gross revenue, net revenue, pretax income, operating income, cash flow,
earnings per share, return on equity, return on invested capital or assets, cost
reductions and savings, return on revenues or productivity, or any variations of
the preceding business criteria, which may be modified at the discretion of the
Committee, to take into account extraordinary items or which may be adjusted to
reflect such costs or expense as the Committee deems appropriate and the opening
or expanding of new geographic regions, developing of new business lines, hiring
personnel and training of personnel. In addition, to the extent consistent with
the goal of providing for deductibility under Section 162(m) of the Code,
performance goals may be based upon a Participant's attainment of personal
objectives with respect to any of the foregoing performance goals or
implementing policies and plans, negotiating transactions and sales, developing
long-term business goals or exercising managerial responsibility. Measurements
of the Company's or a Participant's performance against the Performance Goals
established by the Committee shall be objectively determinable and shall be
determined according to generally accepted accounting principles as in existence
on the date on which the Performance Goals are established and without regard to
any changes in such principles after such date.

3.3 The establishment of performance goals under the Plan shall in
all cases be implemented in a manner consistent with the requirements of Section
162(m) of the Code and Treasury Regulations promulgated thereunder.

ARTICLE IV - DETERMINATION OF BONUS AWARDS

4.1 As soon as practicable following the end of a Performance
Period, the Committee shall determine whether and to what extent the Company
and/or the Participants have achieved the Performance Goal or Performance Goals
established for such Performance Period, including the specific target objective
or objectives and the satisfaction of any other material terms of the bonus
award, and shall certify such determination in writing, which certification may
take the form of minutes of the Committee documenting such determination. In
addition, the Committee shall calculate the amount of each Participant's bonus
for such Performance Period based upon the levels of achievement of the relevant
Performance Goals and the objective formula or formulae established for such
purposes with respect to such Performance Period. The Committee shall have no
discretion to increase the amount any Participant's bonus payable under the
Plan, but may, notwithstanding anything contained herein to the contrary, reduce
the amount of or totally eliminate such bonus, if it determines, in its absolute
and sole discretion, that such a reduction or elimination is appropriate in
order to reflect the Participant's individual performance or to take into
account any other factors the Committee deems appropriate.

4.2 No Participant shall be entitled to receive a bonus or bonuses
during any one Plan Year in an amount that is, in the aggregate, in excess of
two hundred fifty percent (250%) of such Participant's base annual salary as in
effect as of the first day of such Plan Year or two million five hundred
thousand dollars ($2,500,000), whichever is less.

4.3 In no event shall the aggregate amount of all bonuses payable in
any Plan Year under this Plan exceed ten percent (10%) of the Company's average
annual income before taxes for the preceding five fiscal years of the Company.

ARTICLE V - PAYMENT OF AWARDS

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5.1 Approved bonus awards shall be payable by the Company in cash to
each Participant, or to his estate in the event of his death, in a single
payment or in installments, after the end of each Performance Period and after
the Committee has certified in writing pursuant to Section 3.1 that the relevant
performance goals were achieved, except that the Committee may elect to pay such
bonus in one or more installments over a period ending no later than the end of
the seventh month following the Committee's certification of the achievement of
the relevant performance goals, and may require that the payment of any such
installment be subject to the Participant's continued employment by the Company.

5.2 A bonus award that would otherwise be payable to a Participant
who is not employed by the Company or one of its subsidiaries on the last day of
a Performance Period shall be prorated, or not paid, as follows:

(a) Terminated due to disability: Prorated based on active
service during Performance Period.

(b) Retirement in accordance with the Company's retirement
policies or with the approval of the Committee: Prorated based on active service
during Performance Period.

(d) Resignation pursuant to mutual written agreement: Prorated
based on active service during Performance Period.

(e) Leave of absence: Prorated based on active service during
Performance Period.

(f) Death of Participant: Prorated based on active service
during Performance Period.

ARTICLE VI - OTHER TERMS AND CONDITIONS

6.1 No bonus awards shall be paid under the Plan unless and until
the material terms (within the meaning of Section 162(m)(4)(C) of the Code) of
the Plan, including the business criteria described in Section 2.3 of the Plan,
are disclosed to and approved by the Company's shareholders by a majority of
votes cast in a separate vote, either in person or by proxy, including
abstentions to the extent abstentions are counted as voting under applicable
state law.

6.2 No person shall have any legal claim to be granted an award
under the Plan and the Committee shall have no obligation to treat Participants
uniformly. Except as may be otherwise required by law, bonus awards under the
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or
levy of any kind, either voluntary or involuntary. Bonuses awarded under the
Plan shall be payable from the general assets of the Company and no Participant
shall have any claim with respect to any specific assets of the Company.

6.3 Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the employ of the
Company or any subsidiary or to maintain any Participant's compensation at any
level.

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6.4 The Company or any of its subsidiaries may deduct from any award
any applicable withholding taxes or any amounts owed by the employee to the
Company or any of its subsidiaries.

ARTICLE VII - ADMINISTRATION

7.1 All members of the Committee shall be persons who qualify as
"outside directors" as defined under Section 162(m) of the Code. Until changed
by the Board, the Compensation and Stock Based Compensation Committee for Key
Employees and Non-Employee Directors shall constitute the Committee hereunder.

7.2 The Committee shall have full power and authority to administer
and interpret the provisions of the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of the Plan and
for the conduct of its business as the Committee deems necessary or advisable.

7.3 Except with respect to matters which under Section 162(m)(4)(C)
of the Code are required to be determined in the sole and absolute discretion of
the Committee, the Committee shall have full power to delegate to any officer or
employee of the Company the authority to administer and interpret the procedural
aspects of the Plan, subject to the Plan's terms, including adopting and
enforcing rules to decide procedural and administrative issues.

7.4 The Committee may rely on opinions, reports or statements of
officers or employees of the Company or any subsidiary thereof and of Company
counsel (inside or retained counsel), public accountants and other professional
or expert persons.

7.5 The Board reserves the right to amend or terminate the Plan in
whole or in part at any time. Unless otherwise prohibited by applicable law, any
amendment required to conform the Plan to the requirements of Section 162(m) of
the Code may be made by the Committee. No amendment may be made to the class of
individuals who are eligible to participate in the Plan, the performance
criteria specified in Section 2.3 or the maximum bonus payable to any
Participant as specified in Section 3.2 without shareholder approval unless
shareholder approval is not required in order for bonuses paid to Covered
Employees to constitute qualified performance-based compensation under Section
162(m) of the Code.

7.6 No member of the Committee shall be liable for any action taken
or omitted to be taken or for any determination made by him or her in good faith
with respect to the Plan, and the Company shall indemnify and hold harmless each
member of the Committee against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Committee) arising out of any act or omission in connection with the
administration or interpretation of the Plan, unless arising out of such
person's own fraud or bad faith.

7.7 The place of administration of the Plan shall be in the State of
Pennsylvania, and the validity, construction, interpretation, administration and
effect of the Plan and of its rules and regulations, and rights relating to the
Plan, shall be determined solely in accordance with the laws of the State of
Pennsylvania.

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PRELIMINARY COPY

PROXY

TOLL BROTHERS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - March 22, 2001

The undersigned stockholder of Toll Brothers, Inc. (the "Company"),
revoking all previous proxies, hereby appoints ROBERT I. TOLL, BRUCE E. TOLL AND
CARL B. MARBACH, and each of them individually, as the attorney and proxy of the
undersigned, with full power of substitution, to vote all shares of Common Stock
of the Company which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company, to be held at the
offices of the Company, 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania on
March 22, 2001, and at any adjournment or postponement thereof. Said proxies are
authorized and directed to vote as indicated with respect to the matters
specified on the reverse side.

This proxy is solicited on behalf of the Board of Directors. This proxy,
when properly executed, will be voted in the manner directed herein by the
undersigned. Unless otherwise specified, the shares will be voted "FOR" the
election of the four Director nominees, "FOR" the approval of the proposed
amendments to the Company's Certificate of Incorporation to increase the number
of authorized shares of the Company's capital stock, "FOR" the approval of the
proposed amendment to the Toll Brother's Cash Bonus Plan and "FOR" the approval
of the Toll Brothers, Inc. Executive Officer Cash Bonus Plan. This proxy also
delegates discretionary authority to vote with respect to any other business
which may properly come before the meeting or any adjournment or postponement
thereof.

(Continued on reverse side)

FOLD AND DETACH HERE

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Please mark
your votes as
indicated in
in this example |X|
1. FOR WITHHOLD
all nominees authority
listed (except as to vote for all
marked to the nominees
contrary) listed
|_| |_|

(INSTRUCTION: To withhold authority to vote for any nominee, strike a line
through the nominee's name below.)

Zvi Barzilay, Edward G. Boehne, Richard J. Braemer and Carl B. Marbach

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

2. The approval of proposed amendments of the Company's Certificate of
Incorporation to increase the number of authorized shares of the Company's
capital stock.

FOR AGAINST ABSTAIN
|_| |_| |_|

3. The approval of the amendment to the Toll Brothers, Inc. Inc. Cash Bonus
Plan.

FOR AGAINST ABSTAIN
|_| |_| |_|

4. The approval of the Toll Brothers, Inc. Executive Officer Cash Bonus Plan.

FOR AGAINST ABSTAIN
|_| |_| |_|

5. To vote upon such other business as may properly come before the meeting or
any adjournment or postponement thereof.

THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING,
PROXY STATEMENT AND 2000 ANNUAL REPORT OF TOLL BROTHERS, INC.

Dated: ____________________________________________, 2001

_________________________________________________________
Signature of Stockholder

NOTE: Please sign this Proxy exactly as name(s) appear(s) in address. When
signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such. If the stockholder is a a corporation, please
sign by full corporate name by duly authorized officer or officers and affix the
corporate seal. Where shares

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<PAGE>

are held in the name of two or more persons, all such persons should sign.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

FOLD AND DETACH HERE