SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 6, 1996
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Toll Brothers, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 001-09186 23-2416878
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3103 Philmont Avenue, Huntingdon Valley, PA 19006
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 938-8000
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Item 5. Other Events.
This Report is being filed for the sole purpose of filing as exhibits
an Indenture, dated as of November 12, 1996, among Toll Corp., as Issuer, Toll
Brothers Corp., as Guarantor, and NBD Bank, as Trustee, and Authorizing
Resolutions, dated as of November 6, 1996, which collectively constitute the
Indenture terms relating to the $100,000,000 principal amount of 8 3/4% Senior
Subordinated Notes Due 2006 of Toll Corp., guaranteed on a senior subordinated
basis by Toll Brothers, Inc., issued on November 12, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOLL BROTHERS, INC.
Dated: November 14, 1996 By: JOSEPH R. SICREE
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Joseph R. Sicree
Vice President
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<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Current Report on Form 8-K:
Exhibit
No. Item
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4.1 Indenture, dated as of November 12, 1996 among Toll Corp., as
Issuer, Toll Brothers Corp., as Guarantor and NBD Bank, as
Trustee.
4.2 Authorizing Resolutions, dated as of November 6, 1996, relating
to $100,000,000 principal amount of 8 3/4% Senior Subordinated
Notes due 2006 of Toll Corp., guaranteed on a senior subordinated
basis by Toll Brothers, Inc.
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Exhibit 4.1
TOLL CORP., as Issuer
TOLL BROTHERS, INC., as Guarantor
Debt Securities
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Dated as of November 12, 1996
NBD Bank, Trustee
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CROSS-REFERENCE TABLE
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<CAPTION>
TIA
Section Section Indenture
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<S> <C> <C>
310(a)(1)............................................... 9.10
(a)(2)............................................... 9.10
(a)(3)............................................... N.A.
(a)(4)............................................... N.A.
(b).................................................. 9.08; 9.10; 13.02
(c).................................................. N.A.
311(a).................................................. 9.11
(b).................................................. 9.11
(c).................................................. N.A.
312(a).................................................. 2.05
(b).................................................. 13.03
(c).................................................. 13.03
313(a).................................................. 9.06
(b)(1)............................................... N.A.
(b)(2)............................................... 9.06
(c).................................................. 9.06; 13.02
(d).................................................. 9.06
314(a).................................................. 4.03; 13.02
(b).................................................. N.A.
(c)(1)............................................... 13.04
(c)(2)............................................... 13.04
(c)(3)............................................... N.A.
(d).................................................. N.A.
(e).................................................. 13.05
(f).................................................. N.A.
315(a).................................................. 9.01(b)
(b).................................................. 9.05; 13.02
(c).................................................. 9.01(a)
(d).................................................. 9.01(c)
(e).................................................. 8.11
316(a)(last sentence)................................... 13.06
(a)(1)(A)............................................ 8.05
(a)(1)(B)............................................ 8.04
(a)(2)............................................... N.A.
(b).................................................. 8.07
317(a)(1)............................................... 8.08
(a)(2)............................................... 8.09
(b).................................................. 2.04
318(a).................................................. 13.01
</TABLE>
N.A. means Not Applicable.
Note: This cross-reference table shall not, for any purpose,
be deemed to be a part of the Indenture.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Heading Page
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<S> <C> <C> <C>
1 DEFINITIONS AND INCORPORATION BY REFERENCE
1.01. Definitions.................................................................. 1
1.02. Incorporation by Reference of Trust
Indenture Act............................................................. 6
1.03. Incorporation by Reference of
Provisions of Securities..................................................... 6
1.04. Rules of Construction........................................................ 7
2 THE SECURITIES
2.01. Form and Dating.............................................................. 7
2.02. Execution and Authentication................................................. 9
2.03. Registrar and Paying Agent................................................... 10
2.04. Paying Agent To Hold Money in Trust.......................................... 10
2.05. Securityholder Lists......................................................... 10
2.06. Transfer and Exchange........................................................ 11
2.07. Replacement Securities....................................................... 11
2.08. Outstanding Securities....................................................... 11
2.09. Temporary Securities......................................................... 12
2.10. Cancellation................................................................. 12
2.11. Defaulted Interest........................................................... 12
2.12. Global Securities............................................................ 13
3 REDEMPTION
3.01. Notices to Trustee........................................................... 13
3.02. Selection of Securities To Be Redeemed....................................... 14
3.03. Notice of Redemption......................................................... 14
3.04. Effect of Notice of Redemption............................................... 15
3.05. Deposit of Redemption Price.................................................. 15
3.06. Securities Redeemed in Part.................................................. 16
4 COVENANTS
4.01. Payment of Securities........................................................ 16
4.02. SEC Reports.................................................................. 16
4.03. Compliance Certificate....................................................... 16
5 SUCCESSOR CORPORATION
5.01. When Company and the Guarantor
May Merge, etc............................................................ 17
</TABLE>
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<TABLE>
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Article Section Heading Page
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6 SUBORDINATION
6.01. Agreement To Subordinate..................................................... 17
6.02. Company Not To Make Payments with
Respect to Securities in Certain
Circumstances............................................................. 18
6.03. Securities Subordinated to Prior
Payment of All Senior Indebtedness
of the Company on Dissolution,
Liquidation or Reorganization of
the Company............................................................... 19
6.04. Securityholders To Be Subrogated to
Rights of Holders of Senior
Indebtedness of the Company............................................... 20
6.05. Obligation of the Company
Unconditional............................................................. 21
6.06. Knowledge of Trustee......................................................... 21
6.07. Application by Trustee of Monies
Deposited with It......................................................... 22
6.08. Subordination Rights Not Impaired by
Acts or Omissions of Company or
Holders of Senior Indebtedness of
the Company............................................................... 22
6.09. Securityholders Authorize Trustee To
Effectuate Subordination
of Securities............................................................. 22
6.10. Right of Trustee To Hold Senior
Indebtedness of the Company............................................... 23
6.11. Article Six Not To Prevent Events of
Default................................................................... 23
7 GUARANTEE
7.01. Guarantee.................................................................... 23
7.02. Agreement To Subordinate..................................................... 25
7.03. Guarantor Not To Make Payments with
Respect to Securities in Certain
Circumstances............................................................. 26
7.04. Guarantee Subordinated to Prior
Payment of All Senior Indebtedness
of the Guarantor on Dissolution,
Liquidation or Reorganization of
the Guarantor............................................................. 27
7.05. Securityholders To Be Subrogated
to Rights of Holders of Senior
Indebtedness of the Guarantor............................................. 28
7.06. Obligation of the Guarantor
Unconditional............................................................. 29
7.07. Knowledge of Trustee......................................................... 30
</TABLE>
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<TABLE>
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Article Section Heading Page
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<S> <C> <C> <C>
7.08. Application by Trustee of Monies
Deposited with It......................................................... 30
7.09. Subordination Rights Not Impaired by
Acts or Omissions of Guarantor or
Holders of Senior Indebtedness of
the Guarantor............................................................. 30
7.10. Securityholders Authorize Trustee To
Effectuate Subordination of
Guarantee................................................................. 31
7.11. Right of Trustee To Hold Senior
Indebtedness of the Guarantor............................................. 31
7.12. Article 7 Not To Prevent Events of
Default................................................................... 31
7.13. Execution and Delivery of Guarantee.......................................... 31
7.14. Subordination of Indebtedness Owed
by the Company to the Guarantor........................................... 32
7.15. Officers' Certificate........................................................ 32
8 DEFAULTS AND REMEDIES
8.01. Events of Default............................................................ 32
8.02. Acceleration................................................................. 35
8.03. Other Remedies............................................................... 36
8.04. Waiver of Past Defaults...................................................... 36
8.05. Control by Majority.......................................................... 36
8.06. Limitation on Suits.......................................................... 36
8.07. Rights of Holders To Receive Payment......................................... 37
8.08. Collection Suit by Trustee................................................... 37
8.09. Trustee May File Proofs of Claim............................................. 37
8.10. Priorities................................................................... 37
8.11. Undertaking for Costs........................................................ 38
9 TRUSTEE
9.01. Duties of Trustee............................................................ 38
9.02. Rights of Trustee............................................................ 40
9.03. Individual Rights of Trustee................................................. 40
9.04. Trustee Disclaimer........................................................... 40
9.05. Notice of Defaults........................................................... 40
9.06. Reports by Trustee to Holders................................................ 41
9.07. Compensation and Indemnity................................................... 41
9.08. Replacement of Trustee....................................................... 42
9.09. Successor Trustee by Merger, etc............................................. 43
9.10. Eligibility; Disqualification................................................ 43
9.11. Preferential Collection of Claims
Against Company........................................................... 43
10 CONVERSION OF SECURITIES
10.01. Applicability of Article..................................................... 43
10.02. Conversion Privilege......................................................... 43
</TABLE>
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<TABLE>
<CAPTION>
Article Section Heading Page
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<S> <C> <C> <C>
10.03. Manner of Exercise of Conversion
Privilege................................................................. 44
10.04. Payment in Lieu of Fractional
Shares.................................................................... 45
10.05. Adjustment of Conversion Price............................................... 46
10.06. Notice of Certain Corporate Action........................................... 49
10.07. Guarantor To Provide Stock................................................... 50
10.08. Taxes on Conversions......................................................... 51
10.09. Covenant as to Stock......................................................... 51
10.10. Consolidation or Merger...................................................... 51
10.11. Disclaimer of Responsibility for
Certain Matters........................................................... 52
11 DISCHARGE OF INDENTURE
11.01. Termination of the Company's and the
Guarantor's Obligations................................................... 53
11.02. Application of Trust Money................................................... 54
11.03. Repayment to Company......................................................... 54
12 AMENDMENTS, SUPPLEMENTS AND WAIVERS
12.01. Without Consent of Holders................................................... 55
12.02. With Consent of Holders...................................................... 55
12.03. Compliance with Trust Indenture Act.......................................... 56
12.04. Revocation and Effect of Consents............................................ 56
12.05. Notation on or Exchange of
Securities................................................................ 56
12.06. Trustee To Sign Amendments, etc.............................................. 57
13 MISCELLANEOUS
13.01. Trust Indenture Act Controls................................................. 57
13.02. Notices...................................................................... 57
13.03. Communication by Holders with Other
Holders................................................................... 58
13.04. Certificate and Opinion as to
Conditions Precedent...................................................... 58
13.05. Statements Required in Certificate
or Opinion................................................................ 58
13.06. When Treasury Securities Disregarded......................................... 59
13.07. Rules by Trustee, Paying Agent,
Registrar................................................................. 59
13.08. Legal Holidays............................................................... 59
13.09. Governing Law................................................................ 59
13.10. No Adverse Interpretation of Other
Agreements................................................................ 60
13.11. No Recourse Against Others................................................... 60
13.12. Successors................................................................... 60
13.13. Duplicate Originals.......................................................... 60
13.14. Counterparts................................................................. 60
Signatures ......................................................................................... 61
Exhibit A - Form of Security.............................................................................. A-1
Exhibit B - Form of Guarantee............................................................................. B-1
</TABLE>
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<PAGE>
INDENTURE dated as of November 12, 1996 among TOLL CORP., a Delaware
corporation (the "Company"), TOLL BROTHERS, INC., a Delaware corporation (the
"Guarantor"), and NBD Bank, a Michigan banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's debt
securities issued under this Indenture ("Securities"):
ARTICLE 1.
Definitions and Incorporation by Reference
Section 1.011. Definitions.
"Acceleration Notice" has the meaning provided in Section 8.02.
"Affiliate" has the meaning provided in Rule 405 promulgated under the
Securities Act of 1933, as amended and in effect on the date hereof.
"Authorizing Resolution" means a resolution adopted by the Board of
Directors or by an Officer or committee of Officers pursuant to Board delegation
authorizing a Series of Securities. An Authorizing Resolution shall be so
adopted by both the Company and the Guarantor.
"Bankruptcy Law" has the meaning provided in Section 8.01.
"Board of Directors" means the Board of Directors of the Company or the
Guarantor, as the case may be, or any authorized committee of the Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or the Guarantor, as the case
may be, to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
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"Capital Stock" means the classes of capital stock of a Person as they
exist on the date of this Indenture or as they may be constituted from time to
time and warrants, options and similar rights to acquire such capital stock.
"Common Stock" means the Common Stock ($.01 par value) of the Guarantor
as the same exists at the date of this Indenture as originally executed or as
such stock may be constituted from time to time.
"Company" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor or any other obligor on
the Securities. "Company" shall also mean the Guarantor in the event the Company
fails to perform those duties required by Sections 312 through 317 of the TIA.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, as determined in accordance with generally
accepted accounting principles.
"Conversion Price" means the initial conversion price of Securities of
a Series specified in the Authorizing Resolution establishing the terms of such
Series Security, as adjusted in accordance with the provisions of Article 10.
"Current Market Price" for any relevant date means, (a) except for
purposes of Section 10.04, the average of the last reported sale prices of the
Common Stock for the 30 consecutive Business Days commencing 45 Business Days
before the day in question and (b) for purposes of Section 10.04 only, the last
reported sale price of the Common Stock, in either such case as reported on the
composite tape, or similar reporting system, for issues listed on the New York
Stock Exchange (or if the Common Stock is not then listed on that exchange, for
issues listed on such other national securities exchange upon which the Common
Stock is listed as may be designated by the Board of Directors for the purposes
hereof) or, if there is no such reported sale on the day or days in question, on
the basis of the average of the closing bid and asked quotations as so reported,
or, if the Common Stock is not listed on any national securities exchange, on
the basis of the average of the high bid and low asked quotations on the day or
days in question in the over-the-counter market as reported by the National
Association of Securities Dealers' Automated Quotations System, or if not so
quoted, as reported by National Quotation Bureau, Incorporated, or any similar
organization, or if not so reported as determined in good faith by the Board.
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"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Debt of the Company" means any single issue of
indebtedness of the Company constituting Senior Indebtedness of the Company
which at the time of determination has an aggregate principal amount outstanding
of at least $25,000,000 and is specifically designated in the instrument or
instruments creating, governing or evidencing such Senior Indebtedness of the
Company as "Designated Senior Debt of Toll Corp." (it being understood that the
Company's guarantee of the Revolving Credit Agreement shall be considered a
single issue of indebtedness of the Company for purposes of this definition).
"Designated Senior Debt of the Guarantor" means any single issue of
indebtedness of the Guarantor constituting Senior Indebtedness of the Guarantor
which at the time of determination has an aggregate principal amount outstanding
of at least $25,000,000 and is specifically designated in the instrument or
instruments creating, governing or evidencing such Senior Indebtedness of the
Guarantor as "Designated Senior Debt of Toll Brothers, Inc." (it being
understood that the Guarantor's guarantee of the Revolving Credit Agreement
shall be considered a single issue of indebtedness of the Guarantor for purposes
of this definition).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Event of Default" has the meaning provided in Section 8.01.
"Guarantee" has the meaning provided in Section 7.01.
"Guarantor" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time
to time.
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"Interest Payment Date," when used with respect to any installment of
interest payable on the Securities, has the meaning provided in Section 1 of the
Securities.
"Legal Holiday" has the meaning provided in Section 13.08.
"Non-Recourse Indebtedness" means indebtedness or other obligations
secured by a lien on property to the extent that the liability for such
indebtedness or other obligations is limited to the security of the property
without liability on the part of the Guarantor or any Subsidiary (other than the
Subsidiary which holds title to such property) for any deficiency.
"Non-Recourse Judgment" means a judgment in respect of indebtedness or
other obligations secured by a lien on property to the extent that the liability
for (i) such indebtedness or other obligations and (ii) such judgment is limited
to such property without liability on the part of the Guarantor or any
Subsidiary (other than the Subsidiary which holds title to such property) for
any deficiency.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Accounting Officer, the Controller, the Treasurer or the
Secretary of the Company or the Guarantor, as the case may be.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or any Vice President, and by the Chief Accounting
Officer, the Controller, the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary of the Company or the Guarantor, as the case may be. See
Sections 13.04 and 13.05.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be counsel to, but not an employee
of, the Company or the Guarantor. See Sections 13.04 and 13.05.
"Paying Agent" has the meaning provided in Section 2.03.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
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"Principal" of a debt security means the principal of the security
plus, when appropriate, the premium, if any, on the security.
"Record Date" for the interest payable on any Interest Payment Date on
the Securities has the meaning provided in Section 1 of the Securities.
"Registrar" has the meaning provided in Section 2.03.
"Revolving Credit Agreement" means the Amended and Restated Revolving
Credit Agreement dated as of November 1, 1993, among Toll Brothers, Inc., First
Huntingdon Finance Corp., a Delaware corporation, such other entities in which
Toll Brothers, Inc. owns capital stock that are named therein, PNC Bank, a
national banking association, as Agent, and the banks named therein, as the same
may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities" means the securities as amended or supplemented from time
to time that are authenticated and issued under this Indenture.
"Senior Indebtedness of the Company," if applicable, has the meaning
provided in the Authorizing Resolution.
"Senior Indebtedness of the Guarantor," if applicable, has the meaning
provided in the Authorizing Resolution.
"Series" means a series of Securities or the Securities of a Series.
"Special Record Date" has the meaning provided in Section 2.11.
"Subsidiary" means any corporation of which at least a majority in
interest of the outstanding stock having by the terms thereof voting power under
ordinary circumstances to elect a majority of the directors of such corporation,
irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency, is at the time, directly or indirectly, owned or
controlled by the Guarantor.
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"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture and as it may be
amended from time to time.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor.
"Trust Officer" when used with respect to the Trustee means any officer
within the Corporate Trust Department (or any successor group) of the Trustee,
including any Vice President, Second Vice President, Assistant Vice President,
Trust Officer or any other officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder or Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Company, the Guarantor
or any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them.
Section 1.03. Incorporation by Reference of Provisions of Securities.
Whenever this Indenture refers to a provision of the Securities, the provision
is incorporated by reference in and made a part of this Indenture.
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Section 1.04. Rules of Construction. Unless the context otherwise
requires:
1. a term has the meaning assigned to it;
2. an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles at the time of the relevant computation;
3. "or" is not exclusive;
4. words in the singular include the plural, and in the
plural include the singular; and
5. provisions apply to successive events and
transactions.
ARTICLE 2.
The Securities
Section 2.01. Form and Dating. The aggregate principal amount of
Securities that may be issued under this Indenture is unlimited. The Securities
may be issued from time to time in one or more Series. Each Series shall be
created by an Authorizing Resolution or a supplemental indenture that
establishes the terms of the Series, which may include the following:
(1) the title of the Series;
(2) the aggregate principal amount of the Series;
(3) the interest rate or method of calculation of the
interest rate;
(4) the date from which interest will accrue;
(5) the Record Dates for interest payable on Securities
of the Series;
(6) the dates when, places where and manner in which
principal and interest are payable;
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(7) the Registrar and Paying Agent;
(8) the terms of any mandatory or optional redemption
by the Company;
(9) the terms of any redemption at the option of
Holders;
(10) the denominations in which Securities are issuable;
(11) whether Securities will be issued in registered or
bearer form and the terms of any such forms of
Securities;
(12) whether any Securities will be represented by a
global Security and the terms of any such global
Security;
(13) the currencies (including any composite currency)
in which principal or interest or both may be paid;
(14) if payments of principal or interest may be made in
a currency other than that in which Securities are
denominated, the manner for determining such
payments;
(15) provisions for electronic issuance of Securities or
issuance of Securities in uncertificated form;
(16) any Events of Default or covenants in addition to
or in lieu of those set forth in this Indenture;
(17) whether and upon what terms Securities may be
defeased;
(18) the form of the Securities and the Guarantees,
which, unless the Authorizing Resolution otherwise
provides, shall be in the form of Exhibits A and B;
(19) whether the Securities of such Series will be
convertible into Common Stock of the Guarantor and
the terms thereof (including without limitation the
Conversion Price, the conversion period and any other
provision in addition to or in lieu of those set
forth in this Indenture);
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(20) whether the Securities and Guarantees of such Series
shall be subordinated to any obligations of the
Company or the Guarantor, and the obligations to
which such subordination will apply;
(21) any terms that may be required by or advisable
under applicable law; and
(22) any other terms not inconsistent with this
Indenture.
All Securities of one Series need not be issued at the same time and,
unless otherwise provided, a Series may be reopened for issuances of additional
Securities of such Series pursuant to an Authorizing Resolution, an Officers'
Certificate or in any indenture supplemental hereto.
The creation and issuance of a Series and the authentication
and delivery thereof are not subject to any conditions precedent.
Section 2.02. Execution and Authentication. Two Officers shall sign the
Securities for the Company by manual or facsimile signature. The Company's seal
shall be reproduced on the Securities. Two Officers of the Guarantor shall sign
the notation of the Guarantee by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. The signature shall be conclusive
evidence that the Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue upon a
written order of the Company signed by two Officers or by an Officer and an
Assistant Treasurer of the Company. Each Security shall be dated the date of its
authentication.
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Section 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer, for exchange or, if applicable, for conversion (in the case of
conversion, as agent for the Guarantor) ("Registrar") and an office or agency
where Securities may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Company initially appoints the Trustee as Registrar and Paying
Agent.
Section 2.04. Paying Agent To Hold Money in Trust. Each Paying Agent
shall hold in trust for the benefit of the Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal or interest on the
Securities, and shall notify the Trustee of any default by the Company (or any
other obligor on the Securities) in making any such payment. While any such
default continues, the Trustee shall require a Paying Agent to pay all money
held by it to the Trustee. If the Company or a Subsidiary acts as Paying Agent,
it shall segregate the money and hold it as a separate trust fund. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon doing so the Paying Agent shall have no further liability for the
money.
Section 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee on or before each Interest
Payment Date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
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Section 2.06. Transfer and Exchange. Where a Security is presented to
the Registrar or a co-registrar with a request to register a transfer, the
Registrar shall register its transfer as requested if its reasonable
requirements are met. Where Securities are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit transfers and exchanges,
the Trustee shall authenticate Securities at the Registrar's request. The
Registrar need not transfer or exchange any Security selected for redemption,
except the unredeemed part thereof if the Security is redeemed in part, or
transfer or exchange any Securities for a period of 15 days before a selection
of Securities to be redeemed. The Company may charge a reasonable fee for any
transfer or exchange (including the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any such
transfer or exchange and any other expenses in connection therewith) but not for
any exchange pursuant to Section 2.09, 3.06 or 12.05. This Section 2.06 is
subject to Section 11 of the Securities.
Section 2.07. Replacement Securities. If the Holder of a Security
claims that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security
and the Guarantor shall endorse the Guarantee thereon if the Trustee's
reasonable requirements are met. An indemnity bond must be sufficient in the
judgment of the Company, the Guarantor and the Trustee to protect the Company,
the Guarantor, the Trustee, the Paying Agent, the Registrar or any co-registrar
from any loss which any of them may suffer if a Security is replaced. The
Company may charge for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company
and the Guarantor.
Section 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those presented
to it by the Company or its designee for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company, the Guarantor or one of their Affiliates holds the
Security.
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If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a redemption date or maturity date money
sufficient to pay Securities payable on that date, then on and after that date
such Securities cease to be outstanding and interest on them ceases to accrue.
If a Security is called for redemption or if it matures in less than
six months and if the Company has satisfied its obligation to pay the Security,
or if a Security has been converted in accordance with the provisions of Article
10, the Company and the Trustee need not treat the Security as outstanding in
determining whether Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 2.09. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities and the Guarantor shall endorse the Guarantee thereon.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities and the Guarantor shall endorse
the Guarantee thereon in exchange for temporary Securities.
Section 2.10. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange, conversion or payment. The Trustee and no one else shall cancel and
destroy all Securities surrendered for transfer, exchange, conversion, payment
or cancellation. Unless the Authorizing Resolution so provides, the Company may
not issue new Securities to replace Securities it has paid or delivered to the
Trustee for cancellation.
Section 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, it shall pay the defaulted interest in
any lawful manner. It may pay the defaulted interest, plus any interest payable
on the defaulted interest (to the extent lawful) if an Event of Default has
occurred and is continuing, to the Persons who are Securityholders on a
subsequent special record date (the "Special Record Date"). The Company shall
fix the subsequent Special Record Date and payment date. At least 15 days before
such Special Record Date, the Company shall give notice to the Trustee and shall
mail to each Securityholder a notice that states the subsequent Special Record
Date, the payment date, and the amount of defaulted interest to be paid.
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Section 2.12. Global Securities. Unless the Authorizing Resolution
provides otherwise, the Company may issue some or all of the Securities of a
Series in temporary or permanent global form. A global Security shall represent
that amount of Securities of a Series as specified in the global Security or as
endorsed thereon from time to time. At the Company's request, the Registrar
shall endorse a global Security to reflect the amount of any increase or
decrease in the Securities represented thereby.
The Company may issue a global Security only to a depositary designated
by the Company. A depositary may transfer a global Security only as a whole to
its nominee or to a successor depositary.
The Authorizing Resolution may establish, among other things, the
manner of paying principal and interest on a global Security and whether and
upon what terms a beneficial owner of an interest in a global Security may
exchange such interest for definitive Securities.
The Company and the Trustee shall not be responsible for any acts or
omissions of a depositary, for any depositary records of beneficial ownership
interests or for any transactions between the depositary and beneficial owners.
ARTICLE 3.
Redemption
Section 3.01. Notices to Trustee. Securities of a Series that are
redeemable prior to maturity shall be redeemable in accordance with their terms
and, unless the Authorizing Resolution provides otherwise, in accordance with
this Article.
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If the Company wants to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in writing of the redemption date
and the principal amount of Securities to be redeemed. Any such notice may be
cancelled at any time prior to notice of such redemption being mailed to
Holders. Any such cancelled notice shall be void and of no effect.
If the Company wants to credit any Securities previously redeemed,
retired or acquired against any redemption pursuant to Paragraph 6 of the
Securities, it shall notify the Trustee of the amount of the credit and it shall
deliver any Securities not previously delivered to the Trustee for cancellation
with such notice.
The Company shall give each notice provided for in this Section 3.01 at
least 10 Business Days before the notice of any such redemption is to be mailed
to Holders (unless a shorter notice shall be satisfactory to the Trustee).
Section 3.02. Selection of Securities To Be Redeemed. If less than all
the Securities of a Series are to be redeemed, the Trustee shall select the
Securities to be redeemed, if the Securities of such Series are listed on a
national securities exchange, in accordance with the rules of such exchange, or
if the Securities of such Series are not so listed, on either a pro rata basis
or by lot or by such method as the Trustee shall deem fair and appropriate. The
Trustee shall make the selection from Securities outstanding and not previously
called for redemption. Securities in denominations of $1,000 may only be
redeemed in whole. The Trustee may select for redemption portions (equal to
$1,000 or any integral multiple thereof) of the principal of Securities that
have denominations larger than $1,000. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities called
for redemption.
Section 3.03. Notice of Redemption. At least 30 days but not more than
60 days before a redemption date, the Company shall mail a notice of redemption
by first-class mail to each Holder of Securities to be redeemed.
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The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) in the event that any Security is to be redeemed in part
only, the portion of the principal amount thereof to be redeemed and
that on and after the redemption date, upon surrender of such Security,
a new Security or Securities in principal amount equal to the
unredeemed portion thereof will be issued;
(5) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(6) that interest on Securities called for redemption ceases
to accrue on and after the redemption date;
(7) that the Securities are being redeemed pursuant to the
mandatory redemption or the optional redemption provisions, as
applicable; and
(8) if applicable, the current Conversion Price and the date
on which the right to convert the Securities into Common Stock will
expire.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
Section 3.04. Effect of Notice of Redemption. Once notice of redemption
is mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price. Upon surrender to the Paying Agent,
such Securities shall be paid at the redemption price, plus accrued interest to
the redemption date.
Section 3.05. Deposit of Redemption Price. Prior to the redemption
date, the Company or its designee shall deposit with the Paying Agent money
sufficient to pay the redemption price of and accrued and unpaid interest on all
Securities to be redeemed on that date.
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Section 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Trustee shall authenticate for the Holder
a new Security and the Guarantor shall endorse the Guarantee thereon equal in
principal amount to the unredeemed portion of the Securities surrendered.
ARTICLE 4.
Covenants
Section 4.01. Payment of Securities. The Company shall pay the
principal of and interest on Securities of a Series on the dates and in the
manner provided in the Securities of the Series. An installment of principal or
interest shall be considered paid on the date due if the Trustee or Paying Agent
holds on that date immediately available legal tender funds designated for,
available and sufficient to pay the installment.
The Company shall pay interest on overdue principal at the rate borne
by the Series; it shall pay interest on overdue installments of interest at the
same rate to the extent lawful.
Section 4.02. SEC Reports. Within 15 days after each of the Guarantor
and the Company files with the SEC copies of its annual reports and other
information, documents and reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe) which they are
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, the Guarantor and the Company shall file the same with the Trustee. If the
Guarantor shall cease to be subject to the requirements of Section 13 or 15(d)
of the Exchange Act, the Guarantor shall file with the Trustee, within 15 days
after the last date on which it would have been required to make such a filing
with the SEC, financial statements, including any notes thereto, and a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," each comparable to that which the Guarantor would have been
required to include in such annual reports, information, documents or other
reports, if the Guarantor were then subject to the requirements of Section 13 or
15(d) of the Exchange Act. The Company and the Guarantor also shall comply with
the other provisions of TIA ss. 314(a).
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Section 4.03. Compliance Certificate. The Company and the Guarantor
each shall deliver to the Trustee within 120 days after the end of their
respective fiscal year an Officers' certificate satisfying the requirements of
Section 3.14(a)(4) of the TIA and stating whether or not the signers know of any
Default or Event of Default. If they do know of such a Default or Event of
Default, the certificate shall describe the Default or Event of Default.
ARTICLE 5.
Successor Corporation
Section 5.01. When the Company and the Guarantor May Merge, Etc.
Neither the Company nor the Guarantor shall consolidate with or merge into, or
transfer all or substantially all of its assets to, any other person unless (i)
such other Person is a corporation organized and existing under the laws of the
United States or a State thereof or the District of Columbia and expressly
assumes by supplemental indenture all the obligations of the Company or the
Guarantor under the Indenture and either the Securities or the Guarantee, as the
case may be; (ii) immediately after giving effect to such transaction no Default
or Event of Default shall have occurred and be continuing; and (iii) the
Consolidated Net Worth of the surviving corporation is equal to or greater than
the Consolidated Net Worth of the Company or the Guarantor, as the case may be,
immediately prior to such merger or transfer of assets. Thereafter all such
obligations of the predecessor corporation shall terminate.
ARTICLE 6.
Subordination
Section 6.01. Agreement To Subordinate. The provisions of this Article
6 shall apply to the Securities of a Series to the extent specified in the
Authorizing Resolution relating to such Series. Each reference in this Article 6
to "a Security" or "the Securities" refers to the Securities of each such Series
so designated.
The Company, for itself and its successors, and each Holder, by
accepting Securities, agrees that the payment of the principal of, interest on
or any other amounts due on the Securities are subordinated in right of payment,
to the extent and in the manner stated in this Article 6, to the prior payment
in full of all Senior Indebtedness of the Company. Each Holder by accepting
Securities authorizes and directs the Trustee on behalf of such Holder to take
such action as may be necessary or appropriate to effectuate, as between the
holders of Senior Indebtedness of the Company and such Holder, the subordination
provided in this Article 6 and appoints the Trustee attorney-in-fact for such
Holder for such purpose.
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This Article 6 shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness of the Company, and such provisions are made for the benefit of the
holders of Senior Indebtedness of the Company and such holders are made obligees
hereunder and they and/or each of them may enforce such provisions.
Section 6.02. Company Not To Make Payments with Respect to Securities
in Certain Circumstances.
a. Upon the maturity of any Senior Indebtedness of the Company
by lapse of time, acceleration (unless waived) or otherwise, all principal
thereof and interest thereon shall first be paid in full, or such payment duly
provided for in cash or in a manner satisfactory to the holders of such Senior
Indebtedness of the Company, before any payment is made on account of the
principal of or interest on the Securities or to acquire any of the Securities.
b. In the event that notwithstanding the provisions of this
Section 6.02 the Company shall make any payment to the Trustee on account of the
principal of or interest on the Securities after the happening of a default in
payment of the principal of or interest on Senior Indebtedness of the Company,
then, unless and until such default shall have been cured or waived or shall
have ceased to exist, such payment (subject to the provisions of Sections 6.06
and 6.07) shall be held by the Trustee, in trust for the benefit of, and shall
be paid forthwith over and delivered to, the holders of Senior Indebtedness of
the Company (pro rata as to each of such holders on the basis of the respective
amounts of Senior Indebtedness of the Company held by them) or their
representative or the trustee under the indenture or other agreement (if any)
pursuant to which Senior Indebtedness of the Company may have been issued, as
their respective interests may appear, for application to the payment of all
Senior Indebtedness of the Company remaining unpaid to the extent necessary to
pay all Senior Indebtedness of the Company in full in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
holders of the Senior Indebtedness of the Company.
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The Company shall give prompt written notice to the Trustee of
any default in the payment of principal of or interest on any Senior
Indebtedness of the Company.
Section 6.03. Securities Subordinated to Prior Payment of All
Senior Indebtedness of the Company on Dissolution, Liquidation or Reorganization
of the Company. Upon any distribution of assets of the Company in any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefits of creditors or otherwise):
a. the holders of all Senior Indebtedness of the Company shall first be
entitled to receive payment in full of the principal thereof and interest due
thereon before the Holders of the Securities are entitled to receive any payment
on account of the principal of or interest on the Securities;
b. any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Securities or the Trustee on behalf of the Holders of the Securities would be
entitled except for the provisions of this Article 6, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities, shall be paid by the liquidating trustee or agent or other Person
making such payment or distribution directly to the holders of the Senior
Indebtedness of the Company or their representative, or to the trustee under any
indenture under which Senior Indebtedness of the Company may have been issued
(pro rata as to each such holder, representative or trustee on the basis of the
respective amounts of unpaid Senior Indebtedness of the Company held or
represented by each), to the extent necessary to make payment in full of all
Senior Indebtedness of the Company remaining unpaid, after giving effect to any
concurrent payment or distribution or provision therefor to the holders of such
Senior Indebtedness of the Company, except that Holders of the Securities would
be entitled to receive securities that are subordinated to Senior Indebtedness
of the Company to at least the same extent as the Securities; and
c. in the event that notwithstanding the foregoing provisions of this
Section 6.03, any payment or distribution of assets of the Company of any kind
or character whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities, shall be received by the Trustee or the Holders of the Securities on
account of principal of or interest on the Securities before all Senior
Indebtedness of the Company is paid in full, or effective provision made for its
payment, such payment or distribution (subject to the provisions of Sections
6.06 and 6.07)
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shall be received and held in trust for and shall be paid over to the holders of
the Senior Indebtedness of the Company remaining unpaid or unprovided for or
their representative, or to the trustee under any indenture under which such
Senior Indebtedness of the Company may have been issued (pro rata as provided in
subsection (b) above), for application to the payment of such Senior
Indebtedness of the Company until all such Senior Indebtedness of the Company
shall have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness of
the Company, except that Holders of the Securities would be entitled to receive
securities that are subordinated to Senior Indebtedness of the Company to at
least the same extent as the Securities.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company.
Section 6.04. Securityholders To Be Subrogated to Rights of Holders of
Senior Indebtedness of the Company. Subject to the payment in full of all Senior
Indebtedness of the Company, the Holders of the Securities shall be subrogated
equally and ratably to the rights of the holders of the Senior Indebtedness of
the Company to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness of the Company until all amounts owing on
the Securities shall be paid in full, and for the purpose of such subrogation no
payments or distributions to the holders of the Senior Indebtedness of the
Company by or on behalf of the Company or by or on behalf of the Holders of the
Securities by virtue of this Article 6 which otherwise would have been made to
the Holders of the Securities shall, as among the Company, its creditors other
than holders of the Senior Indebtedness of the Company and the Holders of the
Securities, be deemed to be payment by the Company to or on account of the
Senior Indebtedness of the Company, it being understood that the provisions of
this Article 6 are intended solely for the purpose of defining the relative
rights of the Holders of the Securities, on the one hand, and the holders of the
Senior Indebtedness of the Company, on the other hand.
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Section 6.05. Obligation of the Company Unconditional. Nothing
contained in this Article 6 or elsewhere in this Indenture or in any Security is
intended to or shall impair, as between the Company and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of the Company other than the holders of
the Senior Indebtedness of the Company, nor shall anything herein or therein
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article 6 of the holders of Senior
Indebtedness of the Company in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Upon any distribution of
assets of the Company referred to in this Article 6, the Trustee, subject to the
provisions of Sections 9.01 and 9.02, and the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any distribution to the Trustee or the
Holders of the Securities, for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness of
the Company and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 6.
Nothing contained in this Article 6 or elsewhere in this Indenture or
in any Security is intended to or shall affect the obligation of the Company to
make, or prevent the Company from making, at any time except during the pendency
of any dissolution, winding up, liquidation or reorganization proceeding, and
except during the continuance of any default specified in Section 6.02 (not
cured or waived), payments at any time of the principal of or interest on the
Securities.
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Section 6.06 Knowledge of Trustee. Notwithstanding any provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment of monies to or by
the Trustee until two business days after the Trustee shall have received
written notice thereof from the Company, any Securityholder or any Paying Agent
or the holder or representative of any class of Senior Indebtedness of the
Company.
Section 6.07. Application by Trustee of Monies Deposited with It. If at
least two business days prior to the date on which by the terms of this
Indenture any monies deposited with the Trustee or any Paying Agent may become
payable for any purpose (including, without limitation, the payment of either
the principal of or the interest on any Security) the Trustee shall not have
received with respect to such monies the notice provided for in Section 6.06,
then the Trustee shall have full power and authority to receive such monies and
to apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date. This Section shall be construed solely for the benefit of the Trustee
and such Paying Agent and shall not otherwise affect the rights of holders of
Senior Indebtedness of the Company.
Section 6.08. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness of the Company. No right of any
present or future holders of any Senior Indebtedness of the Company to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The holders
of Senior Indebtedness of the Company may extend, renew, modify or amend the
terms of the Senior Indebtedness of the Company or any security therefor and
release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders. No provision in any supplemental indenture which
affects the superior position of the holders of Senior Indebtedness of the
Company shall be effective against the holders of Senior Indebtedness of the
Company who have not consented thereto.
Section 6.09. Securityholders Authorize Trustee To Effectuate
Subordination of Securities. Each Holder of Securities by acceptance thereof
authorizes and expressly directs the Trustee on its, his or her behalf to take
such action as may be necessary or appropriate to effectuate the subordination
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provided in this Article 6 and appoints the Trustee its, his or her
attorney-in-fact for such purpose, including, in the event of any dissolution,
winding up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the immediate filing of a claim for the unpaid balance of its,
his or her Securities in the form required in said proceedings and cause said
claim to be approved. If the Trustee does not file a proper claim or proof of
debt in the form required in such proceedings prior to 30 days before the
expiration of the time to file such claim or claims, then the holders of Senior
Indebtedness of the Company have the right to file and are hereby authorized to
file an appropriate claim for and on behalf of the Holders of said Securities.
Section 6.10. Right of Trustee To Hold Senior Indebtedness of the
Company. The Trustee shall be entitled to all of the rights set forth in this
Article 6 in respect of any Senior Indebtedness of the Company at any time held
by it to the same extent as any other holder of Senior Indebtedness of the
Company and nothing in this Indenture shall be construed to deprive the Trustee
of any of its rights as such holder.
Section 6.11. Article Six Not To Prevent Events of Default. The failure
to make a payment on account of principal or interest by reason of any provision
in this Article 6 shall not be construed as preventing the occurrence of an
Event of Default under Section 8.01.
ARTICLE 7.
Guarantee
Section 7.01. Guarantee. The Guarantor hereby unconditionally
guarantees (such guarantee to be referred to herein as the "Guarantee") to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Securities or the obligations of the
Company hereunder or thereunder, (i) the due and punctual payment of the
principal of and any interest on the Securities, whether at maturity or on an
Interest Payment Date, by acceleration or otherwise, and interest on the overdue
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principal of and interest, if any, on the Securities, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or under the
Securities shall be promptly paid in full, all in accordance with the terms
hereof and thereof including all amounts payable to the Trustee under Section
9.07 hereof, and (ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that the same shall be promptly
paid in full when due or to be performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
If the Company fails to make any payment when due of any amount so
guaranteed for whatever reason, the Guarantor shall be obligated to pay the same
immediately. The Guarantor hereby agrees that its obligations hereunder shall be
continuing, absolute and unconditional, irrespective of, and shall be unaffected
by, the validity, regularity or enforceability of the Securities, this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Securities or the Trustee with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of the Guarantor. The Guarantor hereby
waives diligence, presentment, demand of payment, demand of performance, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, the benefit of
discussion, protest, notice and all demand whatsoever and covenants that this
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Securities, in this Indenture and in this Article
7. If any Securityholder or the Trustee is required by any court or otherwise to
return to the Company or the Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or the Guarantor, any
amount paid by the Company or the Guarantor to the Trustee or such
Securityholder, this Article 7, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Securityholders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. The Guarantor further agrees that, as between the
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Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 8 for the purposes of the Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of such obligations as provided in Article 8 such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantor for the purpose of this Article 7. In addition, without limiting the
foregoing, upon the effectiveness of an acceleration under Article 8, the
Trustee may make a demand for payment on the Securities under the Guarantee
provided hereunder and not discharged.
The Guarantor shall be subrogated to all rights of the Holder of any
Securities against the Company in respect of any amounts paid to the Holder by
the Guarantor pursuant to the provisions of this Guarantee; provided that the
Guarantor shall not be entitled to enforce, or to receive any payments arising
out of or based upon, such right of subrogation until the principal of and
interest on all the Securities shall have been paid in full.
The Guarantee set forth in this Section 7.01 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
Section 7.02. Agreement To Subordinate. The provisions of this Article
7 shall apply to the Securities of a Series to the extent specified in the
Authorizing Resolution relating to such Series. Each reference in this Article 7
to "a Security" or "the Securities" refers to the Securities of each such Series
so designated.
The Guarantor, for itself and its successors, and each Holder, by
accepting the Securities, agrees that the payment of the principal of, interest
on and any other amounts due on the Securities pursuant to the Guarantee are
subordinated in right of payment, to the extent and in the manner stated in this
Article 7, to the prior payment in full of all Senior Indebtedness of the
Guarantor. Each Holder by accepting Securities authorizes and directs the
Trustee on behalf of such Holder to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Indebtedness of the
Guarantor and such Holder, the subordination provided in this Article 7 and
appoints the Trustee attorney-in-fact for such Holder for such purpose.
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This Article shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness of the Guarantor, and such provisions are made for the benefit of
the holders of Senior Indebtedness of the Guarantor, and such holders are made
obligees hereunder and they and/or each of them may enforce such provisions.
Section 7.03. Guarantor Not To Make Payments with Respect to Securities
in Certain Circumstances.
a. Upon the maturity of any Senior Indebtedness of the Guarantor by
lapse of time, acceleration (unless waived) or otherwise, all principal thereof
and interest thereon shall first be paid in full, or such payment duly provided
for in cash or in a manner satisfactory to the holders of such Senior
Indebtedness of the Guarantor, before any payment, pursuant to the Guarantee, is
made on account of the principal of or interest on the Securities or to acquire
any of the Securities.
b. In the event that notwithstanding the provisions of this Section
7.03 the Guarantor shall make any payment to the Trustee on account of the
principal of or interest on the Securities after the happening of a default in
payment of the principal of or interest on Senior Indebtedness of the Guarantor,
then, unless and until such default shall have been cured or waived or shall
have ceased to exist, such payment (subject to the provisions of Sections 7.07
and 7.08) shall be held by the Trustee, in trust for the benefit of, and shall
be paid forthwith over and delivered to, the holders of Senior Indebtedness of
the Guarantor (pro rata as to each of such holders on the basis of the
respective amounts of Senior Indebtedness of the Guarantor held by them) or
their representative or the trustee under the indenture or other agreement (if
any) pursuant to which Senior Indebtedness of the Guarantor may have been
issued, as their respective interests may appear, for application to the payment
of all Senior Indebtedness of the Guarantor remaining unpaid to the extent
necessary to pay all Senior Indebtedness of the Guarantor in full in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness of the Guarantor.
The Guarantor shall give prompt written notice to the Trustee of any
default in the payment of principal of or interest on any Senior Indebtedness of
the Guarantor.
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Section 7.04. Guarantee Subordinated to Prior Payment of All Senior
Indebtedness of the Guarantor on Dissolution, Liquidation or Reorganization of
the Guarantor. Upon any distribution of assets of the Guarantor in any
dissolution, winding up, liquidation or reorganization of the Guarantor (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise):
a. the holders of all Senior Indebtedness of the Guarantor
shall first be entitled to receive payment in full of the principal
thereof and interest due thereon before the Holders of the Securities
are entitled to receive any payment on account of the principal of or
interest on the Securities pursuant to the Guarantee;
b. any payment or distribution of assets of the Guarantor of
any kind or character, whether in cash, property or securities, to
which the Holders of the Securities or the Trustee on behalf of the
Holders of the Securities would be entitled except for the provisions
of this Article 7, including any such payment or distribution which may
be payable or deliverable by reason of the payment of any other
indebtedness of the Guarantor being subordinated to the payment of the
Securities, shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution directly to the holders of
the Senior Indebtedness of the Guarantor or their representative, or to
the trustee under any indenture under which Senior Indebtedness of the
Guarantor may have been issued (pro rata as to each such holder,
representative or trustee on the basis of the respective amounts of
unpaid Senior Indebtedness of the Guarantor held or represented by
each), to the extent necessary to make payment in full of all Senior
Indebtedness of the Guarantor remaining unpaid, after giving effect to
any concurrent payment or distribution or provision therefor to the
holders of such Senior Indebtedness of the Guarantor, except that
Holders of the Securities would be entitled to receive securities that
are subordinated to Senior Indebtedness of the Guarantor to at least
the same extent as the Securities; and
c. in the event that, notwithstanding the foregoing provisions
of this Section 7.04, any payment or distribution of assets of the
Guarantor of any kind or character, whether in cash, property or
securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other
indebtedness of the Guarantor being subordinated to the payment of the
Securities, shall be received by the Trustee or the Holders of the
Securities on account of principal of or interest on the Securities
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before all Senior Indebtedness of the Guarantor is paid in full, or
effective provision made for its payment, such payment or distribution
(subject to the provisions of Sections 7.07 and 7.08) shall be received
and held in trust for and shall be paid over to the holders of the
Senior Indebtedness of the Guarantor remaining unpaid or unprovided for
or their representative, or to the trustee under any indenture under
which such Senior Indebtedness of the Guarantor may have been issued
(pro rata as provided in subsection (b) above), for application to the
payment of such Senior Indebtedness of the Guarantor until all such
Senior Indebtedness of the Guarantor shall have been paid in full,
after giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Indebtedness of the
Guarantor, except that Holders of the Securities would be entitled to
receive securities that are subordinated to Senior Indebtedness of the
Guarantor to at least the same extent as the Securities.
Upon any distribution of assets of the Guarantor referred to in this
Article 7, the Trustee, subject to the provisions of Sections 9.01 and 9.02, and
the Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution, winding
up, liquidation or reorganization proceedings are pending, or a certificate of
the liquidating trustee or agent or other Person making any distribution to the
Trustee or the Holders of the Securities, for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Indebtedness of the Guarantor and other Indebtedness of the Guarantor, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 7.
The Guarantor shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Guarantor.
Section 7.05. Securityholders To Be Subrogated to Rights of Holders of
Senior Indebtedness of the Guarantor. Subject to the payment in full of all
Senior Indebtedness of the Guarantor, the Holders of the Securities shall be
subrogated equally and ratably to the rights of the holders of the Senior
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Indebtedness of the Guarantor to receive payments or distributions of assets of
the Guarantor applicable to the Senior Indebtedness of the Guarantor until all
amounts owing on the Securities shall be paid in full, and for the purpose of
such subrogation no payments or distributions to the holders of the Senior
Indebtedness of the Guarantor by or on behalf of the Guarantor or by or on
behalf of the Holders of the Securities by virtue of this Article 7 which
otherwise would have been made to the Holders of the Securities shall, as among
the Guarantor, its creditors other than holders of Senior Indebtedness of the
Guarantor and the Holders of the Securities, be deemed to be payment by the
Guarantor to or on account of the Senior Indebtedness of the Guarantor, it being
understood that the provisions of this Article 7 are intended solely for the
purpose of defining the relative rights of the Holders of the Securities, on the
one hand, and the holders of the Senior Indebtedness of the Guarantor, on the
other hand.
Section 7.06. Obligation of the Guarantor Unconditional. Nothing
contained in this Article 7 or elsewhere in this Indenture or in any Security is
intended to or shall impair, as between the Guarantor and the Holders of the
Securities, the obligation of the Guarantor, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of and
interest on the Securities as and when the same shall become due and payable in
accordance with the terms of the Guarantee, or is intended to or shall affect
the relative rights of the Holders of the Securities and creditors of the
Guarantor other than the holders of the Senior Indebtedness of the Guarantor,
nor shall anything herein or therein prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
Default under this Indenture, subject to the rights, if any, under this Article
7 of the holders of Senior Indebtedness of the Guarantor in respect of cash,
property or securities of the Guarantor received upon the exercise of any such
remedy.
Nothing contained in this Article 7 or elsewhere in this Indenture or
in any Security is intended to or shall affect the obligation of the Guarantor
to make, or prevent the Guarantor from making, at any time except during the
pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and except during the continuance of any default specified in
Section 7.03 (not cured or waived), payments at any time of the principal of or
interest on the Securities pursuant to the Guarantee.
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Section 7.07. Knowledge of Trustee. Notwithstanding any provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment of monies to or by
the Trustee until two Business Days after the Trustee shall have received
written notice thereof from the Guarantor, any Securityholder or any Paying
Agent or the holder or representative of any class of Senior Indebtedness of the
Guarantor.
Section 7.08. Application by Trustee of Monies Deposited with It. If at
least two Business Days prior to the date on which by the terms of this
Indenture any monies deposited with the Trustee or any Paying Agent may become
payable for any purpose (including, without limitation, the payment of either
the principal of or the interest on any Security) the Trustee shall not have
received with respect to such monies the notice provided for in Section 7.07,
then the Trustee shall have full power and authority to receive such monies and
to apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date. This Section shall be construed solely for the benefit of the Trustee
and such Paying Agent and shall not otherwise affect the rights of holders of
Senior Indebtedness of the Guarantor.
Section 7.09. Subordination Rights Not Impaired by Acts or Omissions of
Guarantor or Holders of Senior Indebtedness of the Guarantor. No right of any
present or future holders of any Senior Indebtedness of the Guarantor to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Guarantor with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The holders
of Senior Indebtedness of the Guarantor may extend, renew, modify or amend the
terms of the Senior Indebtedness of the Guarantor, or any security therefor and
release, sell or exchange such security and otherwise deal freely with the
Guarantor, all without affecting the liabilities and obligations of the parties
to the Indenture or the Holders. No provision in any supplemental indenture
which affects the superior position of the holders of Senior Indebtedness of the
Guarantor shall be effective against the holders of Senior Indebtedness of the
Guarantor who have not consented thereto.
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Section 7.10. Securityholders Authorize Trustee To Effectuate
Subordination of Guarantee. Each Holder of Securities by acceptance thereof
authorizes and expressly directs the Trustee on its, his or her behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article 7 and appoints the Trustee its, his or her
attorney-in-fact for such purpose, including, in the event of any dissolution,
winding up, liquidation or reorganization of the Guarantor (whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment for the
benefit of creditors or otherwise) tending towards liquidation of the business
and assets of the Guarantor, the immediate filing of a claim for the unpaid
balance, pursuant to the Guarantee, of its, his or her Securities, in the form
required in said proceedings and cause said claim to be approved. If the Trustee
does not file a proper claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the time to file such claim
or claims, then the holders of Senior Indebtedness of the Guarantor have the
right to file and are hereby authorized to file an appropriate claim for and on
behalf of the Holders of said Securities.
Section 7.11. Right of Trustee To Hold Senior Indebtedness of the
Guarantor. The Trustee shall be entitled to all of the rights set forth in this
Article 7 in respect of any Senior Indebtedness of the Guarantor at any time
held by it to the same extent as any other holder of Senior Indebtedness of the
Guarantor, and nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
Section 7.12. Article 7 Not To Prevent Events of Default. The failure
to make a payment on account of principal or interest by reason of any provision
in this Article 7 shall not be construed as preventing the occurrence of an
Event of Default under Section 8.01.
Section 7.13. Execution and Delivery of Guarantee. To evidence the
Guarantee set forth in this Article 7, the Guarantor hereby agrees that a
notation of the Guarantee, substantially in the form of Exhibit B hereto, shall
be endorsed on each Security authenticated and delivered by the Trustee and that
this Indenture shall be executed on behalf of the Guarantor by the Chairman of
the Board, its President or one of its Vice Presidents under a facsimile of its
seal reproduced thereon.
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The Guarantor hereby agrees that its Guarantee shall remain in full
force and effect notwithstanding any failure to endorse on each Security a
notation of the Guarantee.
If an Officer whose signature is on this Indenture or on the Securities
no longer holds that office at the time the Trustee authenticates the Security
on which a notation of the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of the Guarantor.
Section 7.14. Subordination of Indebtedness Owed by the Company to the
Guarantor. Any indebtedness owed by the Company to the Guarantor shall be
subordinate to all obligations of the Company with respect to the Securities and
this Indenture to the same extent as the Securities are subordinated to Senior
Indebtedness of the Company.
Section 7.15. Officers' Certificate. If there occurs an event referred
to in the first sentence of Section 7.04(c) or the first sentence of Section
7.04, the Guarantor shall promptly give to the Trustee an Officers' Certificate
(on which the Trustee may conclusively rely) identifying all holders of Senior
Indebtedness of the Guarantor and the principal amount of Senior Indebtedness of
the Guarantor then outstanding held by each such holder and stating the reasons
why such Officers' Certificate is being delivered to the Trustee.
ARTICLE 8.
Defaults and Remedies
Section 8.01. Events of Default. An "Event of Default" on a Series
occurs if:
(1) the Company or the Guarantor defaults in the payment of
interest on any Security of the Series when the same becomes due and payable and
the default continues for a period of 30 days whether or not such payment shall
be prohibited by the provisions of Article 6 or Article 7; or
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(2) the Company or the Guarantor defaults in the payment of
the principal of any Security of the Series when the same becomes due and
payable at maturity or upon redemption, whether or not such payment shall be
prohibited by the provisions of Article 6 or Article 7; or
(3) the Company or the Guarantor fails to comply with any of
its other agreements in the Securities, the Guarantee or this Indenture
applicable to the Series and such failure continues for the period and after
the notice specified below; or
(4) there occurs a default in the payment of indebtedness of
the Company, the Guarantor or any Subsidiary under the terms of the instrument
evidencing or securing such indebtedness permitting the holder thereof to
accelerate the payment of in excess of an aggregate of $2,000,000 in principal
amount of such indebtedness (after the lapse of applicable grace periods) or, in
the case of non-payment defaults, there occurs an acceleration of any such
indebtedness if such acceleration is not rescinded or annulled within 10 days
after such acceleration; provided, the term "indebtedness" as used in this
Section 8.01(4) shall not include an acceleration of or default on Non-Recourse
Indebtedness (a) if the Guarantor would be able to declare a dividend pursuant
to the terms of such Series in the amount of the excess of the aggregate book
value of all property (net of any previous write-downs or reserves in respect of
such property) subject to the Non-Recourse Indebtedness being accelerated or in
default over such Non-Recourse Indebtedness or (b) which consists of a purchase
money obligation, provided, solely in the case of this clause (b), for so long
as the Company's 10 1/2% Senior Subordinated Notes due 2002 (and any related
guarantee) are outstanding, the Guarantor is diligently contesting such
acceleration or default in good faith by appropriate proceedings (or, solely in
the case of this clause (b), at such time as the Company's 10 1/2% Senior
Subordinated Notes due 2002 (and any related guarantee) are no longer
outstanding, such purchase money obligation does not exceed $2,000,000 in
aggregate principal amount, whether or not the Guarantor is so diligently
contesting); or
(5) a final judgment for the payment of money in an amount in
excess of $2,000,000 shall be entered against the Company, the Guarantor or any
Subsidiary, and shall remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days after the date on which the right to
appeal has expired; provided the term "final judgment," at such time as the
Company's 10 1/2% Senior Subordinated Notes due 2002 (and any related guarantee)
are no longer outstanding, shall not
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include a Non-Recourse Judgment unless the book value of all property (net of
any previous write-downs or reserves in respect of such property) subject to
such Non-Recourse Judgment exceeds the amount of such Non-Recourse Judgment by
more than $5,000,000; or
(6) the Company and the Guarantor pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) provides for relief against the Company and the Guarantor
in an involuntary case,
(B) appoints a Custodian of the Company and the Guarantor for
all or substantially all of its property, or
(C) orders the liquidation of the Company and the Guarantor
and the order or decree remains unstayed and in effect for 90 days; or
(8) the Guarantee shall for any reason (other than pursuant to its
terms) cease to be in full force and effect.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A default under clause (3) is not an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the Securities of the
Series affected notify the Company of the default and the Company does not cure
the default within 60 days after receipt of the notice. The notice must specify
the default, demand that it be remedied and state that the notice is a "Notice
of Default."
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Section 8.02. Acceleration. If an Event of Default (other
than an Event of Default under Section 8.01(6) or 8.01(7)) on a Series occurs
and is continuing, the Trustee by notice to the Company and the Person or
Persons designated to receive notices for the Agent (or other Person acting on
behalf of the banks) under the Revolving Credit Agreement, or the Holders of at
least 25% in principal amount of the outstanding Securities of the Series by
notice to the Company, the Trustee and such Person or Persons (either such
notice is referred to herein as an "Acceleration Notice") may declare the unpaid
principal of and accrued and unpaid interest on all the Securities of the Series
to be due and payable if, with respect to such Series, (i)(a) no Designated
Senior Debt of the Company or the Guarantor is outstanding, or (b) if the
Securities of the Series are not subordinated to other indebtedness of the
Company, immediately, or (ii) if Designated Senior Debt of the Company or the
Guarantor is outstanding and the Securities of the Series are subordinated to
other indebtedness of the Company, upon the earlier of (A) ten days after such
Acceleration Notice is received by the Company and (B) the acceleration of any
Senior Indebtedness of the Company or the Guarantor. If an Event of Default
specified in Section 8.01(6) or 8.01(7) occurs, the unpaid principal of and
accrued and unpaid interest on the Securities then outstanding shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Securityholder. The Holders of a majority in
principal amount of the Securities of the Series by notice to the Trustee may
rescind such declaration or acceleration and its consequences if all existing
Events of Default have been cured or waived (except nonpayment of principal or
interest that has become due solely because of the acceleration) and if the
rescission would not conflict with any judgment or decree.
The Company and the Guarantor (i) agree, promptly after
execution of this Indenture, to notify the Trustee in writing of the Person or
Persons referred to in the first sentence of this Section 8.02 and (ii) agree,
promptly after any change thereof, to so notify the Trustee. Any failure by the
Trustee or holders of Securities to give an Acceleration Notice to such Person
or Persons will not affect the substance or validity of the Acceleration Notice
provided that it is otherwise given in accordance with the first paragraph of
this Section 8.02.
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Section 8.03. Other Remedies. If an Event of Default on a Series occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of principal or interest on the Series
or to enforce the performance of any provisions of the Securities or this
Indenture and applicable to the Series.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Section 8.04. Waiver of Past Defaults. Subject to Section 12.02, the
Holders of a majority in principal amount of the Securities of a Series by
notice to the Trustee may waive on behalf of all Holders of Securities of the
Series an existing Default and its consequences. When a Default is waived, it is
cured and stops continuing, but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 8.05. Control by Majority. The Holders of a majority in
principal amount of the Securities of a Series may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it with respect to such Series.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture, that is unduly prejudicial to the rights of another
Securityholder, or that would involve the Trustee in personal liability.
Section 8.06. Limitation on Suits. A Securityholder may not pursue any
remedy with respect to this Indenture or the Series unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
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(2) the Holders of at least 25% in principal amount of
the Securities of the Series make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the Securities do not give the Trustee a direction
inconsistent with such request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
Section 8.07. Rights of Holders To Receive Payment. Notwithstanding
any other provisions of this Indenture, the right of any Holder of a Security to
receive payment of principal of and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
Section 8.08. Collection Suit by Trustee. If an Event of Default in
payment of interest or principal specified in Section 8.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company, the Guarantor or any other obligor on
the Securities for the whole amount of principal and interest remaining unpaid.
Section 8.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company (or any other
obligor upon the Securities, including the Guarantor), its creditors or its
property.
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Section 8.10. Priorities. If the Trustee collects any money pursuant to
this Article 8, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 9.07;
Second: to the holders of Senior Indebtedness of the Company as
required by Article 6 and to the holders of Senior Indebtedness of the Guarantor
as required by Article 7;
Third: to Securityholders of the Series for amounts due and unpaid on
the Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Series for
principal and interest, respectively; and
Fourth: to the Company, or its designee.
The Trustee may fix a record date and payment date for any payment to
Securityholders.
Section 8.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 8.07, or a suit by Holders of more than 10% in
principal amount of the Securities of the Series.
ARTICLE 9.
Trustee
Section 9.01. Duties of Trustee.
a. If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
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b. Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
c. The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 8.05.
d. Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
e. The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
f. The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree with the Company or the Guarantor, as the
case may be.
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g. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
Section 9.02. Rights of Trustee. Subject to Section 9.01:
a. The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
b. Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on the Certificate or Opinion.
c. The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
d. The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or
within its rights or powers.
Section 9.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or
co-registrar may do the same with like rights. However, the Trustee must comply
with Sections 9.10 and 9.11.
Section 9.04. Trustee Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement in the Securities other than its
certificate of authentication.
Section 9.05. Notice of Defaults. If a Default on a Series occurs and
is continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a default in payment of principal or interest on a Series, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders of the Series.
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<PAGE>
Section 9.06. Reports by Trustee to Holders. Within 60 days after each
May 15 beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Securityholder, if required by TIA ss. 313(a), a
brief report dated as of such May 15 that complies with TIA ss. 313(a). The
Trustee also shall comply with TIA ss. 313(b) and ss. 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities have been
listed on any securities exchange.
Section 9.07. Compensation and Indemnity. The Company and the Guarantor
shall pay to the Trustee from time to time reasonable compensation for its
services. The Trustee's compensation hereunder shall not be limited by any law
on compensation relating to the trustee of an express trust. The Company and the
Guarantor shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel. The
Company and the Guarantor shall indemnify and hold harmless the Trustee against
any loss or liability incurred by it in the administration of this trust or the
performance of its duties hereunder. The Trustee shall notify the Company and
the Guarantor promptly of any claim for which it may seek indemnity. The Company
and the Guarantor shall defend the claim and the Trustee shall cooperate in the
defense. In the event that counsel to the Trustee shall advise counsel to the
Company and the Guarantor that there may be defenses reasonably available to the
Trustee different than or additional to those available to the Company and the
Guarantor, then in such event the Trustee shall be permitted to employ counsel
of its choosing at the expense of the Company and the Guarantor. The Company and
the Guarantor need not pay for any settlement made without their consent. The
Company and the Guarantor need not reimburse any expense or indemnify against
any loss or liability incurred by the Trustee through negligence, bad faith or
with willful misconduct.
To ensure the Company's and the Guarantor's payment obligations in this
Section, the Trustee shall have a claim prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Securities.
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When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 9.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company. The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the Trustee to be removed and
may appoint a successor Trustee with the Company's and the Guarantor's consent.
The Company or the Guarantor may remove the Trustee if:
1. the Trustee fails to comply with Section 9.10;
2. the Trustee is adjudged a bankrupt or an insolvent;
3. a receiver or other public officer takes charge of the
Trustee or its property; or
4. the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the prior claim provided by Section 9.07). Any
resignation or removal of the Trustee and any appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee.
The successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company of the
Holders of a majority in principal amount of the Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
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If the Trustee fails to comply with Section 9.10, any Securityholder
may, subject to Section 8.11, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
Section 9.09. Successor Trustee by Merger, etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.
Section 9.10. Eligibility; Disqualification. This Indenture shall
always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1). The
Trustee shall have a combined capital and surplus of at least $15,000,000 as set
forth in the most recent published annual report of condition. The Trustee shall
comply with TIA ss. 310(b).
Section 9.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
ARTICLE 10.
CONVERSION OF SECURITIES
Section 10.01. Applicability of Article. Securities of any Series which
are convertible into Common Stock at the option of the Holder shall be
convertible in accordance with their terms and unless the Authorizing Resolution
provides otherwise, in accordance with this Article. Each reference in this
Article 10 to "a Security" or "the Securities" refers to the Securities of the
particular Series that is convertible into Common Stock. If more than one Series
of Securities with conversion privileges are outstanding at any time, the
provisions of this Article 10 shall be applied separately to each such Series.
Section 10.02. Conversion Privilege. Subject to and upon compliance
with the provisions of this Article 10, the Holder of any Security so designated
shall have the right, at its, his or her option, at any time prior to the close
of business on the date specified in the Securities of such Series (or if such
Security or portion thereof is called for redemption prior to such date, then in
respect of such Security or portion thereof to and including but not after the
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close of business on the second day (or, if such day is not a Business Day, then
on the next following Business Day) preceding the date fixed for such
redemption) to convert the principal amount of any such Security, or any portion
of such principal amount which is $1,000 or an integral multiple thereof, into
that number of fully paid and non-assessable shares of the Guarantor's Common
Stock (calculated as to each conversion to the nearest 1/100th of a share)
obtained by dividing the principal amount of the Security or portion thereof to
be converted by the Conversion Price and by surrender of the Security so to be
converted in whole or in part, such surrender to be made in the manner provided
in Section 10.03. Notwithstanding the previous sentence, if the Company shall
fail to redeem a Security which has been called for redemption, the Holder of
such Security shall retain the right to convert such Security as provided in
this Article 10.
Section 10.03. Manner of Exercise of Conversion Privilege. In order to
exercise a conversion privilege, the Holder of any Security to be converted in
whole or in part shall surrender such Security at any of the offices or agencies
to be maintained for such purpose by the Company pursuant to Section 2.03, and
shall give notice to the Company and the Guarantor in the form provided in the
Security, duly executed, at such office or agency that the Holder elects to
convert such Security or the portion thereof specified in said notice. Such
notice shall also state the name or names, together with the address or
addresses, in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued. Each Security
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the same name as the name in which such Security is registered,
be accompanied by instruments of transfer, in form satisfactory to the
Guarantor, duly executed by the Holder or its, his or her duly authorized
attorney. Securities so surrendered during the period from the close of business
on a Record Date, or the next preceding Business Day if such Record Date is not
a Business Day, preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (excluding Securities or portions thereof called
for redemption during such period) shall also be accompanied by payment in
next-day funds or other funds acceptable to the Guarantor of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
such Security then being converted; provided, however, that, if the Company
shall default on the payment of said interest, said funds shall be returnable to
the payor thereof. As promptly as practicable after the surrender of such
Security, as aforesaid, the Guarantor shall issue and shall deliver at such
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45
office or agency to such Holder, or on its, his or her written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Security or portion thereof in accordance
with the provisions of this Article 10 and any fractional interest in respect of
a share of Common Stock arising upon such conversion shall be settled as
provided in Section 10.04. In case any Security of a denomination greater than
$1,000 shall be surrendered for partial conversion, the Company and the
Guarantor shall execute and the Trustee shall authenticate and deliver to or
upon the order of the Holder of the Security so surrendered, at the expense of
the Company, a new Security or Securities and Guarantee or Guarantees in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Security. Such conversion shall be deemed
to have been effected immediately prior to the close of business on the date on
which such Security shall have been surrendered and such notice received by the
Company and the Guarantor as aforesaid, and the Person or Persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time and such
conversion shall be at the Conversion Price in effect at such time, unless the
stock transfer books of the Guarantor shall be closed on that date, in which
event such Person or Persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date upon which such Security shall have been
surrendered and such notice received by the Company and the Guarantor. Subject
to the aforesaid requirement for a payment in the event of conversion after the
close of business on a Record Date preceding an Interest Payment Date, no
payment or adjustment shall be made on conversion for interest accrued on the
Securities surrendered for conversion or for dividends on the Common Stock
delivered on such conversion.
Section 10.04. Payment in Lieu of Fractional Shares. No fractional
shares of Common Stock shall be issued upon conversion of the Securities.
Instead of any fractional interest in a share of Common Stock which would
otherwise be deliverable upon the conversion of any Security or Securities, the
Company and/or the Guarantor shall make an adjustment therefor to the nearest
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1/100th of a share in cash at the Current Market Price thereof at the close of
business on the Business Day next preceding the day of conversion. If more than
one Security shall be surrendered for conversion at one time by the same Holder,
the number of full shares issuable upon conversion thereof shall be computed on
the basis of the aggregate principal amount of the Securities, or specified
portions thereof to be converted, so surrendered.
Section 10.05. Adjustment of Conversion Price. The Conversion Price
shall be adjusted from time to time as follows:
a. In case the Guarantor shall hereafter (i) pay a dividend or
make a distribution on its Common Stock in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares, or (iv) issue by reclassification of
its Common Stock any shares of Capital Stock of the Guarantor, the
Conversion Price in effect immediately prior to such action shall be
adjusted so that the Holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common
Stock or other Capital Stock of the Guarantor which he would have owned
immediately following such action had such Security been converted
immediately prior thereto. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date
in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or reclassification. If, as a result of an adjustment made
pursuant to this subsection (a), the Holder of any Security thereafter
surrendered for conversion shall become entitled to receive shares of
two or more classes of Capital Stock or shares of Common Stock and
other Capital Stock of the Guarantor, the Board of Directors (whose
determination shall be conclusive and shall be described in a statement
filed with the Trustee and with the Registrar) shall determine in an
equitable manner the allocation of the adjusted Conversion Price
between or among shares of such classes of Capital Stock or shares of
Common Stock and other Capital Stock.
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b. In case the Guarantor shall hereafter issue rights or
warrants to holders of its outstanding shares of Common Stock generally
entitling them (for a period expiring within 45 days after the record
date mentioned below) to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price per share
of the Common Stock on the record date mentioned below, the Conversion
Price of the shares of Common Stock shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date of issuance of such rights or
warrants by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would purchase
at such Current Market Price, and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase. Such adjustment shall
become effective immediately after the record date for the
determination of shareholders entitled to receive such rights or
warrants.
c. In case the Guarantor shall hereafter distribute to holders
of its outstanding Common Stock generally evidences of its indebtedness
or assets (excluding any cash dividend paid from retained earnings of
the Guarantor and dividends or distributions payable in stock for which
adjustment is made pursuant to subsection (a) of this Section 10.05) or
rights or warrants to subscribe to securities of the Guarantor
(excluding those referred to in subsection (b) of this Section 10.05),
then in each such case the Conversion Price of the shares of Common
Stock shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction of which the
numerator shall be the Current Market Price per share of the Common
Stock on the record date mentioned below less the then fair market
value (as determined by the Board of Directors, whose determination
filed with the Trustee and with the Registrar) of the portion of the
evidences of indebtedness or assets so distributed to the holder of one
share of Common Stock or of such subscription rights or warrants
applicable to one share of Common Stock, and of which the denominator
shall be such Current Market Price per share of Common Stock. Such
adjustment shall become effective immediately after the record date for
the determination of shareholders entitled to receive such
distribution.
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d. In any case in which this Section 10.05 shall require that
an adjustment be made immediately following a record date, the
Guarantor may elect to defer (but only until five Business Days
following the filing by the Company with the Trustee and the Registrar
of the certificate of independent public accountants described in
subsection (f) of this Section 10.05) issuing to the Holder of any
Security converted after such record date the shares of Common Stock
issuable upon such conversion over and above the shares of Common Stock
issuable upon such conversion on the basis of the Conversion Price
prior to adjustment.
e. No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% of such price; provided, however, that any adjustments which
by reason of this subsection (e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment,
and provided further that adjustment shall be required and made in
accordance with the provisions of this Article 10 (other than this
subsection (e)), not later than such time as may be required in order
to preserve the tax-free nature of a distribution to the holders of
Securities or Common Stock. All calculations under this Section 10.05
shall be made to the nearest cent or to the nearest 1/100th of a share,
as the case may be. Anything in this Section 10.05 to the contrary
notwithstanding, the Guarantor shall be entitled to make such
reductions in the Conversion Price, in addition to those required by
this Section 10.05, as it in its discretion shall determine to be
advisable in order that any stock dividend, subdivision of shares,
distribution of rights to purchase stock or securities, or distribution
of securities convertible into or exchangeable for stock hereafter made
by the Guarantor to its shareholders shall not be taxable.
f. Whenever the Conversion Price is adjusted as herein
provided, (i) the Company and the Guarantor shall promptly file with
the Trustee and the Registrar a certificate of a
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firm of independent public accountants setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment and the manner of computing the same,
which certificate shall be conclusive evidence of the correctness of
such adjustment and (ii) a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price shall
forthwith be given by the Company and the Guarantor to the Holders in
the manner provided in Section 13.02. Subject to TIA Section 315(a),
(c) and (d), the Trustee and any conversion agent shall be under no
duty or responsibility with respect to any such certificate or the
certificate provided for in Section 10.10 except to exhibit the same
from time to time to any Holder of a Security desiring an inspection of
such certificate.
g. In the event that at any time as a result of an adjustment
made pursuant to subsection (a) of this Section 10.05, the Holder of
any Security thereafter surrendered for conversion shall become
entitled to receive any shares of the Guarantor other than shares of
Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any Security shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common
Stock contained in this Article 10.
Section 10.06. Notice of Certain Corporate Action. In the event:
a. the Guarantor shall take any action which would require an
adjustment in the Conversion Price pursuant to Section 10.05(c); or
b. the Guarantor shall authorize the granting to the holders
of its Common Stock (as a class) of rights or warrants to subscribe for
or purchase any shares of stock of any class or of any other rights; or
c. there shall be any capital reorganization or
reclassification of the Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in
the par value of the Common Stock), or any consolidation or merger to
which the Guarantor is a party or any statutory exchange of securities
with another corporation and for which approval of any shareholders of
the Guarantor is required, or any sale or transfer of all or
substantially all of the assets of the Guarantor; or
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d. there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Guarantor;
then the Company and the Guarantor shall cause to be filed with the Trustee and
the Registrar, and shall cause to be given to the Holders, in the manner
provided in Section 13.02, at least 14 days prior to the applicable date
hereinafter specified, a notice stating (i) the date on which a record is to be
taken for the purpose of such distribution or rights, or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such distribution or rights are to be determined, or (ii) the date
on which such reorganization, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. Failure to give such notice or any defect therein
shall not affect the legality or validity of the proceedings described in
subsection (a), (b), (c) or (d) of this Section 10.06.
Section 10.07. Guarantor To Provide Stock. The Guarantor covenants that
it will at all times reserve and keep available, free from preemptive rights,
out of the aggregate of its authorized but unissued shares of Common Stock or
its issued shares of Common Stock held in its treasury, or both, for the purpose
of effecting conversions of Securities, the full number of shares of Common
Stock deliverable upon the conversion of all outstanding Securities not
theretofore converted. For purposes of this Section 10.07, the number of shares
of Common Stock which shall be deliverable upon the conversion of all
outstanding Securities shall be computed as if at the time of computation all
outstanding Securities were held by a single Holder.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Common Stock
deliverable upon conversions of the Securities, the Guarantor will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Guarantor may validly and legally issue fully paid and non-assessable
shares of Common Stock at such adjusted Conversion Price.
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The Guarantor will endeavor to list the shares of Common Stock required
to be delivered upon conversion of Securities prior to such delivery upon each
national securities exchange, if any, upon which the outstanding Common Stock is
listed at the time of such delivery.
Prior to the delivery of any securities which the Guarantor shall be
obligated to deliver upon conversion of the Securities, the Guarantor will
endeavor to comply with all federal and state laws and regulations thereunder
requiring the registration of such securities with, or any approval of or
consent to the delivery thereof by, any governmental authority.
Section 10.08. Taxes on Conversions. The Company and/or the Guarantor
will pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on
conversions of Securities pursuant hereto; provided, however, that neither the
Company nor the Guarantor shall be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the Holder of the Securities to be converted
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company and/or the Guarantor
the amount of any such tax or has established, to the satisfaction of the
Company and the Guarantor, that such tax has been paid.
Section 10.09. Covenant as to Stock. The Guarantor covenants that all
shares of Common Stock which may be delivered upon conversions of Securities
will upon delivery be duly and validly issued and fully paid and non-assessable,
free of all liens and charges and not subject to any preemptive rights.
Section 10.10. Consolidation or Merger. Notwithstanding any other
provision herein to the contrary, in case of any consolidation or merger to
which the Guarantor is a party other than a merger or consolidation in which the
Guarantor is the continuing corporation, or in case of any sale or conveyance to
another corporation of the property of the Guarantor as an entirety or
substantially as an entirety, or in the case of any statutory exchange of
securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Guarantor), there shall
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be no adjustments under Section 10.05 but the Holder of each Security then
outstanding shall have the right thereafter to convert such Security into the
kind and amount of securities, cash or other property which he would have owned
or have been entitled to receive immediately after such consolidation, merger,
statutory exchange, sale or conveyance had such Security been converted
immediately prior to the effective date of such consolidation, merger, statutory
exchange, sale or conveyance and in any such case, if necessary, appropriate
adjustment shall be made in the application of the provisions set forth in this
Article 10 with respect to the rights and interests thereafter of the Holders of
the Securities, to the end that the provisions set forth in this Article 10
shall thereafter correspondingly be made applicable, as nearly as may reasonably
be, in relation to any shares of stock or other securities or property
thereafter deliverable on the conversion of the Securities. Any such adjustment
shall be made by and set forth in a supplemental indenture executed by the
Company, the Guarantor and the Trustee and approved by a firm of independent
public accountants, evidenced by a certificate to that effect; and any
adjustment so approved shall for all purposes hereof conclusively be deemed to
be an appropriate adjustment.
The above provisions of this Section 10.10 shall similarly
apply to successive consolidations, mergers, statutory exchanges, sales or
conveyances.
The Company shall give notice of the execution of such a supplemental
indenture to the Holders of Securities in the manner provided in Section 13.02
within 30 days after the execution thereof.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in such supplemental indenture relating
either to the kind or amount of shares of stock or securities or property
receivable by Holders upon the conversion of their Securities after any such
consolidation, merger, statutory exchange, sale or conveyance, or to any
adjustment to be made with respect thereto.
Section 10.11. Disclaimer of Responsibility for Certain Matters.
Neither the Trustee nor the Registrar shall at any time be under any duty or
responsibility to any Holder of Securities to determine whether any facts exist
which may require any adjustment of the Conversion Price, or with respect to the
nature or extent of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. Neither the Trustee nor the Registrar shall be accountable with
respect to the listing or registration referred to in Section 10.07 or the
validity or value (or the kind or amount) of any shares of Common Stock, or of
any securities or property, which may at any time be issued or delivered upon
the conversion of any Security; and neither the Trustee nor the Registrar makes
any representation with respect thereto. Neither the Trustee nor the Registrar
shall be responsible for any failure of the Guarantor to issue, transfer or
deliver any shares of Common Stock or stock certificates or other
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securities or property or to make any cash payment upon the surrender of any
Security for the purpose of conversion or, subject to TIA Section 315(a), (c)
and (d), to comply with any of the covenants contained in this Article 10.
ARTICLE 11.
Discharge of Indenture
Section 11.01. Termination of the Company's and the Guarantor's
Obligations. Securities of a Series may be defeased in accordance with their
terms and, unless the Authorizing Resolution provides otherwise, in accordance
with this Article.
The Company may terminate all of its obligations under the
Securities of a Series and this Indenture, to the extent its obligations under
this Indenture relate to that Series, and the obligations of the Guarantor shall
terminate if all Securities of a Series previously authenticated and delivered
(other than destroyed, lost or stolen Securities which have been replaced or
paid) have been delivered to the Trustee for cancellation or if:
1. the Securities mature within one year or all of them
are to be called for redemption within one year under
arrangements satisfactory to the Trustee for giving the notice
of redemption; and
2. the Company irrevocably deposits in trust with the Trustee
money sufficient to pay principal of and interest on the outstanding
Securities to maturity or redemption, as the case may be. The Company
may make the deposit only if Article 6 permits it. Immediately after
making the deposit, the Company shall give notice of such event and
proposed date of payment to each Securityholder.
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The Company's obligations and, to the extent applicable, the
Guarantor's obligations, in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 9.07,
9.08 and 11.03 and Article 10, however, shall survive until the Securities are
no longer outstanding. Thereafter, the Company's obligations and, to the extent
applicable, the Guarantor's obligations, in Sections 9.07 and 11.03 shall
survive.
After a deposit, the Trustee upon request shall acknowledge in writing
the discharge of the Company's obligations under the Securities, the Guarantor's
obligations under the Guarantee and their obligations under the Indenture except
for those surviving obligations specified above.
Section 11.02. Application of Trust Money. The Trustee shall
hold in trust money deposited with it pursuant to Section 11.01. It shall apply
the deposited money through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities.
Section 11.03. Repayment to Company. The Trustee and the
Paying Agent shall promptly pay to the Company upon request any excess money
held by them at any time. The Trustee and the Paying Agent shall pay to the
Company upon request any money held by them for the payment of principal or
interest (including interest, if any, earned on such money) that remains
unclaimed for two years; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of
the Company cause to be published once in a newspaper of general circulation in
The City of New York or mail to each Holder notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication or mailing, any unclaimed balance of
such money then remaining will be repaid to the Company. After payment to the
Company, Securityholders entitled to any of such money must look to the Company
or, if applicable, the Guarantor for payment as general creditors unless
applicable abandoned property law designates another person and all liability of
the Trustee or Paying Agent with respect to such money shall thereupon cease.
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ARTICLE 12.
Amendments, Supplements and Waivers
Section 12.01. Without Consent of Holders. The Company may amend or
supplement this Indenture or the Securities without notice to or consent of any
Securityholder:
1. to cure any ambiguity, defect or inconsistency;
2. to comply with Section 5.01;
3. to provide for uncertificated Securities in addition to or
in place of certificated Securities; or
4. to make any change that does not adversely affect the
rights of any Securityholder.
Section 12.02. With Consent of Holders. The Company may amend or
supplement this Indenture or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities of all Series affected by the amendment voting as a
class. The Holders of a majority in principal amount of the Securities may waive
compliance by the Company with any provision of this Indenture or the Securities
without notice to any Securityholder. However, without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver
pursuant to Section 8.04, may not:
1. reduce the amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
2. reduce the rate of or extend the time for payment of
interest on any Security;
3. reduce the principal of or extend the fixed maturity of any
Security or alter the redemption provisions with respect thereto;
4. waive a default in the payment of the principal of
or interest on any Security;
5. modify the provisions of Article 6 (subordination) or
Article 7 (guarantee) in a manner adverse to the Holders;
<PAGE>
-56-
6. make any security payable in money other than that stated
in the Security;
7. if applicable, make any change that adversely affects the
right to convert or the Conversion Price for any Security; or
8. make any change in Section 8.04 or 8.07 or this
Section 12.02.
After an amendment under this Section 12.02 becomes effective, the
Company shall mail to the Holders a notice briefly describing the amendment.
Section 12.03. Compliance with Trust Indenture Act. Every amendment to
or supplement of this Indenture or the Securities shall comply with the TIA as
then in effect.
Section 12.04. Revocation and Effect of Consents. A consent to an
amendment, supplement or waiver by a Holder of a Security shall bind the Holder
and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to the Security or portion of a Security of
such Holder. The Trustee must receive the notice of revocation before the date
the amendment, supplement or waiver becomes effective.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder unless it makes a change described in clauses (1)
through (8) of Section 12.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
Section 12.05. Notation on or Exchange of Securities. If an amendment,
supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determine, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate, a new Security that reflects the changed terms.
<PAGE>
-57-
Section 12.06. Trustee To Sign Amendments, etc. The Trustee shall sign
any amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affect the rights or duties
of the Trustee. If it does, the Trustee may but need not sign it. In signing any
amendment, supplement or waiver, the trustee may rely on an Opinion of Counsel
which shall state that such amendment, supplement or waiver is permitted under
this Article 12.
ARTICLE 13.
Miscellaneous
Section 13.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA or the TIA as amended after
the date hereof, the required provision shall control.
Section 13.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by
first-class mail addressed as follows:
if to the Company or the Guarantor:
Toll Brothers, Inc.
3103 Philmont Avenue
Huntingdon Valley, Pennsylvania 19006
Attention: Chief Financial Officer
with a copy to:
Mark K. Kessler, Esquire
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor Packard Building
15th and Chestnut Streets
Philadelphia, PA 19102
if to the Trustee:
NBD Bank
611 Woodward Avenue
Detroit, MI 48226
Attention: Corporate Trust Services
<PAGE>
-58-
The Company, the Guarantor or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall be mailed
to him at his address as it appears on the registration books of the Registrar
and shall be sufficiently given to him if so mailed within the time prescribed.
In addition, a copy of each such notice or communication shall be mailed to the
Trustee at the address specified above.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it. If the
Company or the Guarantor mails a notice or communication to Securityholders, it
shall mail a copy of such notice to the Trustee and each agent at the same time.
Section 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Guarantor, the Trustee, the Registrar and anyone
else shall have the protection of TIA Section 312(c). Section 13.04. Certificate
and Opinion as to Conditions Precedent. Upon any request or application by the
Company to the Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
1. an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
2. an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
<PAGE>
-59-
1. a statement that the person making such certificate or
opinion has read such covenant or condition;
2. a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
3. a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
4. a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 13.06. When Treasury Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities of a Series
have concurred in any direction, waiver or consent, Securities of the Series
owned by the Company or the Guarantor or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or the guarantor shall be disregarded, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities of the Series which the Trustee
knows are so owned shall be so disregarded.
Section 13.07. Rules by Trustee, Paying Agent, Registrar. The Trustee
may make reasonable rules for action by or a meeting of Securityholders. The
Paying Agent or Registrar each may make reasonable rules for its functions.
Section 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday, a legal holiday or a day on which banking institutions are not required
to be open. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 13.09. Governing Law. The laws of the State of New York shall
govern this Indenture, the Securities and the Guarantee without regard to
principles of conflicts of law.
<PAGE>
-60-
Section 13.10. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company, the Guarantor or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 13.11. No Recourse Against Others. All liability described in
paragraph 20 of the Securities of any director, officer, employee or
shareholder, as such, of the Company or the Guarantor is waived and released.
Section 13.12. Successors. All agreements of the Company or the
Guarantor in this Indenture and the Securities shall bind its successor. All
agreements of the Trustee in this Indenture shall bind its successor.
Section 13.13. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
Section 13.14. Counterparts. This Indenture may be executed in any
number of counterparts, all of which shall together constitute one and the same
instrument. This Indenture shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.
<PAGE>
-61-
SIGNATURES
Dated: November , 1996 TOLL CORP., as Issuer
By:
--------------------------------
Name: Joel H. Rassman
Title: Senior Vice President
(SEAL)
Attest:
------------------------------
Name:
Title:
Dated: November , 1996 TOLL BROTHERS, INC., as Guarantor
By:
-------------------------------
Name: Joel H. Rassman
Title: Senior Vice President
(SEAL)
Attest:
----------------------------------
Name:
Title:
<PAGE>
-62-
Dated: November , 1996 NBD Bank, as Trustee
By:
-------------------------------
Name:
Title:
(SEAL)
Attest:
-------------------------------
Name:
Title:
<PAGE>
A-1
No. EXHIBIT A
TOLL CORP.
promises to pay to
or registered assigns
the principal sum of [Dollars]* on
[Title of Security]
Interest Payment Dates: and
Record Dates: and
Authenticated: Dated:
TOLL CORP.
[Seal]
By
as Trustee, certifies that this
is one of the Securities referred
to in the Indenture.
By:
--------------------------------
Authorized Signatory Chairman of Secretary
the Board
- --------------
* Or other currency. Insert corresponding provisions on reverse side of
Security in respect of foreign currency denomination or interest
payment requirement.
<PAGE>
A-2
(REVERSE OF SECURITY)
TOLL CORP.
[Title of Security]
1. Interest.
Toll Corp. (the "Company"), a Delaware corporation, promises to pay
interest on the principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on and of each year (the
"Interest Payment Date"), commencing on . Interest on the Security will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from , provided that, if there is no existing default in the payment
of interest, and if this Security is authenticated between a record date
referred to on the face hereof (the "Record Date") and the next succeeding
Interest Payment Date, interest shall accrue from such Interest Payment Date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment.
The Company will pay interest on the Securities (except defaulted
interest) to the persons who are registered holders of Securities at the close
of business on the Record Date next preceding the Interest Payment Date. Holders
must surrender Securities to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and interest by wire transfer or by its
check payable in such money. It may mail an interest check to a holder's
registered address.
3. Paying Agent and Registrar.
Initially, NBD Bank (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its subsidiaries may act as Paying Agent,
Registrar or co-registrar.
<PAGE>
A-3
4. Indenture.
The Company issued the Securities under an Indenture dated as of
November __, 1996 (the "Indenture"), among the Company, Toll Brothers, Inc. (the
"Guarantor") and the Trustee. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss.77aaa-77bbbb) as in effect on the date
of the Indenture and as may be amended from time to time. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of them. Payment of the Securities is guaranteed on a
senior subordinated basis by the Guarantor (the "Guarantee").
5. Optional Redemption.*
The Company may redeem the Securities at any time on or after in whole,
or from time to time in part, at the following redemption prices (expressed as a
percentage of principal amount), plus accrued and unpaid interest to the
redemption date:
If redeemed during the 12-month period beginning
Year Percentage
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
and thereafter.................................... %
6. Mandatory Redemption.*
The Company shall redeem % of the aggregate principal amount of
Securities originally issued under the Indenture on each of , which
redemptions are calculated to retire % of the Securities originally issued
prior to maturity. Such redemptions shall be made at a redemption price equal to
100% of the principal amount thereof, together with accrued interest to the
redemption date. The Company may reduce the principal amount of Securities to be
redeemed pursuant to this Paragraph 6 by the principal amount of any Securities
- -------------------
* If applicable
<PAGE>
A-4
previously redeemed, retired or acquired, otherwise than pursuant to this
Paragraph 6, that the Company has delivered to the Trustee for cancellation and
not previously credited to the Company's obligations under this Paragraph 6.
Each such Security shall be received and credited for such purpose by the
Trustee at the redemption price and the amount of such mandatory redemption
payment shall be reduced accordingly.
7. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Securities to be redeemed
at its, his or her registered address. Securities in denominations larger than
$1,000 may be redeemed in part. On and after the redemption date interest ceases
to accrue on Securities or portions of them called for redemption, provided that
if the Company shall default in the payment of such Security at the redemption
price together with accrued interest, interest shall continue to accrue at the
rate borne by the Securities.
8. Selection.
Selection of Securities for any redemption will be made by the Trustee,
if the Securities are listed on a national securities exchange by the rules of
such exchange or if the Securities are not so listed on either a pro rata basis
or by lot or by any other method that the Trustee deems fair and appropriate.
9. Conversion*
A Holder of a Security may convert it into Common Stock of the
Guarantor at any time prior to the close of business on , or,
if the Security is called for redemption, the Holder may convert it at any time
before the close of business on the second Business Day before the date fixed
for redemption. The initial Conversion Price is $______ per share of Common
Stock, subject to adjustment in certain events. The Company and/or the Guarantor
will deliver a check in lieu of any fractional share. On conversion no payment
or adjustment for interest accrued on the Securities will be made.
- --------------------
* If applicable.
<PAGE>
A-5
To convert a Security a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to the
Registrar (as agent for the Guarantor), (3) furnish appropriate endorsements and
transfer documents if required by the Registrar and (4) pay any transfer or
similar tax if required. A Holder may convert a portion of a Security if the
portion is $1,000 or a whole multiple of $1,000.
10. Subordination.*
The Securities will be subordinated in right of payment to the prior
payment in full of all Senior Indebtedness of the Company (as defined in the
Authorizing Resolution). The Securities will be senior in right of payment to
certain specified obligations of the Company as set forth in the Indenture. The
Guarantee will be subordinated in right of payment to the prior payment in full
of all Senior Indebtedness of the Guarantor (as defined in the Authorizing
Resolution). The Guarantee will be senior in right of payment to certain
specified obligations of the Guarantor as set forth in the Indenture.
11. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in denominations
of $1,000 and integral multiples thereof. A holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Securities selected for redemption.
Also, it need not transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed is scheduled.
12. Person Deemed Owner.
The registered holder of a Security may be treated as the owner of it
for all purposes.
13. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company as
its request. After that, holders entitled to the money must look to the Company
or, if applicable, the Guarantor for payment unless an abandoned property law
designates another person.
- --------------------
* If applicable.
<PAGE>
A-6
14. Discharge Prior to Redemption or Maturity.
The Indenture will be discharged and cancelled except for certain
Sections thereof, subject to the terms of the Indenture, upon the payment of all
the Securities or upon the deposit with the Trustee, within not more than one
year prior to the maturity or redemption of the Securities, of funds sufficient
for such payment or redemption. In the case of such a deposit, Securityholders
must look to the deposited money for payment.
15. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the consent of the holders of at least a majority
in principal amount of the Securities of all Series affected by the amendment
voting as a class, and any past default or compliance with any provision may be
waived with the consent of the holders of a majority in principal amount of the
Securities. Without the consent of any Securityholder, the Company may amend or
supplement the Indenture or the Securities to cure any ambiguity, defect or
inconsistency; to comply with Article 5 of the Indenture (providing for the
assumption of the obligations of the Company or the Guarantor under the
Indenture by a successor corporation); to provide for uncertificated Securities
in addition to or in place of certificated Securities; or to make any change
that does not adversely affect the rights of any Securityholder.
16. Restrictive Covenants.*
The Securities are general unsecured obligations of the Company limited
to $ principal amount. [insert brief description of any covenants] Once a
year the Company must report to the Trustee on compliance with the limitations.
17. Successor Corporation.
When a successor corporation assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor corporation
will be released from those obligations.
- --------------------
* If applicable.
<PAGE>
A-7
18. Defaults and Remedies.
An Event of Default is:
(i) failure of the Company or the Guarantor to pay interest for 30 days
or principal when due (whether or not prohibited by the subordination
provision); (ii) failure of the Company or Guarantor to perform any other
agreement for 60 days after notice; (iii) default in the payment of Indebtedness
of the Company, the Guarantor or any Subsidiary under the terms of the
instrument evidencing or securing such Indebtedness permitting the holder
thereof to accelerate the payment of in excess of an aggregate of $2,000,000 in
principal amount of such Indebtedness (after the lapse of applicable grace
periods) or, in the case of non-payment defaults, acceleration of any such
Indebtedness if such acceleration is not rescinded or annulled within 10 days
after such acceleration, provided that, subject to the terms of the Indenture,
the term "Indebtedness" shall not include an acceleration of or default on
certain Non-Recourse Indebtedness; (iv) a final judgment for the payment of
money in an amount in excess of $2,000,000 shall be entered against the Company,
the Guarantor or any Subsidiary which remains undischarged or unstayed for a
period of 60 days after the date on which the right to appeal has expired;
provided the term "final judgment," at such time as the Company 10 1/2% Senior
Subordinated Notes due 2002 (and any related guarantee) are no longer
outstanding, shall not include a Non-Recourse Judgment unless the book value of
all property (net of any previous write-downs or reserves in respect of such
property) subject to such Non-Recourse Judgment exceeds the amount of such
Non-Recourse Judgment by more than $5,000,000; (v) certain events of bankruptcy,
insolvency or reorganization; or (vi) the Guarantee shall for any reason (other
than pursuant to its terms) cease to be in full force and effect.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a Default, give the Holders notice of all uncured Defaults known
to it (the term "Default" to include the events specified above, without grace
or notice), provided that, except in the case of default in the payment of
principal of or interest on any of the Securities, the Trustee shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the Securityholders.
<PAGE>
A-8
In case an Event of Default (other than arising out of certain events
of bankruptcy, insolvency or reorganization) occurs and is continuing, the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding, by notice in writing to the Company (and to the
Trustee if given by the Securityholders), may declare the Securities to be due
and payable (i) if (a) no Designated Senior Debt of the Company or the Guarantor
is outstanding, or (b) if the Securities are not subordinated to other
indebtedness of the Company, immediately, or (ii) if Designated Senior Debt of
the Company or the Guarantor is outstanding and the Securities are subordinated
to other indebtedness of the Company, upon the earlier of (A) ten days after
such Acceleration Notice is received by the Company and (B) the acceleration of
any Senior Indebtedness of the Company or the Guarantor. In case an Event of
Default arising out of certain events of bankruptcy, insolvency or
reorganization occurs and is continuing, the outstanding principal of and
accrued interest on the Securities shall ipso facto become and be due and
payable immediately, without declaration or any further act on the part of the
Trustee or any Securityholder.
Such declaration or acceleration and its consequences may be rescinded
by holders of a majority in principal amount of the outstanding Securities of
the affected Series if all existing Events of Defaults have been cured and
waived (except non-payment of principal or interest that has become due solely
because of the acceleration) and if the rescission would not conflict with any
judgment or decree.
Defaults (except, unless theretofore cured, a default in payment of
principal of or interest on the Securities or a default with respect to a
provision which cannot be modified under the terms of the Indenture without the
consent of each Securityholder affected) may be waived by the holders of a
majority in principal amount of outstanding Securities upon the conditions
provided in the Indenture.
The Indenture requires the Guarantor to file periodic reports with the
Trustee as to the absence of defaults.
19. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company, the Guarantor or their affiliates, and may otherwise deal with the
Company, the Guarantor or their affiliates, as if it were not Trustee.
<PAGE>
A-9
20. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
or the Guarantor shall not have any liability for any obligations of the Company
or the Guarantor under the Securities, the Guarantee or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
21. Authentication.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
22. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture. Requests may be made to: Secretary, Toll
Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania 19006.
<PAGE>
A-10
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Security to
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
- -------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- -------------------------------------------------------------------------------
Date: Your Signature:
---------------------- ------------------------------
(Sign exactly as your
name appears on the
other side of this
Security)
Signature Guarantee:
----------------------------------------------------------
NOTE: Signature(s) must be guaranteed by a member firm of a major
stock exchange or a commercial bank or trust company.
<PAGE>
A-11
CONVERSION NOTICE*
If you want to convert this Security pursuant to Article 10 of the
Indenture, check the box:
/ /
If you want to convert only part of this Security pursuant to Article
10 of the Indenture, state the amount:
$
--------------------
If you want the stock certificate made out in another person's name,
fill in the form below:
(Insert other person's Social Security or Tax. I.D. Number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)
Date: Your Signature:
---------------------------- -------------------------
(Sign exactly as your
name appears on the
other side of this
Security)
Signature Guarantee:
-----------------------------------------------------------
NOTE: Signature(s) must be guaranteed by a member firm of a major
stock exchange or a commercial bank or trust company.
- --------------
* If applicable.
<PAGE>
B-1
EXHIBIT B
[FORM OF NOTATION ON SECURITY
RELATING TO GUARANTEE]
GUARANTEE
Toll Brothers, Inc. (hereinafter referred to as the "Guarantor," which
term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed), has
unconditionally guaranteed on a subordinated basis (i) the due and punctual
payment of the principal of and interest on the Securities, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on the
overdue principal of and interest, if any, on the Securities, to the extent
lawful, and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee under the Indenture and the Security all
in accordance with the terms set forth in Article 7 of the Indenture and (ii) in
case of any extension of time of payment or renewal of any Securities or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
[The obligations of the Guarantor to the Holders of the Securities and
to the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth and are expressly subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor, to the extent
and in the manner provided in Article 7 of the Indenture and reference is hereby
made to the Indenture for the precise terms of the Guarantee and the
subordination thereof therein made.]
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under the
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
<PAGE>
B-2
The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which this Guarantee is
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
TOLL BROTHERS, INC.
By
-------------------------------------
By
-------------------------------------
(Seal)
Exhibit 4.2
AUTHORIZING RESOLUTIONS
Relating to the $100,000,000 Principal Amount of
8 3/4% Senior Subordinated Notes
Due 2006
of
Toll Corp.
Guaranteed on a Senior Subordinated Basis
by
Toll Brothers, Inc.
------------------------------
Approved by the Board of Directors
of Toll Corp.
and the Shelf Terms Committee
of Toll Brothers, Inc.
------------------------------
As of November 6, 1996
<PAGE>
Joint Resolutions Adopted by
the Board of Directors
of
Toll Corp.
and by
the Shelf Terms Committee
of
Toll Brothers, Inc.
As of November 6, 1996
Relating to $100,000,000 Principal Amount of
8 3/4% Senior Subordinated Notes
of Toll Corp. Due 2006 and
Guaranteed on a Senior Subordinated Basis by Toll Brothers, Inc.
WHEREAS, Toll Brothers, Inc. (the "Guarantor") and Toll Corp. (the
"Company") previously filed a Registration Statement on Form S-3 (File Nos.
33-51775 and 33-51775-01) with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, relating to the "shelf registration" of the
Guarantor's Common Shares, Preferred Shares, and Guarantees and the Company's
Debt Securities for a proposed public offering or offerings in the aggregate
amount up to $250,000,000 (the "Shelf Registration Statement"); and
WHEREAS, in January 1994,the Company sold $57,500,000 principal amount
of 4 3/4% Convertible Senior Subordinated Notes of the Company, guaranteed on a
senior subordinated basis by the Guarantor pursuant to the Shelf Registration
Statement.
WHEREAS, the Company and the Guarantor desire to sell $100,000,000
principal amount of a new series of Senior Subordinated Notes of the Company,
guaranteed on a senior subordinated basis by the Guarantor (the "Securities"),
pursuant to the Shelf Registration Statement.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Company (the "Toll Board") and the Shelf Terms Committee of the Board of
Directors of the Guarantor (the "Shelf Committee") hereby approve the
establishment and the issuance of the Securities to be issued as a series
pursuant to an Indenture, in the form included as Exhibit 4.1 to the Shelf
Registration Statement, to be dated as of November 12, 1996, among the Company,
as the issuer, the Guarantor, as the Guarantor, and NBD Bank, a Michigan banking
corporation, as Trustee (the "Trustee"), (the "Base Indenture"), as the same is
supplemented by these resolutions.
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RESOLVED, FURTHER, that the Toll Board and the Shelf Committee hereby
approve the following terms and provisions which shall supplement the terms and
provisions of the Base Indenture (said supplemented terms and provisions and the
Base Indenture are hereinafter collectively referred to as the "Indenture" and
each reference herein to the "Indenture" is a reference to the Base Indenture as
the same is supplemented by the terms and provisions of these joint
resolutions):
PARAGRAPH 1. The title of the Securities shall be "8 3/4% Senior
Subordinated Notes due 2006".
PARAGRAPH 2. The aggregate principal amount at maturity of the
Securities which may be authenticated and delivered under the Indenture shall be
$100,000,000 (except for any Securities authenticated and delivered upon
registration of the transfer of, or in exchange for, or in lieu of other
Securities pursuant to the terms of the Indenture). The Securities will be
issued only in registered form in denominations of $1,000 and integral multiples
thereof.
PARAGRAPH 3. The principal amount of the Securities is due and payable
in full on November 15, 2006, subject to earlier redemption as referred to in
the Indenture.
PARAGRAPH 4. The Securities shall bear interest at the rate of 8 3/4%
per annum (computed on the basis of a 360-day year of twelve 30-day months),
from November 12, 1996 to maturity or early redemption; and interest will be
payable semi-annually on May 15 and November 15 in each year, commencing May 15,
1997, to the persons in whose name such Securities are registered at the close
of business on the May 1 or November 1, as the case may be, preceding such
interest payment date.
PARAGRAPH 5. The Securities are redeemable, in whole or in part from
time to time on or after November 15, 2001 and prior to maturity, at the option
of the Company upon not less than 30 nor more than 60 days' notice mailed by
first-class mail to each Holder of record at such Holder's last address as it
appears on the registration books of the Registrar. Redemption of the Securities
made at the election of the Company shall be made at the following respective
redemption prices (expressed as a percentage of principal amount), plus accrued
and unpaid interest to the redemption date, if redeemed during the 12-month
period beginning November 15 of the years indicated:
Year Percentage
---- ----------
2001................................. 104.375%
2002................................. 102.917%
2003................................. 101.458%
2004 and thereafter.................. 100.000%
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PARAGRAPH 6. Principal of and interest on the Securities shall be
payable in accordance with Section 4.01 of the Indenture.
PARAGRAPH 7. The Securities shall not be convertible into the Company's
or the Guarantor's Common Stock.
PARAGRAPH 8. The payment of the principal of, premium, if any, and
interest on the Securities is subordinated in right of payment, in the manner
and to the extent set forth in the Indenture, to the prior payment in full of
all senior indebtedness of the Company (referred to in the Indenture as "Senior
Indebtedness of the Company" and as further defined herein) whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. The term "Senior Indebtedness of the Company" as used in the
Indenture shall mean: (i) the principal of, premium, if any, and interest on any
indebtedness, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed by the Company, (a) under the Revolving
Credit Agreement (as defined in the Indenture), (b) for money borrowed from
others (including, for this purpose, all obligations incurred under capitalized
leases or purchase money mortgages or under letters of credit or similar
commitments), or (c) in connection with the acquisition by it of any other
business, property or entity and, in each case, all renewals, extensions and
refundings thereof, unless the terms of the instrument creating or evidencing
such indebtedness expressly provide that such indebtedness is not superior in
right of payment to the payment of the principal of, premium, if any, and
interest on the Securities. Senior Indebtedness of the Company, as such term is
used in the Indenture, shall not include (a) indebtedness or amounts owed for
compensation to employees, for goods or materials purchased in the ordinary
course of business, or for services, (b) indebtedness of the Company to the
Guarantor or any Subsidiary for money borrowed or advances from such entities,
(c) the Company's 10 1/2% Senior Subordinated Notes due 2002 (which shall rank
pari passu in right of payment with the Securities), (d) the Company's 9 1/2%
Senior Subordinated Notes due 2003 (which shall rank pari passu in right of
payment with the Securities), (e) the Company's 4 3/4% Convertible Senior
Subordinated Notes due 2004 (which shall rank pari passu in right of payment
with the Securities), and (f) the Securities. For purposes hereof, a
"capitalized lease" shall be deemed to mean a lease of real or personal property
which, in accordance with generally accepted accounting principles, has been
capitalized.
PARAGRAPH 9. The payment of the principal of, premium, if any, and
interest on the Securities pursuant to the Guarantee (as such term is defined in
the Indenture) will be subordinated in right of payment, in the manner and to
the extent set forth in the Indenture, to the prior payment in full of all
senior indebtedness of the Guarantor (referred to in the Indenture as "Senior
Indebtedness of the Guarantor" and as further defined herein), whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. The term "Senior Indebtedness of the Guarantor" as used
in the Indenture shall mean: (i) the principal of, premium, if any, and interest
on any indebtedness, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed or guaranteed by the Guarantor, (a) under
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the Revolving Credit Agreement, or (b) for money borrowed from others
(including, for this purpose, all obligations incurred under capitalized leases
or purchase money mortgages or under letters of credit or similar commitments),
or (c) in connection with the acquisition by it of any other business, property
or entity, and, in each case, all renewals, extensions and refundings thereof,
unless the terms of the instrument creating or evidencing such indebtedness
expressly provide that such indebtedness is not superior in right of payment to
the payment of the Securities pursuant to the Guarantee. Senior Indebtedness of
the Guarantor, as such term is used in the Indenture, shall not include (a) the
Guarantee, (b) indebtedness of the Guarantor to any Subsidiary for money
borrowed or advances from such Subsidiary, (c) the Guarantor's guarantee of the
Company's 10 1/2% Senior Subordinated Notes due 2002 (which shall rank pari
passu in right of payment with the Guarantee), (d) the Guarantor's guarantee of
the Company's 9 1/2% Senior Subordinated Notes due 2003 (which shall rank pari
passu in right of payment with the Guarantee) and (e) the Guarantor's guarantee
of the Company's 4 3/4% Convertible Senior Subordinated Notes due 2004 (which
shall rank pari pasu in right of payment with the Guarantee). For purposes
hereof, a "capitalized lease" shall be deemed to mean a lease of real or
personal property which, in accordance with generally accepted accounting
principles, has been capitalized.
PARAGRAPH 10. As used in the Indenture, the following terms shall have
the respective meanings set forth below:
"Consolidated Adjusted Net Worth" of the Guarantor means the
Consolidated Net Worth of the Guarantor less the stockholders' equity of each of
the Unrestricted Subsidiaries, as determined in accordance with generally
accepted accounting principles.
"Consolidated Fixed Charge Ratio" of the Guarantor means the ratio of
(i) the aggregate amount of Consolidated Net Income Available for Fixed Charges
of such Person for the four fiscal quarters for which financial information in
respect thereof is available immediately prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Ratio (the
"Transaction Date") to (ii) the aggregate Consolidated Interest Expense of such
Person for the four fiscal quarters for which financial information in respect
thereof is available immediately prior to the Transaction Date.
"Consolidated Income Tax Expense" of the Guarantor means, for any
period for which the determination thereof is to be made, the aggregate of the
income tax expense of the Guarantor and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense" of the Guarantor means, for any period
for which the determination thereof is to be made, the Interest Expense of the
Guarantor and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with generally accepted accounting principles.
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"Consolidated Net Adjusted Income" of the Guarantor means, for any
period for which the determination thereof is to be made taken as one accounting
period, the aggregate Consolidated Net Income of the Guarantor and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles, adjusted by excluding (to the extent not
otherwise excluded in calculating Consolidated Net Income) any net extraordinary
gain or any net extraordinary loss, as the case may be, during such period.
"Consolidated Net Income" for any period means the aggregate of the Net
Income of the Guarantor and its consolidated subsidiaries for such period, on a
consolidated basis, determined in accordance with generally accepted accounting
principles, provided that (i) the Net Income of any person in which the
Guarantor or any consolidated Subsidiary has a joint interest with the third
party or which is organized outside of the United States shall be included only
to the extent of the lesser of (A) the amount of dividends or distributions paid
to the Guarantor or a consolidated subsidiary or (B) the Guarantor's direct or
indirect proportionate interest in the Net Income of such Person, provided that,
so long as the Guarantor or a consolidated subsidiary has an unqualified legal
right to require the payment of a dividend or distribution, Net Income shall be
determined solely pursuant to clause (B); (ii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, and (iii) the Net Income of any
Unrestricted Subsidiary shall be included only to the extent of the amount of
dividends or distributions (the fair value of which, if other than in cash, to
be determined by the Board of Directors, in good faith) by such Subsidiary to
the Guarantor or to any of its consolidated Restricted Subsidiaries.
"Consolidated Net Income Available for Fixed Charges" means, for any
period for which the determination thereof is to be made, the sum of the amounts
for such period of (i) Consolidated Net Adjusted Income, (ii) Consolidated
Interest Expense (excluding capitalized interest) and (iii) Consolidated Income
Tax Expense, all as determined on a consolidated basis for the Guarantor and its
Subsidiaries in conformity with generally accepted accounting principles.
"Designated Senior Debt of the Guarantor" means any single issue of
Indebtedness of the Guarantor constituting Senior Indebtedness of the Guarantor
which at the time of determination has an aggregate principal amount outstanding
of at least $25,000,000 and is specifically designated in the instrument or
instruments creating, governing or evidencing such Senior Indebtedness of the
Guarantor as "Designated Senior Debt of Toll Brothers, Inc." (it being
understood that the Guarantor's guarantee of the Revolving Credit Agreement
shall be considered a single issue of Indebtedness of the Guarantor for purposes
of this definition).
"Designated Senior Debt of the Company" means any single issue of
Indebtedness of the Company constituting Senior Indebtedness of the Company
which at the time of determination has an aggregate principal amount outstanding
of at least $25,000,000 and is specifically designated in the instrument or
instruments creating, governing or evidencing such
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Senior Indebtedness of the Company as "Designated Senior Debt of Toll Corp." (it
being understood that the Company's guarantee of the Revolving Credit Agreement
shall be considered a single issue of Indebtedness of the Company for purposes
of this definition).
"Excluded Debt" means any Indebtedness of the Guarantor and any
Indebtedness or preferred stock of the Company, whether outstanding on the date
of the Indenture or thereafter created, which is (i) subordinated in right of
payment to the Securities or the Guarantee (upon liquidation or otherwise) and
(ii) matures after, and is not redeemable, mandatorily or at the option of the
holder thereof prior to the date of maturity of the Securities.
"Indebtedness," for the purpose of the covenants described in Sections
4.07 and 4.08, and certain definitions, means without duplication (i) any
liability of any Person (a) for borrowed money or evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation) given in
connection with the acquisition of any businesses, properties or assets of any
kind (other than a trade payable or current liability arising in the ordinary
course of business) to the extent it would appear as a liability upon a balance
sheet of such Person prepared on a consolidated basis in accordance with
generally accepted accounting principles, or (b) for the payment of money
relating to a capitalized lease obligation; (ii) any liability of any Person
under any obligation incurred under letters of credit; and (iii) any liability
of others described in clause (i) or (ii) with respect to which such Person has
made a guarantee or similar arrangement, directly or indirectly (to the extent
of such guarantee or arrangement).
"Interest Expense" of any Person means, for any period for which the
determination thereof is to be made, the sum of the aggregate amount of (i)
interest in respect of indebtedness (including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing), (ii) all but the principal component of rentals in
respect of capitalized lease obligations, paid, accrued or scheduled to be paid
or accrued by such Person during such period and (iii) capitalized interest, all
as determined in accordance with generally accepted accounting principles, minus
(iv) interest expense attributable to such Person's directly or indirectly
majority-owned mortgage finance Affiliates.
"Net Income" of any Person means the net income (loss) of such Person,
determined in accordance with generally accepted accounting principles;
excluding, however, from the determination of Net Income all gain (to the extent
that it exceeds all losses) realized upon the sale or other disposition
(including, without limitation, dispositions pursuant to sale leaseback
transactions) of any real property or equipment of such Person, which is not
sold or otherwise disposed of in the ordinary course of business, or of any
capital stock of such Person or its subsidiaries owned by such Person.
"Restricted Subsidiary" means any Subsidiary that is not an
Unrestricted Subsidiary.
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"Unrestricted Subsidiary" means (a) any Subsidiary which, in accordance
with the provisions of the Indenture, has been designated in a Board Resolution
of the Guarantor as an Unrestricted Subsidiary, in each case unless and until
such Subsidiary shall, in accordance with the provisions of the Indenture, be
designated by Board Resolution as a Restricted Subsidiary; and (b) any
Subsidiary a majority of the voting stock of which shall at the time be owned
directly or indirectly by one or more Unrestricted Subsidiaries.
"Unrestricted Subsidiary Investment" means any loan, advance, capital
contribution or transfer (including by way of guarantee or other similar
arrangement) in or to any Unrestricted Subsidiary. For the purposes of the
covenant described in Section 4.04, (i) "Unrestricted Subsidiary Investment"
shall include the fair market value of the net assets of any Subsidiary at the
time that such Subsidiary is designated an Unrestricted Subsidiary and (ii) any
property transferred to an Unrestricted Subsidiary shall be valued at a fair
market value at the time of such transfer, in each case as determined by the
Board of Directors of the Guarantor in good faith. "Unrestricted Subsidiary
Investment" does not include the fair market value of the net assets of an
Unrestricted Subsidiary that is designated as a Restricted Subsidiary (as
determined by the Board of Directors of the Guarantor in good faith), provided
that such designation is then permitted pursuant to the terms of the Indenture.
Capitalized terms not otherwise defined herein shall have the meanings
given to them in the Indenture.
PARAGRAPH 11. The Securities shall be entitled to the benefit of each
of the covenants in Article 4 of the Base Indenture and each of the following
additional covenants (each of which shall be deemed to be a provision of the
Indenture and, when referred to as a provision of the Indenture, shall be
identified by reference to the Section number which is set forth immediately
preceding such covenant):
SECTION 4.04. Limitation on Restricted Payments. The Guarantor may not
declare or pay any dividend or make any distribution or payment on its Capital
Stock or to its shareholders, as shareholders (other than dividends or
distributions payable in its Capital Stock), or purchase, redeem or otherwise
acquire or retire for value, or permit any Restricted Subsidiary to purchase or
otherwise acquire for value, any Capital Stock of the Guarantor (collectively,
"Restricted Payments"), or make or permit any Restricted Subsidiary to make (I)
any loan, advance, capital contribution or transfer other than for fair market
value (as determined by a majority of the disinterested members of the Board of
Directors of the Guarantor or the relevant Restricted Subsidiary, which shall be
evidenced by a written resolution of such Board of Directors) in or to any
Affiliate (which term does not include joint ventures (whether in corporate,
partnership or other form) with an unaffiliated party or parties) other than a
Restricted Subsidiary or the Guarantor or (II) any Unrestricted Subsidiary
Investment (collectively, "Restricted Investments"), if, at the time of such
Restricted Payment or Restricted Investment, or after giving effect thereto, (i)
a Default or an Event of Default shall have occurred and be
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continuing, or (ii) the sum of (x) the aggregate amount expended for such
Restricted Payments (the amount expended for such purposes, if other than in
cash, to be determined by the Board of Directors of the Guarantor, whose
determination shall be conclusive and evidenced by a resolution of such Board of
Directors filed with the Trustee) subsequent to October 31, 199l, and (y) the
amount by which the aggregate book value of all property (net of any previous
write-downs or reserves in respect of such property) subject to Non-Recourse
Indebtedness which has been accelerated or is in default is in excess of such
Non-Recourse Indebtedness and (z) the aggregate amount of Restricted Investments
then outstanding, shall exceed the sum of (a) 50% of the aggregate Consolidated
Net Income (or, in case such aggregate Consolidated Net Income shall be a
deficit, minus 100% of such deficit) of the Guarantor accrued on a cumulative
basis subsequent to October 31, 1991, and (b) the aggregate net proceeds,
including the fair market value of property other than cash (as determined by
the Board of Directors of the Guarantor, whose determination shall be conclusive
and evidenced by a resolution of such Board of Directors filed with the
Trustee), received by the Guarantor from the issue or sale after October 31,
1991 of Capital Stock of the Guarantor, including capital stock of the Guarantor
issued upon the conversion of indebtedness of the Guarantor, other than Capital
Stock that is redeemable at the option of the holder or is mandatorily
redeemable and (c) $20,000,000, or (iii) the Guarantor would be unable to incur
an additional $1.00 of Indebtedness (other than Excluded Debt) pursuant to
Section 4.07; provided, however, that the foregoing shall not prevent (A) the
payment of any dividend within 60 days after the date of declaration thereof, if
at said date of declaration the making of such payment would have complied with
the provisions hereof, (B) the retirement of any shares of the Guarantor's
Capital Stock by exchange for, or out of proceeds of the substantially
concurrent sale of, other shares of its Capital Stock (other than Capital Stock
that is redeemable at the option of the holder or is mandatorily redeemable), or
(C) the payment or advance of cash compensation or any compensation pursuant to
or in connection with any employee benefit plan of the Guarantor and the
Subsidiaries paid or payable to any person in his or her capacity as an
employee, officer or director, and neither such retirement nor the proceeds of
any such sale or exchange nor the payment or advance of any such compensation
shall be included in any computation made under clause (ii) of this Section
4.04.
SECTION 4.05. Limitation on Restrictions on Payment of Dividends by
Subsidiaries. The Guarantor will not, and will not permit any Subsidiary to,
enter into any agreement or amendment of any existing agreement if such
agreement or amendment would restrict the payment of dividends or the making of
other distributions on any Subsidiary's Capital Stock, provided that a
Subsidiary may enter into such an agreement or amendment if, immediately prior
thereto either (i) (A) the Consolidated Net Worth of the Guarantor (excluding
the Consolidated Net Worth of such Subsidiary and any other Subsidiaries which
have such agreements) is at least $50,000,000 and (B) the Consolidated Net Worth
of such Subsidiary and any other Subsidiaries which have such agreements does
not account for more than 20% of the Consolidated Net Worth of the Guarantor
(including such Subsidiary and any other Subsidiaries which have such
agreements) or (ii) the Consolidated Net Worth of the Guarantor (excluding the
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Consolidated Net Worth of such Subsidiary and any other Subsidiaries which have
such agreements) is at least $70,000,000.
SECTION 4.06. Maintenance of Consolidated Net Worth. If the
Consolidated Net Worth of the Guarantor and its Subsidiaries at the end of any
two consecutive fiscal quarters is less than $55,000,000, then the Guarantor
shall cause the Company to offer to acquire (the "Offer") on the last day of the
fiscal quarter next following such second fiscal quarter, or, if such second
fiscal quarter ends on the last day of the Guarantor's fiscal year, 120 days
following the last day of such second fiscal quarter (the "Purchase Date")
$7,500,000 aggregate principal amount of Securities (or such lesser amount as
may be outstanding at the time, such amount being referred to as the "Offer
Amount") at a purchase price equal to their principal amount plus accrued and
unpaid interest to the Purchase Date. The Company may credit against its
obligation to offer to repurchase Securities on a Purchase Date the principal
amount of (i) Securities acquired by the Company and surrendered for
cancellation otherwise than pursuant to this Section and (ii) Securities
redeemed or called for redemption, in each case at least 60 days before such
Purchase Date. In no event shall the failure to meet the minimum Consolidated
Net Worth stated above at the end of any fiscal quarter be counted toward the
making of more than one Offer.
The Company shall provide the Trustee with notice of the Offer at least
60 days before any such Purchase Date and at least 10 days before the notice of
any Offer is mailed to Holders. The Company shall notify the Trustee promptly
after the occurrence of any of the events specified in this Section.
Notice of an Offer shall be mailed by the Trustee not less than 30 days
nor more than 60 days before the Purchase Date to the Holders of the Securities
at their last registered address. The Offer shall remain open from the time of
mailing until 5 days before the Purchase Date. The notice shall be accompanied
by a copy of the information regarding the Guarantor required to be contained in
a Quarterly Report on Form 10-Q for the second fiscal quarter referred to above
if such second fiscal quarter is one of the Guarantor's first three fiscal
quarters. If such second fiscal quarter is the Guarantor's last fiscal quarter,
a copy of the information required to be contained in an Annual Report to
Shareholders pursuant to Rule 14a-3 under the Exchange Act for the fiscal year
ending with such second fiscal quarter shall either accompany the notice or be
mailed to Holders not less than 15 days before the Purchase Date. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer. The notice, which shall govern the
terms of the Offer, shall state:
(1) that the Offer is being made pursuant to this Section 4.06;
(2) the Offer Amount, the purchase price and the Purchase Date;
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(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Offer shall
cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Security purchased pursuant to an
Offer will be required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in
the notice at least 5 days before the Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than three days prior to the
Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Security the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have the Security
purchased;
(7) that if Securities in a principal amount in excess of the Offer
Amount are tendered pursuant to the Offer, the Company shall
purchase Securities on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples of $1,000 shall be
acquired); and
(8) that Holders whose Securities were purchased only in part will be
issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
Before a Purchase Date the Company shall (i) accept for payment
Securities or portions thereof properly tendered pursuant to the Offer (on a pro
rata basis if required pursuant to paragraph (7) above), (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail or deliver to Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and mail or deliver to such Holders a new Security equal in principal amount to
any unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Offer on the
Purchase Date. For purposes of this Section 4.06, the Trustee shall act as the
Paying Agent.
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SECTION 4.07. Limitation on Additional Indebtedness. The Guarantor will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
incur, issue, assume, guarantee or in any other manner become liable,
contingently or otherwise, with respect to any Indebtedness (or, with respect to
Restricted Subsidiaries only, any preferred stock) (whether in liquidation or
otherwise) other than Excluded Debt, unless, after giving effect thereto, either
(A) the Consolidated Fixed Charge Ratio of the Guarantor exceeds 1.5:1 or (B)
the ratio of Indebtedness (and, if applicable, Restricted Subsidiary preferred
stock) of such Persons (excluding, for purposes of this calculation, purchase
money mortgages that are Non-Recourse Indebtedness, obligations incurred under
letters of credit, escrow agreements and surety bonds in the ordinary course of
business, Indebtedness of the Guarantor's directly or indirectly majority-owned
mortgage finance Affiliates and Excluded Debt) to Consolidated Adjusted Net
Worth of the Guarantor is less than 4.5:1. Notwithstanding the foregoing, the
Guarantor and its Restricted Subsidiaries may incur, issue, assume, guarantee or
otherwise become liable with respect to: (i) purchase money mortgages that are
Non-Recourse Indebtedness, (ii) obligations incurred under letters of credit,
escrow agreements and surety bonds in the ordinary course of business, (iii)
Indebtedness of the Guarantor's directly or indirectly majority-owned mortgage
finance Affiliates and (iv) Indebtedness solely for the purpose of refinancing
or repaying any existing Indebtedness or Restricted Subsidiary preferred stock
so long as after giving effect to such refinancing or repayment, the sum of
total consolidated Indebtedness of the Guarantor and its Restricted Subsidiaries
and the aggregate liquidation preference of Restricted Subsidiary preferred
stock is not increased (provided that for purposes of this subsection 4.07(iv),
application of the proceeds from the sale of assets of the Guarantor or its
Restricted Subsidiaries in the ordinary course of business to reduce
Indebtedness or Restricted Subsidiary preferred stock and the subsequent
reborrowing to purchase assets in the ordinary course of business shall be
deemed to be a refinancing).
SECTION 4.08. Restrictions on Permitting Restricted Subsidiaries to
Become Unrestricted Subsidiaries and Unrestricted Subsidiaries to Become
Restricted Subsidiaries.
(a) The Guarantor will not permit any Restricted Subsidiary to be
designated as an Unrestricted Subsidiary unless the Guarantor and its Restricted
Subsidiaries would thereafter be permitted to (i) incur at least $1.00 of
Indebtedness (other than Excluded Debt) pursuant to Section 4.07 and (ii) make a
Restricted Payment or Restricted Investment of at least $1.00 pursuant to
Section 4.04.
(b) The Guarantor will not permit any Unrestricted Subsidiary to be
designated as a Restricted Subsidiary unless such Subsidiary has outstanding no
Indebtedness except such Indebtedness as the Guarantor could permit it to become
liable for immediately after becoming a Restricted Subsidiary under the
provisions of Section 4.07.
(c) Promptly after the adoption of any Board Resolution designating a
Restricted Subsidiary as an Unrestricted Subsidiary or an Unrestricted
Subsidiary as a Restricted
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Subsidiary, a copy thereof shall be filed with the Trustee, together with a
Officers' Certificate stating that the provisions of this Section have been
complied with in connection with such designation.
(d) The Guarantor will not designate the Company an Unrestricted
Subsidiary.
(e) At the date of this Indenture all of the Subsidiaries are, and
shall be permitted to be, Restricted Subsidiaries.
SECTION 4.09. When the Company and the Guarantor May Merge, Etc.
Neither the Company nor the Guarantor shall consolidate with or merge into, or
transfer all or substantially all of its assets to, any other person unless (i)
such other Person is a corporation organized and existing under the laws of the
United States or a State thereof of the District of Columbia and expressly
assumes by supplemental indenture all the obligations of the Company or the
Guarantor under the Indenture and either the Securities or the Guarantee, as the
case may be; (ii) immediately after giving effect to such transaction no Default
or Event of Default shall have occurred and be continuing; (iii) the
Consolidated Net Worth of the surviving corporation is equal to or greater than
the Consolidated Net Worth of the Company or the Guarantor, as the case may be,
immediately prior to such merger or transfer of assets and (iv) the surviving
corporation would be able to incur at least an additional $1.00 of Indebtedness
(other than Excluded Debt) under Section 4.07. Thereafter all such obligations
of a predecessor corporation shall terminate.
PARAGRAPH 12. The Securities shall initially be represented by one or
more global Securities (each a "Global Security") deposited with the Trustee on
behalf of The Depositary Trust Company ("DTC") and registered in the name of
Cede & Co. or in the name of such other nominee of DTC as is requested by an
authorized representative of DTC. Unless and until a Global Security registered
in the name of DTC or a nominee of DTC is exchanged in whole or in part for
certificated Securities in definitive form, such Global Security may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC. If DTC is at any time unwilling, unable or
ineligible to continue as a depositary for the Securities and a successor
depositary is not appointed by the Company within 90 days, the Company shall
cause the Trustee to issue individual Securities in definitive form in exchange
for each Global Security then registered in the name of DTC or a nominee of DTC.
The Company shall be entitled at any time and in its sole discretion to
determine not to have Global Securities and, in such event, shall cause the
Trustee to issue individual Securities in definitive form in exchange for each
Global Security then representing Securities. In either instance, an owner of a
beneficial interest in a Global Security shall be entitled to physical delivery
of Securities in definitive form equal in principal amount to such beneficial
interest and to have such Securities registered in its name. Individual
Securities so issued in definitive form shall be issued in denominations of
$1,000 and any larger amount that is an integral multiple of $1,000 and shall be
issued in registered form only, without coupons. In the event the Trustee
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<PAGE>
receives the written request of a beneficial owner of a Security represented by
a Global Security to have such beneficially owned Security (a "DTC Withdrawn
Security") issued in definitive form in exchange for the beneficial interest in
the Global Security representing the DTC Withdrawn Security, such owner shall be
entitled to physical delivery of a Security in definitive form equal in
principal amount to such DTC Withdrawn Security and to have such Security
registered in its name. Payments of principal of and interest on a Global
Security registered in the name of DTC or a nominee of DTC shall be made by the
Company through the Trustee to DTC or its nominee, as the case may be, as the
registered owner of such Global Security. If a Global Security is issued in the
name of a depositary other than DTC or such other depositary's nominee, the
terms and provisions of this Paragraph 12 which are applicable to DTC and its
nominee shall be applicable to, and each reference to DTC and its nominee shall
be deemed to be a reference to such other depositary and its nominee,
respectively, with respect to the Global Security registered in the name of such
other depositary or its nominee.
PARAGRAPH 13. Except as otherwise indicated, each reference herein to a
"Paragraph" shall refer to a Paragraph hereof, and each reference herein to a
"Section" shall refer to a Section of the Indenture.
FURTHER RESOLVED, that the Chairman, President, Chief Financial Officer
or Chief Accounting Officer of the Company (each a "Company Designated
Officer"), and the Chairman, President, Chief Financial Officer or Chief
Accounting Officer of the Guarantor (each a "Guarantor Designated Officer" and
together with each Company Designated Officer, each a "Designated Officer"),
acting alone or with any other officer, be and they hereby are, authorized and
empowered, for and on behalf of the Company and the Issuer, respectively, to
execute and deliver the Terms Agreement dated November 6, 1996 among the
Company, the Guarantor, Salomon Brothers Inc and BT Securities Corporation (the
"Terms Agreement") relating to the issuance and sale of the Securities.
FURTHER RESOLVED, that any two of the Company Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the Company,
to execute and deliver a Global Security in the form attached hereto as
Attachment A, in the principal amount of $100,000,000 and payable to Cede & Co.,
with such changes thereto as such officers shall approve (the "Authorized Global
Security"), their execution of the Authorized Global Security to be conclusive
evidence of such approval;
FURTHER RESOLVED, that any two of the Company Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the Company,
to execute and deliver certificated Securities in definitive form, in
substantially the same form as the Authorized Global Security, provided,
however, that the legends appearing on the face of the Authorized Global
Security shall not be included in such certificated Securities;
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<PAGE>
FURTHER RESOLVED, that any two of the Guarantor Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the
Guarantor, to execute and deliver the Guarantee of the Authorized Global
Security in the form of the Guarantee included in Attachment A, with such
changes thereto as such officers shall approve (the "Authorized Guarantee"),
their execution of the Authorized Guarantee to be conclusive evidence of such
approval;
FURTHER RESOLVED, that any two of the Guarantor Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the
Guarantor, to execute and deliver certificated Securities in definitive form, in
substantially the same form as the Authorized Global Security, provided,
however, that the legends appearing on the face of the Authorized Global
Security shall not be included in such certificated Securities;
FURTHER RESOLVED, that the Company Designated Officers be, and each of
them hereby is, authorized and directed in the name and on behalf of the Company
and under its manual or facsimile seal, and the Guarantor Designated Officers
be, and each of them hereby is, authorized and directed in the name and on
behalf of the Guarantor, to execute, acknowledge and deliver the Base Indenture;
and
FURTHER RESOLVED, that a Designated Officer, acting alone or with any
other officer of the Company or the Guarantor, as the case may be, be and he
hereby is authorized, empowered and directed with the advice of counsel, for and
on behalf of the Company or the Guarantor, as the case may be, to prepare,
execute and file any other documents, instruments, or certificates, to perform
any acts and to do any and all other things on behalf of the Company or the
Guarantor, as the case may be, that said officer shall deem appropriate in order
to effectuate the foregoing resolutions and complete and consummate the offering
of the Securities pursuant to the terms of the Terms Agreement and the
Indenture, and to qualify the Securities for sale to the public in accordance
with any law, rule or regulation of any federal or state governmental body.
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<PAGE>
ATTACHMENT A
CUSIP No. 889479AE1
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Toll Corp., or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. 1
TOLL CORP.
promises to pay to Cede & Co.
or registered assigns
the principal sum of One Hundred Million Dollars on November 15, 2006
8 3/4% SENIOR SUBORDINATED NOTE DUE 2006
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Authenticated: Dated: November 12, 1996
TOLL CORP.
[Seal]
By:
-------------------------------
Joel H. Rassman
Chief Financial Officer
NBD Bank,
as Trustee, certifies that this
is one of the Securities referred
to in the within mentioned Indenture. By:
-------------------------------
Joseph R. Sicree
Chief Accounting Officer
By:
------------------------------
Authorized Signatory
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<PAGE>
(REVERSE OF SECURITY)
TOLL CORP.
8 3/4% SENIOR SUBORDINATED NOTES DUE 2006
1. Interest.
Toll Corp. (the "Company"), a Delaware corporation, promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semi-annually on November 15 and May
15 of each year (the "Interest Payment Date"), commencing on May 15, 1997.
Interest on the Security will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from November 12, 1996, provided
that, if there is no existing default in the payment of interest, and if this
Security is authenticated between a record date referred to on the face hereof
(the "Record Date") and the next succeeding Interest Payment Date, interest
shall accrue from such Interest Payment Date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment.
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities at
the close of business on the Record Date next preceding the Interest Payment
Date. Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by wire
transfer or by its check payable in such money. It may mail an interest check to
a holder's registered address.
3. Paying Agent and Registrar.
Initially, NBD Bank, a Michigan banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-registrar without notice. The Company or any of
its subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as
of November 12, 1996, among the Company, Toll Brothers, Inc. (the "Guarantor")
and the Trustee, as supplemented by the Authorizing Resolutions approved by the
Company and the Guarantor on November 6, 1996 (collectively, the "Indenture").
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss.77aaa-77bbbb) (the "Trust Indenture Act") as in effect on the date of
the Indenture and as may be amended from time to time. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Trust Indenture Act for a
<PAGE>
statement of them. Payment of the Securities is guaranteed on a senior
subordinated basis by the Guarantor (the "Guarantee").
5. Optional Redemption.
The Company may redeem the Securities at any time on or after
November 15, 2001 in whole, or in part from time to time, at the following
redemption prices (expressed as a percentage of principal amount), plus accrued
and unpaid interest to the redemption date:
If redeemed during the 12-month period beginning November 15,
Year Percentage
---- ----------
2001 . . . . . . . . . . . . . . . . . 104.375%
2002 . . . . . . . . . . . . . . . . . 102.917%
2003 . . . . . . . . . . . . . . . . . 101.458%
2004 and thereafter . . . . . . . . . 100.000%
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of Securities to be
redeemed at its, his or her registered address. Securities in denominations
larger than $1,000 may be redeemed in part. On and after the redemption date
interest ceases to accrue on Securities or portions of them called for
redemption, provided that if the Company shall default in the payment of such
Security at the redemption price together with accrued interest, interest shall
continue to accrue at the rate borne by the Securities.
7. Selection for Redemption.
If less than all of the Securities are to be redeemed,
selection of the Securities to be redeemed will be made by the Trustee, if the
Securities are listed on a national securities exchange, in accordance with the
rules of such exchange, or if the Securities are not so listed, on either a pro
rata basis or by lot or by another method that the Trustee deems fair and
appropriate.
8. Subordination.
The Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company (as defined in
the Indenture). The Guarantee will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor (as defined in
the Indenture).
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<PAGE>
9. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples thereof. A holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Securities selected
for redemption. Also, it need not transfer or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed is scheduled.
10. Person Deemed Owner.
The registered holder of a Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, holders entitled to the money must look
to the Company or, if applicable, the Guarantor for payment unless an abandoned
property law designates another person.
12. Discharge Prior to Redemption or Maturity.
The Indenture will be discharged and canceled except for
certain Sections thereof, subject to the terms of the Indenture, upon the
payment of all the Securities or upon the deposit with the Trustee, within not
more than one year prior to the maturity or redemption of the Securities, of
funds sufficient for such payment or redemption. In the case of such a deposit,
Securityholders must look to the deposited money for payment.
13. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the holders of at least a
majority in principal amount of the Securities, and any past default or
compliance with any provision may be waived with the consent of the holders of a
majority in principal amount of the Securities. Without the consent of any
Securityholder, the Company may amend or supplement the Indenture or the
Securities to cure any ambiguity, defect or inconsistency; to comply with
Article 5 of the Indenture (providing for the assumption of the obligations of
the Company or the Guarantor under the Indenture by a successor corporation); to
provide for uncertificated Securities in addition to or in place of certificated
Securities; or to make any change that does not adversely affect the rights of
any Securityholder.
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<PAGE>
14. Successor Corporation.
When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.
15. Defaults and Remedies.
An Event of Default is: (i) failure of the Company or the
Guarantor to pay (whether or not prohibited by any subordination provision)
interest for 30 days or principal or premium, if any, when due; (ii) failure of
the Company or Guarantor to perform any other covenant under the Indenture for
60 days after receipt of notice; (iii) default in the payment of indebtedness of
the Company, the Guarantor or any Subsidiary under the terms of the instrument
evidencing or securing such indebtedness permitting the holder thereof to
accelerate the payment of in excess of an aggregate of $2,000,000 in principal
amount of such indebtedness (after the lapse of applicable grace periods) or, in
the case of non-payment defaults, acceleration of any such indebtedness if such
acceleration is not rescinded or annulled within 10 days after such
acceleration, provided that, subject to the terms of the Indenture, the term
"indebtedness" shall not include an acceleration of or default on certain
Non-Recourse Indebtedness (as defined in the Indenture); (iv) entry of a final
judgment for the payment of money in an amount in excess of $2,000,000 against
the Company, the Guarantor or any Subsidiary which remains undischarged or
unstayed for a period of 60 days after the date on which the right to appeal has
expired, provided the term "final judgment" at such time as the Company's
10 1/2% Senior Subordinated Notes due 2002 (and any related guarantee) are no
longer outstanding, shall not include a Non-Recourse Judgment (as defined in
the Indenture) unless the book value of all property (net of any previous
write-downs or reserves in respect of such property) subject to such
Non-Recourse Judgment exceeds the amount of such Non-Recourse Judgment by more
than $5,000,000; (v) certain events of bankruptcy, insolvency or reorganization
with respect to the Company or the Guarantor; or (vi) the Guarantee shall for
any reason (other than pursuant to its terms) cease to be in full force and
effect.
The Indenture provides that the Trustee will, within 90 days
after the occurrence of a Default known to the Trustee, give the Holders notice
of the Default (the term "Default" to include the events specified above,
without grace or notice), provided that, except in the case of Default in the
payment of principal of or interest on any of the Securities, the Trustee shall
be protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the Securityholders.
In case an Event of Default (other than an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization with
respect to the Company or the Guarantor) occurs and is continuing, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding, by notice in writing to the Company (and to the
Trustee if given by the Securityholders), may declare the unpaid principal of
and accrued and unpaid interest on all the Securities to be due and payable (i)
if (a) no
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<PAGE>
Designated Senior Debt of the Company or the Guarantor (as defined in the
Indenture) is outstanding, or (b) the Securities are not subordinated to other
indebtedness of the Company, immediately, or (ii) if Designated Senior Debt of
the Company or the Guarantor is outstanding and the Securities are subordinated
to other indebtedness of the Company, upon the earlier of (A) ten days after
such Acceleration Notice is received by the Company and (B) the acceleration of
any Senior Indebtedness of the Company or the Guarantor. In case an Event of
Default arising out of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or the Guarantor occurs and is
continuing, the outstanding principal of and accrued and unpaid interest on the
Securities shall ipso facto become and be due and payable immediately, without
declaration or any further act on the part of the Trustee or any Securityholder.
Such declaration or acceleration and its consequences may be
rescinded by holders of a majority in principal amount of outstanding Securities
if all existing Events of Default have been cured and waived (except non-payment
of principal or interest that has become due solely because of the acceleration)
and if the rescission would not conflict with any judgment or decree.
Defaults (except a default in payment of principal of, or
premium, if any, or interest on the Securities or a default with respect to a
provision which cannot be modified under the terms of the Indenture without the
consent of each Securityholder affected) may be waived on behalf of all holders
by the holders of a majority in principal amount of outstanding Securities upon
the conditions provided in the Indenture.
The Indenture requires the Guarantor to file periodic reports
with the Trustee as to the absence of defaults.
16. Trustee, Dealings with Company.
NBD Bank, a Michigan banking corporation, the Trustee under
the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company, the Guarantor or
their affiliates, and may otherwise deal with the Company, the Guarantor or
their affiliates, as if it were not Trustee.
17. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or the Guarantor shall not have any liability for any obligations of the
Company or the Guarantor under the Securities, the Guarantee or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
18. Authentication.
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<PAGE>
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
19. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture. Requests may be made to:
Secretary, Toll Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley,
Pennsylvania 19006.
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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to have this Security purchased by the Company pursuant to
Section 4.06 of the Indenture, check the box / /
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 of the Indenture, state the amount: $
Date: Your Signature:
----------------------- ----------------------------------
(sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:
------------------------------------
Note: Signature(s) must be guaranteed by a member firm of a major stock exchange
or a commercial bank or trust company.
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<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
----------------------- -----------------------------------
(sign exactly as your name appears
on the other side of this Security)
Note: Signature(s) must be guaranteed by a member firm of a major stock exchange
or a commercial bank or trust company.
-8-
<PAGE>
GUARANTEE
Toll Brothers, Inc. (hereinafter referred to as the "Guarantor," which
term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed), has
unconditionally guaranteed on a senior subordinated basis (i) the due and
punctual payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal of and interest, if any, on the Securities, to the
extent lawful, and the due and punctual performance of all other obligations of
the Company to the Holders or the Trustee under the Indenture and the Security
all in accordance with the terms set forth in Article 7 of the Indenture and
(ii) in case of any extension of time of payment or renewal of any Securities or
any of such other obligations, that the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holders of the Securities and
to the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth and are expressly subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor, to the extent
and in the manner provided in Article 7 of the Indenture and reference is hereby
made to the Indenture for the precise terms of the Guarantee and the
subordination thereof therein made.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under the
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which this Guarantee is
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
TOLL BROTHERS, INC.
By
--------------------------------
Joel H. Rassman
Chief Financial Officer
By
--------------------------------
Joseph R. Sicree
Chief Accounting Officer
(Seal)
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<PAGE>
