As filed with the Securities and Exchange Commission,
via EDGAR, on October 21, 1997.
Registration Nos. 333-__________ and 333-___________-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
TOLL CORP.
TOLL BROTHERS, INC.
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(Exact name of each registrant as specified in its charter)
23-2485860 - Toll Corp.
Delaware 23-2416878 - Toll Brothers, Inc.
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(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation
of each registrant)
3103 Philmont Avenue
Huntingdon Valley, Pennsylvania 19006
(215) 938-8000
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(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
Robert I. Toll
Chairman of the Board and
Chief Executive Officer
Toll Brothers, Inc.
3103 Philmont Avenue
Huntingdon Valley, Pennsylvania 19006
(215) 938-8000
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Mark K. Kessler, Esquire
Wolf, Block, Schorr and Solis-Cohen LLP
Twelfth Floor Packard Building
111 South 15th Street
Philadelphia, Pennsylvania 19102
(215) 977-2000
--------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]_______________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_______________
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [X]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate offering Amount of
securities to be registered registered(1) per unit(2) price(2)(3) registration fee(8)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value(4).......
Preferred Stock, $.01 par value(5).... $289,000,000 100% $289,000,000 $87,576.00
Debt Securities(6)....................
Guarantees(7).........................
==============================================================================================================================
</TABLE>
(1) In United States Dollars or the equivalent thereof in one or more foreign
currencies or units of two or more foreign currencies or composite
currencies, including the European Currency Unit. The aggregate initial
offering price of all securities issued from time to time pursuant to this
Registration Statement will not exceed $289,000,000. Such amount represents
(i) the issue price of any Common Stock, (ii) the liquidation preference
(or, if different, the issue price) of any Preferred Stock, and (iii) the
principal amount of any Debt Securities issued at their principal amount or
the issue price rather than the principal amount of any Debt Securities
issued at an original issue discount.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933. The proposed
maximum offering price per unit will be determined from time to time by the
registrant issuing such units or, in the case of an issuance of units which
includes a Guarantee, by the Registrants.
<PAGE>
(3) No separate consideration will be received for (i) any Guarantee or any
Common Stock, Preferred Stock or Debt Securities that may be issuable upon
conversion of or in exchange for convertible or exchangeable Preferred Stock
or Debt Securities (including any securities issuable upon stock splits or
similar transactions pursuant to Rule 416 under the Securities Act of 1933).
(4) Subject to Footnote (1), there are being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from time to
time, by Toll Brothers, Inc. There are also being registered hereunder an
indeterminate number of shares of Common Stock as may be issuable upon
conversion of, or in exchange for, or upon exercise of, convertible or
exchangeable Debt Securities or Preferred Stock.
(5) Subject to Footnote (1), there are being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold, from time
to time, by Toll Brothers, Inc. There are also being registered hereunder an
indeterminate number of shares of Preferred Stock as may be issuable upon
conversion of, or in exchange for, or upon exercise of, convertible or
exchangeable Debt Securities or Preferred Stock.
(6) Subject to Footnote (1), there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold, from time
to time, by Toll Corp. There is also being registered hereunder an
indeterminate principal amount of such Debt Securities as may be issuable
upon conversion of, or in exchange for, or upon exercise of, convertible or
exchangeable Debt Securities or Preferred Stock.
(7) Each of the Debt Securities issued by Toll Corp. will be accompanied by a
Guarantee to be issued by Toll Brothers, Inc.
(8) The prospectus forming a part of this Registration Statement, as such
prospectus may be amended or supplemented from time to time (the
"Prospectus"), shall be deemed to relate to the $289,000,000 of Securities
being registered pursuant to this Registration Statement and, pursuant to
Rule 429 under the Securities Act of 1933, to $11,000,000 of securities
registered pursuant to the Registration Statement on Form S-3 of the
Registrants, Commission File Nos. 333-35775 and 333-35775-01 (the "Prior
Registration Statement"). The amount of filing fees associated with such
securities registered pursuant the Prior Registration Statement (calculated
at 1/33 of one percent of the amount of securities registered, the fee in
effect at the time of filing of the Prior Registration Statement) is
approximately $3,333.
--------------------
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus also
relates to securities registered pursuant to the Prior Registration Statement.
--------------------
The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
================================================================================
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER 21, 1997
TOLL BROTHERS, INC.
Common Stock
Preferred Stock
Guarantees
TOLL CORP.
Debt Securities
Toll Brothers, Inc. (the "Company") may from time to time offer (i) shares
(the "Common Shares") of its Common Stock, $.01 par value per share (the "Common
Stock"), (ii) shares (the "Preferred Shares") of its Preferred Stock, $.01 par
value per share (the "Preferred Stock"), and (iii) unconditional and irrevocable
guarantees ("Guarantees") of debt securities issued by Toll Corp. ("Toll"), a
wholly-owned subsidiary of the Company. Toll may offer from time to time debt
securities (the "Debt Securities"), consisting of debentures, notes and/or other
unsecured evidences of indebtedness in one or more series, guaranteed by the
Company. The foregoing securities are collectively referred to as the
"Securities." Any Securities may be offered with other Securities or separately
(except for Guarantees, which may only be offered with Debt Securities).
Securities may be sold for U.S. dollars, foreign currency or currency units,
including the European Currency Unit; amounts payable with respect to any
Securities may likewise be payable in U.S. dollars, foreign currency or currency
units, including the European Currency Unit -- in each case, as the Company (or,
in the case of Debt Securities, Toll) specifically designates. The Securities
will be offered at an aggregate initial offering price not to exceed U.S.
$300,000,000, or the equivalent thereof (based on the applicable exchange rate
at the time of sale) if Debt Securities are issued in principal amounts
denominated in one or more foreign currencies or currency units as shall be
designated by Toll, at prices and on terms to be determined at the time of sale.
This Prospectus will be supplemented by one or more Prospectus Supplements,
which will set forth with regard to the particular Securities in respect of
which this Prospectus is being delivered (i) in the case of Common Shares, the
aggregate number of Common Shares offered, the public offering price and the
other terms of the offering thereof, (ii) in the case of Preferred Shares, the
aggregate number of Preferred Shares offered, the specific designation and
stated value, any dividend, liquidation preference, redemption, sinking fund,
voting or other rights, the terms for conversion into or exchange for other
Securities, if any, including the terms of any Securities into or for which they
are convertible or exchangeable, the initial public offering price and any
securities exchange listings, and (iii) in the case of Debt Securities, the
title, aggregate principal amount, currency or currencies of denomination,
initial offering price, maturity, interest rate or rates, if any (which may be
either variable or fixed), and/or the method of determination thereof, the time
of payment of any interest, any terms for redemption, extension or early
repayment, any provision for sinking fund payments, rank, any conversion or
exchange
-1-
<PAGE>
rights, whether such Debt Securities are issuable in individual registered form
with or without coupons, any listing on a securities exchange, the net proceeds
to the Company and any other specific terms, including any covenants, relating
to such series of Debt Securities. The Prospectus Supplement will also contain
information, as applicable, about certain United States Federal income tax
considerations relating to the Securities in respect of which this Prospectus is
being delivered.
The Company or Toll may sell the Securities to or through dealers or
underwriters, and also may sell the Securities directly to other purchasers or
through agents. See "Plan of Distribution." If an agent of the Company or Toll
or a dealer or an underwriter is involved in the sale of the Securities in
respect of which this Prospectus is being delivered, the agent's commission or
dealer's purchase price or underwriter's discount will be set forth in, or may
be calculated from, the Prospectus Supplement. Any underwriters, dealers or
agents participating in the offering of Securities may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended. See
"Plan of Distribution" for possible indemnification arrangements for any agents,
dealers or underwriters.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _________, 1997.
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
-3-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy and
information statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission, Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, DC 20549, and at the Regional Offices
of the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, DC 20549, at prescribed rates. The Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements, and other information regarding registrants, such as the
Company, that file electronically with the Commission. The Common Stock is
listed on the New York Stock Exchange and the Pacific Exchange. Reports,
proxy and information statements and other information concerning the Company
may be inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005 and the Pacific Exchange, 301 Pine Street, San
Francisco, California 94104.
The Company and Toll have filed a Registration Statement on Form S-3
(herein, together with all amendments thereto, called the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with the Commission, with respect to the Securities covered by this Prospectus.
Toll does not expect that it will be required to file reports with the
Commission pursuant to Section 15(d) of the Exchange Act. In this regard, Toll
will not make available annual reports to security holders. For further
information with respect to Toll and the Company and the Securities offered
hereby, reference is hereby made to the Registration Statement and exhibits
thereto. Statements contained in this Prospectus concerning the provisions of
certain documents are not necessarily complete and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. Copies of all or any part of the Registration Statement, including
exhibits thereto, may be obtained, upon payment of the prescribed fees, at the
offices of the Commission as set forth above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference (i) the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1996 (ii) the
Company's Quarterly Reports on Form 10-Q for the quarters ended January 31,
1997, April 30, 1997 and July 31, 1997, (iii) the Company's Current Reports on
Form 8-K dated June 20, 1997 and September 17, 1997, (iv) the description of the
Company's Common Stock contained in its Registration Statement on Form 8-A dated
June 19, 1986, and (v) the description of preferred stock purchase rights
contained in the Company's registration statement on Form 8-A dated June 20,
1997. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus from the date of filing such
documents
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<PAGE>
except as to any portion of any future annual or quarterly report to the
Company's stockholders or proxy statement which is not deemed to be filed under
those provisions. Any statement contained in this Prospectus, or in a document
all or a portion of which is incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein (or in any other subsequently filed document which
is also incorporated by reference herein) modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed to constitute a part
of this Prospectus, except as so modified or superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
herein by reference, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). All such
requests should be addressed to: Joseph R. Sicree, Director of Investor
Relations, Toll Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley, PA
19006, (215) 938-8000.
THE COMPANY
The Company designs, builds, markets and arranges financing for
single-family detached and attached homes in middle and high income residential
communities catering to both move-up and empty nester home buyers in fifteen
states and six regions around the country. The Company operates predominantly in
major suburban residential areas in southeastern Pennsylvania, central New
Jersey, the Virginia and Maryland suburbs of Washington, D.C., the Boston,
Massachusetts metropolitan area, southern Connecticut, Westchester County, New
York, Orange County and Los Angeles County, California, the suburbs of Raleigh
and Charlotte, North Carolina and Scottsdale, Arizona. It is also developing
communities in Nassau County, New York, in northern Delaware, in McKinney,
Texas, a northern suburb of Dallas, in Austin, Texas, in several markets on the
west coast of and in southeast Florida, in Columbus, Ohio, and in Nashville,
Tennessee. The Company has also acquired property in the San Francisco Bay area
where it expects to begin offering homes for sale in 1998.
In recognition of the Company's achievements, it has received numerous
awards from national, state and local homebuilder publications and associations.
In fiscal 1996, the Company was selected "America's Best Builder" by the
National Association of Home Builders (the "NAHB") and Builder magazine in
recognition of its excellent financial performance, unique custom-production
system for building luxury homes in high volume and the excellence of its
designs. The Company also received the National Housing Quality Award from the
NAHB, which recognized the Company's outstanding commitment to total quality
management and continuous improvement. In 1994, the Company was named a first
place award winner in the "Build America Beautiful" Awards Program, sponsored by
Better Homes and Gardens magazine, the NAHB and Keep America Beautiful, Inc. in
recognition of the Company's programs to improve the handling of solid waste on
construction sites. In addition, the Company was named "The Builder of the Year"
in 1988 by Professional Builder magazine.
Co-founded by Robert I. Toll and Bruce E. Toll, the Company commenced its
business operations, through predecessor entities, in 1967. The Company is a
Delaware corporation that
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<PAGE>
was formed in May 1986. Its principal executive offices are located at 3103
Philmont Avenue, Huntingdon Valley, Pennsylvania 19006, and its telephone number
is (215) 938-8000.
Toll Corp. ("Toll"), an indirect, wholly-owned subsidiary of the Company,
was incorporated in Delaware in July 1987. Other than the financing of other
subsidiaries of the Company by lending the proceeds of the offering of the
Debt Securities and similar activities related to previous offerings of debt
securities, Toll has no independent operations and generates no operating
revenues. There is no present intention to have Toll engage in other activities.
Toll's principal executive offices are located at 3103 Philmont Avenue,
Huntingdon Valley, Pennsylvania 19006, and its telephone number is (215)
938-8000.
THE HOUSING INDUSTRY
Residential real estate developers, including the Company, are subject to
various risks, both on the national and regional levels, such as economic
recession, oversupply of homes, changes in governmental regulation, effects of
environmental factors, increases in real estate taxes and costs of materials and
labor, and the unavailability of construction funds or mortgage loans at rates
acceptable to builders and home buyers. The Company's business and earnings are
substantially dependent on its ability to obtain financing on acceptable terms
for its development activities. Increases in interest rates could reduce the
funds available to the Company for its future operations and would increase the
Company's expenses. In addition, increases in interest rates may have an adverse
effect upon the Company's sales and could affect the availability of home
financing to present and potential customers of the Company.
The housing industry has been subject to increasing environmental,
building, zoning and sales regulation by various federal, state and local
authorities. This regulation affects construction activities as well as sales
activities and other dealings with consumers. For its development activities,
the Company must obtain the approval of numerous governmental authorities, and
changes in local circumstances or applicable law may necessitate the application
for additional approvals or the modification of existing approvals. Expansion of
regulation has increased the time required to obtain the necessary approvals to
begin construction and has prolonged the time between the initial acquisition of
land or land options and the commencement and completion of construction.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes including acquisition of residential development
properties.
The specific use of proceeds of any Securities issued hereunder will be
more particularly set forth in the applicable Prospectus Supplement.
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<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's historical ratio of
earnings to fixed charges for the five years ended October 31, 1996 and the nine
months ended July 31, 1997:
<TABLE>
<CAPTION>
Year Ended October 31, Nine Months
------------------------------------ Ended
1992 1993 1994 1995 1996 July 31, 1997
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio, including collateralized mortgage financing(1) 2.63 2.72 3.37 3.82 3.87 3.30
</TABLE>
- ----------
(1)For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes, extraordinary gain (loss) and change in
accounting plus interest expense and fixed charges except interest incurred.
Fixed charges consist of interest incurred (whether expensed or capitalized),
the portion of rent expense that is representative of the interest factor, and
amortization of debt discount and issuance costs.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
Debt Securities may be issued from time to time in one or more Series (as
hereinafter defined) by Toll. All Series of Debt Securities will be offered
together with unconditional Guarantees issued by the Company. The particular
terms of each Series of Debt Securities, and the particular terms of the
Guarantees offered in connection therewith, will be set forth in the Indenture
(as hereinafter defined) and the Authorizing Resolution (as hereinafter defined)
relating to such Series of Debt Securities and will be described in the
applicable Prospectus Supplement.
The Debt Securities will be issued pursuant to a resolution adopted by the
Board of Directors (or an Officer or committee of Officers authorized by the
Board of Directors) of both Toll and the Company (an "Authorizing Resolution")
under an indenture (the "Indenture") to be entered into by the Company, Toll and
one or more Trustees prior to the issuance of such Debt Securities. Information
regarding the Trustee or Trustees with respect to any Series of Debt Securities
issued under an Indenture will be included in the related Prospectus Supplement.
The following is a summary of certain provisions of the Indenture and does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all of the provisions of the Indenture, including the
definitions therein of certain capitalized terms used in this Prospectus.
Wherever particular Sections, Articles or defined terms of the Indenture are
referred to herein or in a Prospectus Supplement, such Sections, Articles or
defined terms are incorporated herein or therein by reference. The following
sets forth certain general terms and provisions of the Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Debt Securities so offered, will be
described in the Prospectus Supplement relating to such Debt Securities. To the
extent reference is made herein or in a Prospectus Supplement to the terms of
any Debt Securities, such
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<PAGE>
descriptions do not purport to be complete and are subject to and are qualified
in their entirety by reference to, the Indenture pursuant to which such Debt
Securities are issued and the applicable Authorizing Resolution.
General
The Debt Securities will represent general unsecured obligations of Toll.
The Company will unconditionally guarantee the due and punctual payment of the
principal of, premium, if any, and interest, if any, on the Debt Securities,
when and as the same shall become due and payable, whether at maturity, by
declaration of acceleration, call for redemption or otherwise (the "Guarantee").
See "Guarantee of Debt Securities". An Indenture will not limit the aggregate
principal amount of Debt Securities which may be issued thereunder. Debt
Securities may be issued thereunder from time to time in one or more Series.
Because Toll has no independent operations and generates no operating revenues,
funds required to pay the principal and interest on the Debt Securities will be
derived from the Company and its other Subsidiaries (as defined in the
Indenture). There are no legal or contractual restrictions on the Company's or
such other Subsidiaries' ability to provide such funds.
Unless otherwise provided in the applicable Authorizing Resolution and
Prospectus Supplement, the payment of principal, premium, if any, and interest
on the Debt Securities will be subordinated in right of payment, in the manner
and to the extent set forth in the Indenture pursuant to which such Debt
Securities are issued, to the prior payment in full of all senior indebtedness
of Toll (referred to in the Indenture pursuant to which such Debt Securities are
issued as "Senior Indebtedness of the Company", as further defined in the
applicable Authorizing Resolution and Prospectus Supplement), whether
outstanding on the date of such Indenture or thereafter created, incurred,
assumed or guaranteed.
Reference is made to the applicable Authorizing Resolution and Prospectus
Supplement relating to the particular series (a "Series") of Debt Securities
offered thereby for the following terms: (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 Debt Securities of the Series; (6)
the dates when, places where and manner in which principal and interest are
payable; (7) the Registrar and Paying Agent; (8) the terms of any mandatory or
optional redemption by the issuer of such Series; (9) the terms of any
redemption at the option of holders of such Debt Securities; (10) the
denominations in which such Debt Securities are issuable; (11) whether such Debt
Securities will be issued in registered or bearer form and the terms of any such
forms of such Debt Securities; (12) whether any such Debt Securities will be
represented by a Global Security (as hereinafter defined) and, if applicable,
the terms of any Global Security (see "-- Registered Global Securities"); (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 such Debt Securities are denominated and the
manner for determining such payments; (15) any provisions for electronic
issuance of such Debt Securities or issuance of such Debt Securities in
uncertificated form; (16) any Events of Default or covenants in addition to or
in lieu of those set forth in this Prospectus; (17) whether and upon what terms
such Debt Securities may be defeased; (18) the form of such Debt Securities and
the Guarantees; (19) whether the Debt Securities of such Series will be
convertible into or exchangeable for Common
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<PAGE>
Stock 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 Prospectus); (20) whether the Debt Securities and Guarantees
of such Series shall be subordinated to any obligations of Toll or the Company,
and the obligations to which any such subordination will apply; (21) any terms
that may be required by or advisable under applicable law; and (22) any other
terms of such Series of Debt Securities.
In the event that any Debt Securities are to be issued at a discount, the
terms of such Debt Securities, certain special federal income tax and other
considerations applicable thereto will be described in the related Prospectus
Supplement.
Guarantee of Debt Securities
The Guarantee will constitute the Company's unconditional guarantee of the
due and punctual payment of the principal, premium, if any, and interest, if
any, on the Debt Securities, when and as the same shall become due and payable,
whether at maturity, by declaration of acceleration, call for redemption or
otherwise.
Unless otherwise provided in the applicable Authorizing Resolution and
described in the related Prospectus Supplement, the payment of principal,
premium, if any, and interest on the Debt Securities pursuant to the Guarantee
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 Company (referred to in the Indenture as "Senior Indebtedness of the
Guarantor", as further defined in the applicable Authorizing Resolution and
Prospectus Supplement), whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed or guaranteed.
Upon (i) the maturity of any senior indebtedness of the Company by lapse of
time, acceleration (unless waived) or otherwise or (ii) any distribution of the
assets of the Company upon any dissolution, winding up, liquidation or
reorganization of the Company, the holders of senior indebtedness of the Company
will be entitled to receive payment in full before the holders of any
outstanding Debt Securities will be entitled to receive any payment on such Debt
Securities pursuant to the Guarantee. If, in any of the situations referred to
in clause (i) or (ii) above, a payment is made to the Trustee or to holders of
the Debt Securities by the Company before all senior indebtedness of the Company
has been paid in full or provision has been made for such payment, the payment
to the Trustee or holders must be paid over to the holders of senior
indebtedness of the Company.
The Company's assets consist principally of the stock of its Subsidiaries.
Therefore, its rights and the rights of its creditors, including the holders of
Debt Securities under an Indenture, to participate in the assets of any
Subsidiary (other than Toll) upon liquidation, recapitalization or otherwise
will be subject to the prior claims of such Subsidiary's creditors (including
the banks that have provided and are providing to one of the Subsidiaries a
revolving credit facility under an agreement (the "Revolving Credit Agreement")
pursuant to which the Company and the other Subsidiaries (including Toll) have
guaranteed or will guarantee the obligations owing to such banks under the
Revolving Credit Agreement), except to the extent that claims of the Company
itself as a creditor of the Subsidiary may be recognized.
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<PAGE>
Conversion of Debt Securities
If so indicated in the applicable Authorizing Resolution and Prospectus
Supplement with respect to a particular Series of Debt Securities, such Series
will be convertible into Common Stock of the Company or other securities
(including rights to receive payments in cash or securities based on the value,
rate or price of one or more specified commodities, currencies, currency units
or indices) on the terms and conditions set forth in such Authorizing Resolution
and Prospectus Supplement.
Unless otherwise provided in the applicable Authorizing Resolution and
described in the related Prospectus Supplement, holders of Debt Securities of
any Series that are convertible will be entitled to convert the principal amount
or a portion of such principal amount which is an integral multiple of $1,000 at
any time prior to the date specified in the Debt Securities of such Series
(subject, if applicable, to prior redemption at the option of Toll) into Common
Shares at the conversion price set forth in the applicable Authorizing
Resolution and Prospectus Supplement, subject to adjustment as described below.
In the case of any Debt Security or portion thereof called for redemption,
conversion rights expire at the close of business on the second business day
preceding the redemption date. (Section 10.02).
The Company will not be required to issue fractional shares of Common Stock
upon conversion of the Debt Securities of a convertible Series but will pay a
cash adjustment in lieu thereof. (Section 10.04). Except as otherwise provided
in the Indenture, interest accrued shall not be paid on Debt Securities that are
converted. (Section 10.03).
The conversion price of the Debt Securities of a convertible Series will be
subject to adjustment in certain events, including (i) the subdivision,
combination or reclassification of the outstanding Common Stock of the Company,
(ii) the issuance of Common Stock as a dividend or distribution on Common Stock,
(iii) the issuance of rights or warrants (expiring within 45 days after the
record date for such issuance) to all holders of Common Stock entitling them to
acquire shares of Common Stock (or securities convertible into or exchangeable
for Common Stock) at less than the then Current Market Price (as defined in the
Indenture) of the Common Stock, or (iv) the distribution to all holders of
Common Stock rights or warrants to subscribe for securities of the Company other
than as referred to in (iii), or evidences of the Company's indebtedness or
assets (excluding certain cash dividends and certain other dividends or
distributions payable in stock or rights or warrants to subscribe to securities
of the Company). There will be no upward adjustment in the conversion price
except in the event of a reverse stock split. The Company is not required to
make any adjustment in the conversion price of less than 1%, but the same will
be carried forward and taken into account in the computation of any subsequent
adjustment. (Section 10.05).
Conversion price adjustments or omissions in making such adjustments may,
under certain circumstances, be deemed to be distributions that could be taxable
as dividends under the Internal Revenue Code to holders of Debt Securities or to
holders of Common Stock.
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the continuing
corporation), or any sale or conveyance to another corporation of the property
of the Company as an entirety or substantially as an entirety, or any statutory
exchange of securities with another corporation, there will be no
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adjustments to the conversion price of the Debt Securities of any convertible
Series as set forth above, but the holder of each such convertible Debt Security
then outstanding will have the right to convert such Debt Security into the kind
and amount of securities, cash or other property which such holder would have
owned or have been entitled to receive immediately after such transaction had
such Debt Security been converted immediately prior to the effective date of
such transaction. (Section 10.10).
Form, Exchange, Registration, Conversion, Transfer and Payment
Unless otherwise indicated in the applicable Authorizing Resolution and
Prospectus Supplement, each Series of Debt Securities will be issued in
registered form only, without coupons. Unless otherwise indicated in the
applicable Authorizing Resolution and Prospectus Supplement, payment of
principal, premium, if any, and interest, if any, on the Debt Securities will be
payable, and the exchange, conversion and transfer of Debt Securities will be
registerable, at the office or agency of Toll maintained for such purposes and
at any other office or agency maintained for such purposes. (Section 2.03).
Subject to certain exceptions set forth in the Indenture, Toll may charge a
reasonable fee for any registration of transfer or exchange of such Debt
Securities (including payment of a sum sufficient to cover any tax or other
governmental charge imposed or expenses incurred in connection therewith).
(Section 2.06).
All monies paid by Toll to the Trustee and Paying Agent for the payment of
principal of, premium, if any, or interest on any Debt Security which remain
unclaimed for two years after such principal, premium or interest has become due
and payable may be repaid to Toll and thereafter the holder of such Debt
Security may look only to Toll or, if applicable, the Company, for payment
thereof. (Section 11.03).
Registered Global Securities
Unless otherwise indicated in the applicable Authorizing Resolution and
Prospectus Supplement, the registered Debt Securities of a Series may be issued
in the form of one or more registered global Debt Securities (the "Global
Securities") that will be deposited with and registered in the name of a
depositary (each, a "Depositary") or its nominee identified in the applicable
Prospectus Supplement. In such case, one or more registered Global Securities
will be issued, each in a denomination equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such registered Global Security. Unless and until it is exchanged
in whole or in part for Debt Securities in definitive registered form, a
registered Global Security may not be transferred except as a whole by the
Depositary for such registered Global Security to a nominee of such Depositary,
or by such a nominee to such Depositary or to another nominee of such
Depositary, or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a registered Global
Security will be described in the applicable Prospectus Supplement. The Company
anticipates that the following provisions will apply to all depositary
arrangements.
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Ownership of beneficial interests in a registered Global Security will be
limited to persons that have accounts with the Depositary for such registered
Global Security (collectively, the "participants") or persons holding interests
through participants. Upon the issuance of a registered Global Security, the
Depositary for such registered Global Security will credit, on its book-entry
registration and transfer system, the participants' accounts with the respective
principal amounts of the Debt Securities represented by such registered Global
Security beneficially owned by such participants. The accounts to be credited
shall be designated by any dealers, underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in such
registered Global Security will be shown on, and the transfer of such ownership
interests will be effected only through, records maintained by the Depositary
for such registered Global Security (with respect to interests of participants)
and on the records of participants (with respect to interests of persons holding
through participants). The laws of certain states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to own, transfer or
pledge beneficial interests in registered Global Securities.
So long as the Depositary for a registered Global Security, or its nominee,
is the registered owner of such registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such registered Global Security for all
purposes under the Indenture applicable thereto. Except as set forth below,
owners of beneficial interests in a registered Global Security will not be
entitled to have the Debt Securities represented by such registered Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of such Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture applicable thereto.
Accordingly, each person owning a beneficial interest in a registered Global
Security must rely on the procedures of the Depositary for such registered
Global Security and, if such person is not a participant, on the procedures of
the participant through which such person owns its interests, to exercise any
rights of a holder under the Indenture applicable to such registered Global
Security. The Company understands that under existing industry practices, if the
Company requests any action of holders, or if an owner of a beneficial interest
in a registered Global Security desires to give or take any action which a
holder is entitled to give or take under the applicable Indenture, the
Depositary for such registered Global Security would authorize the participants
holding the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners holding through them.
Principal, premium, if any, and interest payments on Debt Securities
represented by a registered Global Security registered in the name of a
Depositary, or its nominee, will be made to such Depositary or its nominee, as
the case may be, as the registered owner of such registered Global Security.
None of Toll, the Company, the Trustee under the applicable Indenture or any
other agent of Toll or the Company or agent of such Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such registered
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
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The Company expects that the Depositary for any Debt Securities represented
by a registered Global Security, upon receipt of any payment of principal,
premium or interest in respect of such registered Global Security, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in such registered Global Security as
shown on the records of such Depositary. The Company also expects that payments
by participants to owners of beneficial interests in such registered Global
Security held through such participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a registered
Global Security is at any time unwilling or unable to continue as Depositary or
ceases to be a clearing agency registered under the Exchange Act, and a
successor Depositary registered as a clearing agency under the Exchange Act is
not appointed by the Company within 90 days, the Company will issue such Debt
Securities in definitive form in exchange for such registered Global Security.
In addition, the Company may at any time and in its sole discretion determine
not to have any of the Debt Securities of a series represented by one or more
registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive form in exchange for each registered Global Security
representing such Debt Securities. Any Debt Securities issued in definitive form
in exchange for a registered Global Security will be registered in such name or
names as the Depositary shall instruct the Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such
registered Global Security.
Events of Default and Notice Thereof
Unless otherwise indicated in the applicable Prospectus Supplement, the
term "Event of Default" when used in the Indenture means any one of the
following: failure by the Company or Toll to pay (whether or not prohibited by
any subordination provisions) interest for 30 days or principal or premium, if
any, when due on such Debt Securities; failure by the Company or Toll to perform
any other covenant under the Indenture, the Guarantee or the Debt Securities for
60 days after receipt of notice by the Trustee or the holders of at least 25% in
principal of the Debt Securities of the Series affected; default in the payment
of indebtedness of the Company or Toll 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 ten days
after such acceleration, provided that, subject to certain limitations as set
forth in the Indenture, the term "indebtedness" shall not include an
acceleration of or default on certain Non-Recourse Indebtedness (as hereinafter
defined); entry of a final judgment for the payment of money in an amount in
excess of $2,000,000 against Toll, the Company 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 that the term "final judgment" shall not
include a Non-Recourse Judgment (as hereinafter defined) 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; certain events of
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bankruptcy, insolvency or reorganization with respect to the Company or Toll;
or, the Guarantee ceasing (other than pursuant to its terms) to be in full force
and effect. (Section 8.01).
"Non-Recourse Indebtedness" means, as to the Indenture, 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 Company or any Subsidiary (other
than the Subsidiary which holds title to such, property) for any deficiency.
"Non-Recourse Judgment" means, as to the Indenture, 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
Company or any Subsidiary (other than the Subsidiary which holds title to such
property) for any deficiency.
The Indenture will provide that if a default on a Series of Debt Securities
occurs and is continuing and is known to the Trustee for such Series, the
Trustee will, within 90 days after the occurrence of such Default, mail to the
Holders of Debt Securities issued thereunder 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
premium, if any, or interest on any of the Debt 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 Holders of such Debt
Securities. (Section 9.05).
If an Event of Default with respect to Debt Securities of any Series at the
time outstanding (other than an Event of Default resulting from certain events
of bankruptcy, insolvency or reorganization with respect to the Company or Toll)
occurs and is continuing, either the Trustee or the holders of at least 25% in
aggregate principal amount of the outstanding Debt Securities of that Series may
by notice to Toll (the "Acceleration Notice") declare the principal amount of
and accrued and unpaid interest on all the Debt Securities of that Series to be
due and payable if, with respect to Debt Securities of such Series: (i)(a) no
designated senior debt of the Company or Toll (referred to in the Indenture as
"Designated Senior Debt of the Guarantor" and "Designated Senior Debt of the
Company", respectively, as such term is further defined in the applicable
Authorizing Resolution and Prospectus Supplement) is outstanding or (b) if the
Debt Securities of such Series are not subordinated to other indebtedness of
Toll, immediately; or (ii) if Designated Senior Debt of the Company or Toll is
outstanding and the Debt Securities of such Series are subordinated to other
indebtedness of Toll, upon the earlier of (A) ten days after such Acceleration
Notice is received by Toll or (B) the acceleration of any Senior Indebtedness of
the Guarantor or Toll. If an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization with respect to the Company or Toll
occurs with respect to a Series of Debt Securities, the unpaid principal amount
of and accrued and unpaid interest on the Debt Securities of such Series shall
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holder of Debt Securities. At any time after a
declaration of acceleration with respect to Debt Securities of any Series has
been made, but before a judgment or decree based on acceleration has been
obtained, the holders of a majority in aggregate principal amount of outstanding
Debt Securities of that Series may rescind such acceleration, provided that,
among other things, all Events of Default
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with respect to such Series, other than payment defaults caused by such
acceleration, have been cured or waived as provided in the Indenture.
(Section 8.02).
Defaults with respect to a Series of Debt Securities (except a default in
payment of principal of, or premium, if any, or interest on such Debt
Securities, as the case may be) may be waived on behalf of all holders by the
holders of a majority in outstanding principal amount of the Debt Securities of
that Series issued under the Indenture, upon the terms and subject to the
conditions provided in the Indenture. (Section 8.04).
The Indenture includes a covenant that Toll and the Company will file
annually with the Trustee a signed statement regarding compliance by the Company
and Toll with the terms thereof and specifying any default of which the signers
have knowledge. (Section 4.03).
Additional Provisions
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to perform any duty or to exercise any of its rights or powers under
the Indenture, unless the Trustee shall have received indemnity satisfactory to
it against any loss, liability or expense. (Section 9.01). Subject to such
provisions for the indemnification of the Trustee and certain other conditions,
the holders of a majority in aggregate principal amount of the outstanding Debt
Securities of any Series will have the right to 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 the Trustee, with respect to the Debt
Securities of that Series. (Section 8.05).
No holder of any Debt Security of any Series will have any right to pursue
any remedy with respect to the Indenture or the Debt Securities of that Series,
unless: (i) such holder shall have previously given to the Trustee written
notice of a continuing Event of Default; (ii) the holders of not less than 25%
in aggregate principal amount of the outstanding Debt Securities of such Series
make a written request to the Trustee to pursue the remedy; (iii) such holders
shall have offered the Trustee indemnity satisfactory to it against any loss,
liability or expense; (iv) the Trustee shall have failed to comply with such
holders' request within 60 days after receipt of such written request and offer
of indemnity; and (v) the Trustee shall not have received from the holders of a
majority in principal amount of the outstanding Debt Securities of that Series a
direction inconsistent with such request. (Section 8.06). However, the holder of
any Debt Security will have an absolute right to receive payment of the
principal of and interest on such Debt Security on or after the respective due
dates expressed in such Debt Security and to bring suit for the enforcement of
any such payment. (Section 8.07).
Merger or Consolidation
Neither the Company nor Toll 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 Toll, as
the case may be, under the Indenture and either the Guarantee or the Debt
Securities, as the case may be; (ii) immediately after giving effect to such
transaction no Default or Event of
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Default (as defined in the Indenture) 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 Toll, as the case may
be. Thereafter, all such obligations of a predecessor corporation shall
terminate. (Section 5.01).
Modification of an Indenture
The obligations of the Company and Toll and the rights of the holders of
the Debt Securities may be modified under the Indenture with the consent of the
holders of a majority in outstanding principal amount of any Series of Debt
Securities affected by such modification; provided that no extension of the
maturity of any Debt Securities, no reduction in the rate or extension of time
of payment of interest thereon, no reduction of the principal amount thereof or
premium thereon, no change in the redemption provisions, no change that
adversely affects the right to convert or the conversion price for any Series of
Debt Securities, no reduction of the percentage required for any such
modification, no waiver of a default in the payment of the principal, premium,
if any, or interest on any Series of Debt Securities, no modification of the
subordination or guarantee provisions in a manner adverse to holders of any
Series of Debt Securities, no change in the medium of payment other than stated
in the Debt Securities and no change in the provisions regarding amendments to
the Indenture or waiver of Defaults or Events of Default will be effective
against any holders of any Series of Debt Securities without such holder's
consent. (Section 12.02).
Governing Law
The Indenture, the Debt Securities and the Guarantee shall be governed by
the laws of the State of New York. (Section 13.09).
Satisfaction and Discharge of Indenture
Unless otherwise provided in the applicable Authorizing Resolution and
Prospectus Supplement, the Indenture will be discharged upon payment of all the
Series of Debt Securities issued thereunder or upon deposit with the Trustee,
within one year of the date of maturity or redemption of all of the Series of
Debt Securities issued thereunder, of funds sufficient for such payment or
redemption.
Reports to Holders of Debt Securities
The Company and Toll will file with the Trustee copies of their annual
reports and other information, documents and reports as filed with the
Commission. So long as the Company's obligations to file such reports or
information with the Commission are suspended or terminated, the Company will
file with the Trustee audited annual financial statements prepared in accordance
with generally accepted accounting principles and unaudited condensed quarterly
financial statements. Such financial statements shall be accompanied by
management's discussion and analysis of the results of operations and financial
condition of the Company for the period reported upon in substantially the form
required under the rules and regulations of the Commission currently in effect.
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DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, $.01 par value per share, and 1,000,000 shares of Preferred Stock,
$.01 par value per share; however, subject to the limitations and procedures
described below, the Company's shareholders have authorized increases up to
60,000,000 shares of Common Stock and 15,000,000 shares of Preferred Stock. In
March 1993, to reduce applicable state taxes on authorized shares of capital
stock, the Company's shareholders approved a series of amendments to the
Company's Certificate of Incorporation pursuant to which: (i) the authorized
Common Stock was reduced from 60,000,000 shares to 40,000,000 shares and the
authorized Preferred Stock was reduced from 15,000,000 shares to 1,000,000
shares; and (ii) the authorized Common Stock and Preferred Stock could
subsequently be increased in five intermediate steps, over a five year period
ending March 11, 1998 up to the original levels, upon the filing of the
appropriate amendments by the Company's Board of Directors. If all such
amendments are filed before March 11, 1998, the Company's authorized Common
Stock and Preferred Stock will be restored to 60,000,000 shares and 15,000,000
shares, respectively.
Common Stock
Subject to the rights and preferences of any holders of Preferred Stock (no
shares of which currently are outstanding), the holders of the Company's Common
Stock are entitled to one vote per share, to receive such dividends as legally
may be declared by the Board of Directors and to receive pro rata the net assets
of the Company upon liquidation. There are no cumulative voting, preemptive,
conversion or redemption rights applicable to the Common Stock. Persons casting
a majority of the votes in the election of directors will be entitled to elect
all of the directors.
On June 12, 1997, the Board of Directors of the Company adopted a
Stockholder Rights Plan providing that one right (a "Right") shall be attached
to each share of the Company's common stock. Each Right entitles the registered
holder to purchase from the Company a unit consisting of one one-thousandth of a
share of Series A Junior Participating Preferred Stock of the Company at a
purchase price of $100 per unit. Initially the Rights will be attached to all
Common Stock certificates and no separate Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a distribution
date will occur upon the earlier of ten days following a public announcement
that a person or group of affiliated persons has acquired beneficial ownership
of 15% or more of the outstanding shares of Common Stock or ten business days
following the commencement of a tender offer that would result in a person or
group beneficially owning 15% or more of such outstanding shares of Common
Stock. The Rights are not excisable until the distribution date and will expire
at the close of business on July 11, 2007. In the event any person or group
(other than certain exempted persons) acquires 15% or more of the then
outstanding shares of Common Stock (unless such acquisition is made pursuant to
a tender offer for all outstanding shares, at a price determined by a majority
of the independent directors of the Company who are Continuing Directors (as
defined in the Plan)), each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock having a value equal to two times the
exercise price of the Right. At any time until ten days following such stock
acquisition date, the Company may redeem the Rights at a price of $.001 per
Right. A copy of the Rights Agreement was filed with the Securities and Exchange
Commission as an
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Exhibit to a Registration Statement on Form 8-A. This summary of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
The Common Stock is listed on the New York Stock Exchange and the Pacific
Stock Exchange. The registrar and transfer agent for the Common Stock is Chase
Mellon Shareholder Services, L.L.C.
Preferred Stock
General. The Company may issue, from time to time, shares of one or more
series of Preferred Stock.
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of any series of
Preferred Stock offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to the series of Preferred Stock so
offered will be described in a Prospectus Supplement relating to such Preferred
Stock. The following summary of certain provisions of the Preferred Stock does
not purport to be complete and is subject to, and is qualified in its entirety
by express reference to, the provisions of the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and each
Certificate of Designation relating to a specific series of the Preferred Stock
(each, a "Certificate of Designation"), which will be in the form filed as an
exhibit to, or incorporated by reference in, the Registration Statement at or
prior to the time of issuance of such series of Preferred Stock.
The Board of Directors of the Company is authorized to issue shares of
Preferred Stock, in one or more series, and to fix for each such series voting
powers and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions, as are
permitted by the Delaware General Corporation Law.
The Board of Directors of the Company is authorized to determine for each
series of Preferred Stock, and the Prospectus Supplement shall set forth with
respect to such series, the following: (i) the designation of such series and
the number of shares that constitute such series; (ii) the dividend rate (or the
method of calculation thereof), if applicable, on the shares of such series and
the priority as to payment of dividends with respect to other classes or series
of capital stock of the Company; (iii) the dividend periods (or the method of
calculation thereof), if applicable; (iv) the voting rights, if any, of the
shares; (v) the liquidation preference and the priority as to payment of such
liquidation preference with respect to other classes or series of capital stock
of the Company and any other rights of the shares of such series upon any
liquidation or winding-up of the Company; (vi) whether or not and on what terms
the shares of such series will be subject to redemption or repurchase at the
option of the Company; (vii) whether and on what terms the shares of such series
will be convertible into or exchangeable for other debt or equity securities;
(viii) whether the shares of such series of Preferred Stock will be listed on a
securities exchange; and
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(ix) the other rights and privileges and any qualifications, limitations or
restrictions of such rights or privileges of such series.
Dividends. Holders of shares of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors of the Company out of
funds of the Company legally available therefor, cash dividends payable on such
dates and at such rates, if any, per share set forth in the applicable
Prospectus Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Preferred Stock will rank junior as to dividends to any series of
Preferred Stock that may be issued in the future that is expressly senior as to
dividends to such earlier series of the Preferred Stock. If at any time the
Company has failed to pay accrued dividends on any such senior series at the
time dividends are payable on a junior series, the Company may not pay any
dividend on such junior series of Preferred Stock or redeem or otherwise
repurchase shares of such junior series of Preferred Stock until such
accumulated but unpaid dividends on the senior series have been paid or set
aside for payment in full by the Company.
Unless otherwise set forth in the applicable Prospectus Supplement, no
dividends (other than in Common Stock or other capital stock ranking junior to
the Preferred Stock of any series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment, nor shall any other distribution be
declared or made upon the Common Stock, or any other capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends, nor shall any Common Stock or any other capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends be redeemed, purchased or otherwise acquired for any
consideration (or any monies be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Company (except by
conversion into or exchange for other capital stock of the Company ranking
junior to the Preferred Stock of such series as to dividends) unless (i) if such
series of Preferred Stock has a cumulative dividend, full cumulative dividends
on the Preferred Stock of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for all past dividend periods and the then current dividend period or (ii)
if such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period; provided, however,
that any monies theretofore deposited in any sinking fund with respect to any
Preferred Stock of the Company in compliance with the provisions of such sinking
fund may thereafter be applied to the purchase or redemption of such Preferred
Stock in accordance with the terms of such sinking fund, regardless of whether
at the time of such application full cumulative dividends upon shares of the
Preferred Stock outstanding on the last dividend payment date shall have been
paid or declared and set apart for payment; and provided, further, that any such
junior or parity Preferred Stock of the Company or Common Stock of the Company
may be converted into or exchanged for stock of the Company ranking junior to
the series of Preferred Stock then senior to such junior or parity Preferred
Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
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Convertibility. No series of Preferred Stock will be convertible into, or
exchangeable for, other securities or property except as set forth in the
applicable Prospectus Supplement.
Redemption and Sinking Fund. No series of Preferred Stock will be
redeemable or receive the benefit of a sinking fund except as set forth in the
applicable Prospectus Supplement.
Liquidation Rights. Unless otherwise set forth in the applicable Prospectus
Supplement, in the event of any liquidation, dissolution or winding-up of the
Company, the holders of shares of each series of Preferred Stock are entitled to
receive out of assets of the Company available for distribution to stockholders,
before any distribution of assets is made to holders of: (i) any other shares of
Preferred Stock of the Company ranking junior to such series of Preferred Stock
as to rights upon liquidation, dissolution or winding-up; or (ii) shares of
Common Stock, liquidating distributions per share in the amount of the
liquidation preference specified in the applicable Prospectus Supplement for
such series of Preferred Stock plus any dividends accrued and accumulated but
unpaid to the date of final distribution, but, in either case, the holders of
each series of Preferred Stock will not be entitled to receive the liquidating
distribution of, plus such dividends on, such shares until the liquidation
preference of any shares of the Company's capital stock ranking senior to such
series of the Preferred Stock as to the rights upon liquidation, dissolution or
winding-up shall have been paid (or a sum set aside therefor sufficient to
provide for payment) in full. If upon any liquidation, dissolution or winding-up
of the Company, funds available for such purpose are insufficient to pay in full
the amounts payable with respect to any series of the Preferred Stock, and any
other Preferred Stock ranking as to any such distribution on a parity with such
series of the Preferred Stock, the holders of such series of the Preferred Stock
of the Company and such other parity Preferred Stock will share ratably in any
such distribution of assets in proportion to the full respective preferential
amounts to which they are entitled. Unless otherwise specified in a Prospectus
Supplement for a series of Preferred Stock, after payment of the full amount of
the liquidating distribution to which they are entitled, the holders of shares
of Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation or merger of the
Company with another corporation nor a sale of securities shall be considered a
liquidation, dissolution or winding-up of the Company.
Voting Rights. Holders of Preferred Stock will not have any voting rights
except as set forth in the applicable Prospectus Supplement or as otherwise from
time to time required by law.
Miscellaneous. The holders of Preferred Stock will have no preemptive
rights. The Preferred Stock, upon issuance against full payment of the purchase
price therefor, will be fully paid and nonassessable. Shares of Preferred Stock
redeemed or otherwise reacquired by the Company shall resume the status of
authorized and unissued shares of Preferred Stock undesignated as to series, and
shall be available for subsequent issuance. There are no restrictions on
repurchase or redemption of the Preferred Stock on account of any arrearage on
sinking fund installments except as may be set forth in an applicable Prospectus
Supplement. Payment of dividends on any series of Preferred Stock may be
restricted by loan agreements, indentures or other agreements entered into by
the Company. The accompanying Prospectus Supplement will describe any material
contractual restrictions on dividend payments. Such Prospectus Supplement will
also describe any material United States federal income tax considerations
applicable to the Preferred Stock.
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<PAGE>
No Other Rights. The shares of a series of Preferred Stock will not have
any preferences, voting powers or relative, participating, optional or other
special rights except as set forth above or in the applicable Prospectus
Supplement, the Certificate of Incorporation or the applicable Certificate of
Designation, or as otherwise required by law.
Transfer Agent and Registrar. The transfer agent and registrar for each
series of Preferred Stock will be designated in the applicable Prospectus
Supplement.
Classified Board of Directors and Restrictions on Removal
Under the Company's Certificate of Incorporation, as amended, the Company's
Board of Directors is divided into three classes of directors serving staggered
terms of three years each. Each class is to be as nearly equal in number as
possible, with one class being elected each year. The Certificate of
Incorporation also provides that directors may be removed from office only for
cause and only with the affirmative vote of 66 2/3% of the voting power of the
voting stock; that any vacancy on the Board of Directors or any newly created
directorship shall be filled by the remaining Directors then in office, though
less than a quorum; and that advance notice of shareholder nominations for the
elections of Directors shall be given in the manner provided by the By-Laws of
the Company. The required 66 2/3% shareholder vote necessary to alter, amend or
repeal these provisions of the Certificate of Incorporation, the related
amendments to the By-Laws and all other provisions of the By-Laws, or to adopt
any provisions relating to the classification of the Board of Directors and the
other matters described above may make it more difficult to change the
composition of the Company's Board of Directors and may discourage or make
difficult any attempt by a person or group to obtain control of the Company.
PLAN OF DISTRIBUTION
The Company may sell the Common Shares and the Preferred Shares offered
hereby: (i) directly to purchasers; (ii) through agents; (iii) through
underwriters; (iv) through dealers; or (v) through a combination of any such
methods of sale. Toll may sell the Debt Securities, together with Guarantees
issued by the Company, being offered hereby: (i) directly to purchasers; (ii)
through agents; (iii) through underwriters; (iv) through dealers; or (v) through
a combination of any such methods of sale.
The distribution of the Securities may be effected from time to time in one
or more transactions: (a) at a fixed price or prices, which may be changed; (b)
at market prices prevailing at the time of sale; (c) at prices related to such
prevailing market prices; or (d) at negotiated prices. Offers to purchase
Securities may be solicited directly by the Company or Toll, as the case may be,
or by agents designated by the Company or Toll, as the case may be, from time to
time. Any such agent, which may be deemed to be an underwriter as that term is
defined in the Securities Act of 1933, involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company or Toll, as the case may be, to such
agent will be set forth, in the applicable Prospectus Supplement.
If underwriters are utilized in the offer and sale of Securities in respect
of which this Prospectus and an accompanying Prospectus Supplement are
delivered, the name of each managing underwriter, if any, and any other
underwriters and terms of the transaction, including any underwriting discounts
and other items constituting compensation of the underwriters and dealers, if
any, will be set forth in the applicable Prospectus Supplement relating to such
offering and the Securities will be acquired by the underwriters for their own
accounts and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time. Underwriters, dealers and agents may be entitled,
under agreements which may be entered into with the Company, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act, and to reimbursement by the Company of certain
expenses.
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<PAGE>
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company and/or Toll will sell such Securities
to the dealer, as principal. The dealer may then resell such Securities to the
public at varying prices to be determined by such dealer at the time of resale.
The name of the dealer and the terms of the transaction will be set forth in the
applicable Prospectus Supplement relating thereto.
Offers to purchase the Securities may be solicited, and sales thereof may
be made, by the Company and/or Toll directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resales thereof. The terms of any such offer
will be set forth in the applicable Prospectus Supplement relating thereto.
If so indicated in the applicable Prospectus Supplement, the Company and/or
Toll will authorize underwriters or other agents of the Company to solicit
offers by certain institutional investors to purchase Securities from the
Company and/or Toll pursuant to contracts providing for payment and delivery at
a future date. Institutional investors with which such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but in
all cases such purchasers must be approved by the Company and/or Toll. The
obligations of any purchaser under any such contract will not be subject to any
conditions except that (i) the purchase of the Securities shall not at the time
of delivery be prohibited under the laws of any jurisdiction to which such
purchaser is subject and (ii) if the Securities are also being sold to
underwriters, the Company shall have sold to such underwriters the Securities
not subject to delayed delivery. Underwriters and other agents will not have any
responsibility in respect of the validity or performance of such contracts.
In addition, the Securities may be offered and sold by the holders thereof
in one or more of the transactions described above, which transactions may be
effected at any time and from time to time. Upon any such sale of Securities,
the respective holders thereof and any broker, dealer or underwriter
participating therewith may be deemed to be underwriters within the meaning of
Section 2(11) of the Securities Act, and any commissions, discounts or
concessions upon such sale, or any profit on the resale of such Securities,
received thereby in connection with such sale may be deemed to be underwriting
commissions or discounts under the Securities Act. The compensation, including
commissions, discounts, concessions and other profits, received by any broker,
dealer or underwriter in connection with the sale of any of such Securities may
be less than or in excess of customary commissions.
Certain of the underwriters, dealers or agents utilized by the Company
and/or Toll in any offering hereby may be customers of, including borrowers
from, engage in transactions with, and perform services for, the Company and/or
Toll or one or more of their respective affiliates in the ordinary course of
business. Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company or Toll, as the case may
be, to
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<PAGE>
indemnification against certain civil liabilities, including liabilities under
the Securities Act of 1933.
Until the distribution of the Securities is completed, rules of the
Commission may limit the ability of the underwriters and certain selling group
members, if any, to bid for and purchase the Securities. As an exception to
these rules, the representatives of the underwriters, if any, are permitted to
engage in certain transactions that stabilize the price of the Securities. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Securities.
If underwriters create a short position in the Securities in connection
with the offering thereof (i.e, if they sell more Securities than are set forth
on the cover page of the applicable Prospectus Supplement), the representatives
of such underwriters may reduce that short position by purchasing Securities in
the open market. Any such representatives also may elect to reduce any short
position by exercising all or part of the over-allotment option, if any,
described in the applicable Prospectus Supplement.
Any such representatives also may impose a penalty bid on certain
underwriters and selling group members. This means that if the representatives
purchase Securities in the open market to reduce the underwriters' short
position or to stabilize the price of the Securities, they may reclaim the
amount of the selling concession from the underwriters and selling group members
who sold those Securities as part of the offering thereof.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the offering.
Neither the Company, Toll nor any of the underwriters, if any, makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Securities. In
addition, neither the Company, Toll nor any of the underwriters, if any, makes
any representation that the representatives of the underwriters, if any, will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
LEGAL MATTERS
Certain legal matters relating to the validity of the Securities will be
passed upon by Wolf, Block, Schorr and Solis-Cohen LLP, Philadelphia,
Pennsylvania.
EXPERTS
The consolidated financial statements and schedule of the Company included
in the Company's Annual Report (Form 10-K) for the year ended October 31, 1996,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein
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<PAGE>
and incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
-24-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an estimate of the costs and expenses, other
than underwriting discounts and commissions, to be incurred by the Company in
connection with the issuance and distribution of the securities being
registered.
Securities and Exchange Commission registration fee.................. $ 87,576
Printing and Engraving............................................... 150,000
Rating agency fees................................................... 60,000
Blue Sky fees and expenses........................................... 30,000
Legal fees and expenses.............................................. 300,000
Accounting fees and expenses......................................... 100,000
Trustee fees and expenses............................................ 20,000
Miscellaneous........................................................ 52,424
--------
Total........................................ $800,000
========
All expenses, except the Securities and Exchange Commission registration
fee are estimated.
Item 15. Indemnification of Directors and Officers.
For information regarding provisions under which a director or officer of
Toll or the Company may be insured or indemnified in any manner against any
liability which he may incur in his capacity as such, reference is made to
Section 145 of the Delaware General Corporation Law, which provides in its
entirety as follows:
"(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe a person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or
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<PAGE>
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because the person has
met the applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under
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<PAGE>
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, reference to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)."
See also Article Six of the Company's Certificate of Incorporation, as
amended, Article 8 of Toll's Certificate of Incorporation, as amended, Article
VII of the Company's By-Laws, as amended, and Article VIII of Toll's By-Laws, as
amended, pursuant to which each
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<PAGE>
Registrant is granted the power to indemnify any director, officer, employee or
agent of such Registrant.
See also Section 6 of the Underwriting Agreement Basic Provisions, filed as
Exhibit 1 hereto, pursuant to which the Underwriters agree to indemnify the
Registrants and their respective directors, officers and controlling persons
against certain liabilities, including liabilities under the Securities Act.
See Item 17 of this Part II for further information concerning
indemnification of directors, officers and controlling persons of the Company
and Toll.
Item 16. Exhibits
1 Form of Underwriting Agreement Basic Provisions. Incorporated by reference
to Exhibit 1 to the Registrants' Registration Statement on Form S-3
(Commission File Nos. 33-51775 and 33-51775-01).
4.1 Form of Indenture among Toll Corp., as issuer, Toll Brothers, Inc., as
guarantor, and one or more Trustees, including Form of Note and Form of
Guarantee.
5 Opinion and Consent of Wolf, Block, Schorr and Solis-Cohen LLP.
12 Statement of Computation of Ratios of Earnings to Fixed Charges.
23.1 Consent of Wolf, Block, Schorr and Solis-Cohen LLP (included as part of
Exhibit 5).
23.2 Consent of Ernst & Young LLP.
24 Powers of Attorney (included on signature pages of this Registration
Statement).
25 Form T-1, Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939.
Additional exhibits to this Registration Statement will be filed with or
incorporated by reference in this Registration Statement in connection with
future amendments to, or supplements to the prospectus forming a part of this
Registration Statement.
Item 17. Undertakings.
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
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<PAGE>
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in the volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in such post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrants pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the
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question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned Registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
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<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Lower Moreland, Commonwealth of Pennsylvania, on
October 20, 1997.
TOLL CORP.
By: /s/ Robert I. Toll
--------------------------------------------------
Robert I. Toll, Chairman of the Board of Directors
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Robert I. Toll, Bruce E. Toll, Richard J.
Braemer, Joel H. Rassman and Joseph R. Sicree his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents or any of them full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 20, 1997.
Signature Title
- --------- -----
/s/ Robert I. Toll Chairman of the Board, Chief
- ----------------------------- Executive Officer and Director
Robert I. Toll (Principal Executive Officer)
/s/ Bruce E. Toll President, Chief Operating Officer,
- ----------------------------- Secretary and Director
Bruce E. Toll
/s/ Joel H. Rassman Senior Vice President, Treasurer,
- ----------------------------- Chief Financial Officer and Director
Joel H. Rassman (Principal Financial Officer)
/s/ Joseph R. Sicree Chief Accounting Officer
- ----------------------------- (Principal Accounting Officer)
Joseph R. Sicree
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<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Lower Moreland, Commonwealth of Pennsylvania, on
October 20, 1997.
TOLL BROTHERS, INC.
By: /s/ Robert I. Toll
--------------------------------------------------
Robert I. Toll, Chairman of the Board of Directors
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Robert I. Toll, Bruce E. Toll, Richard J.
Braemer, Joel H. Rassman and Joseph R. Sicree his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents or any of them full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 20, 1997.
Signature Title
- --------- -----
/s/ Robert I. Toll Chairman of the Board, Chief
- ----------------------------- Executive Officer and Director
Robert I. Toll (Principal Executive Officer)
/s/ Bruce E. Toll President, Chief Operating Officer,
- ----------------------------- Secretary and Director
Bruce E. Toll
/s/ Zvi Barzilay Executive Vice President, Director
- -----------------------------
Zvi Barzilay
Director
- -----------------------------
Robert S. Blank
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/s/ Richard J. Braemer Director
- -----------------------------
Richard J. Braemer
Director
- -----------------------------
Roger S. Hillas
Director
- -----------------------------
Carl B. Marbach
/s/ Joel H. Rassman Senior Vice President, Treasurer,
- ----------------------------- Chief Financial Officer, Director
Joel H. Rassman (Principal Financial Officer)
Director
- -----------------------------
Paul Shapiro
/s/ Joseph R. Sicree Chief Accounting Officer
- ----------------------------- (Principal Accounting Officer)
Joseph R. Sicree
II-9
<PAGE>
EXHIBIT 4.1
TOLL CORP., as Issuer
TOLL BROTHERS, INC., as Guarantor
Debt Securities
--------------------------
Indenture
Dated as of
[Name of Trustee]
Trustee
<PAGE>
CROSS-REFERENCE TABLE
TIA
Section Section Indenture
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
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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<PAGE>
TABLE OF CONTENTS
Article Section Heading Page
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
6 SUBORDINATION
6.01. Agreement To Subordinate........................ 17
6.02. Company Not To Make Payments with Respect
to Securities in Certain Circumstances....... 18
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<PAGE>
Article Section Heading Page
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
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
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<PAGE>
Article Section Heading Page
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
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
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<PAGE>
Article Section Heading Page
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
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<PAGE>
INDENTURE dated as of among TOLL CORP., a Delaware
corporation (the "Company"), TOLL BROTHERS, INC., a Delaware corporation (the
"Guarantor"), and (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 1.01. 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.
<PAGE>
"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,
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<PAGE>
Incorporated, or any similar organization, or if not so reported as determined
in good faith by the Board.
"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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<PAGE>
"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.
-4-
<PAGE>
"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.
"Restricted Subsidiary," if applicable, has the meaning provided in
the Authorizing Resolution.
["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.
- -----------------
* If applicable.
-5-
<PAGE>
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 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
-6-
<PAGE>
provision of the Securities, the provision is incorporated by reference in and
made a part of this Indenture.
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;
-7-
<PAGE>
(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
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<PAGE>
limitation the Conversion Price, the conversion period
and any other provision in addition to or in lieu of
those set forth in this Indenture);
(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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<PAGE>
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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<PAGE>
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.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof
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<PAGE>
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,
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
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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.
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.
If the Company wants to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in
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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.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
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(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.
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.
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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 Section 314(a).
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.
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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.
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.
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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
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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) 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.
Section 6.05. Obligation of the Company Unconditional. Nothing
contained in this Article 6 or elsewhere in
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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.
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
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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
provided in this Article 6 and appoints the Trustee its, his or her
attorney-in-fact for such purpose, including, in the event
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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
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
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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
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
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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.
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
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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.
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,
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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 repre- sentative, 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
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interest on the Securities 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
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
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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.
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
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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.
Section 7.10. Securityholders Authorize Trustee To Effectuate
Subordination of Guarantee. Each Holder of Securities by acceptance thereof
authorizes and expressly directs the
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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.
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.
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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
(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
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(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 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) would consists of a purchase
money obligation, provided 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" 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
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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.]*
Section 8.03. Other Remedies. If an Event of Default on a Series
occurs and is continuing, the Trustee may
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* If applicable.
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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;
(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;
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(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.
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;
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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.
b. Except during the continuance of an Event of Default:
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(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.
g. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
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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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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 Section 313(a), a
brief report dated as of such May 15 that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Section 313(b) and Section 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 Section 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 Section 310(b).
Section 9.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 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
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prior to such date, then in respect of such Security or portion thereof to and
including but not after the 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
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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 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
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and/or the Guarantor shall make an adjustment therefor to the nearest 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.
b. In case the Guarantor shall hereafter issue rights or warrants to
holders of its outstanding shares of
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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 shall be conclusive and shall be described
in a statement 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 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,
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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
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
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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
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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 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.
The Company's obligations and, to the extent applicable, the
Guarantor's obligations, in Sections 2.03, 2.04,
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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;
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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.
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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:
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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:
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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.
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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.
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SIGNATURES
Dated: TOLL CORP., as Issuer
By:
-----------------------------
Name:
Title:
(SEAL)
Attest:
---------------------------
Name:
Title:
Dated: TOLL BROTHERS, INC., as Guarantor
By:
-----------------------------
Name:
Title:
(SEAL)
Attest:
--------------------------
Name:
Title:
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<PAGE>
Dated: [Name of Trustee]
as Trustee
By:
-----------------------------
Name:
Title:
(SEAL)
Attest:
--------------------------
Name:
Title:
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<PAGE>
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
[Name of Trustee]
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
By:
Authorized Signatory
- ------------------------
* Or other currency. Insert corresponding provisions on reverse side of
Security in respect of foreign currency denomination or interest payment
requirement.
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(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, [Name of Trustee] (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.
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4. Indenture.
The Company issued the Securities under an Indenture dated as of
, 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 (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 {{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 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
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* If applicable.
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<PAGE>
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. Repurchase After a Change of Control.*
In the event of a Change of Control (as defined in the Authorizing
Resolution), each holder of the Securities will have the right, at such holder's
option, subject to the terms and conditions of the Indenture, to require the
Company to purchase all or any part of the Securities at a price equal to 100%
of the principal amount thereof, plus accrued and unpaid interest thereon, in
accordance with the terms set forth in the Indenture.
10. 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.
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.
- ----------------------
* If applicable.
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<PAGE>
11. 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 Authorizing
Resolution. 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 Authorizing
Resolution.
12. 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.
13. Person Deemed Owner.
The registered holder of a Security may be treated as the owner
of it for all purposes.
14. 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.
15. 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.
- --------------------
* If applicable.
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<PAGE>
16. 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.
17. 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.
18. 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.
19. 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 (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
shall be entered against the Company, the Guarantor or any Subsidiary which
remains undischarged or
- --------------------
* If applicable.
A-6
<PAGE>
unstayed for a period of 60 days after the date on which the right to appeal has
expired; provided the term "final judgment" 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; 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.
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
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<PAGE>
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.
20. Trustee Dealings with Company.
[Name of Trustee], 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.
21. 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.
22. Authentication.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
21. 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
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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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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.
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<PAGE>
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.
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<PAGE>
EXHIBIT B
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 Seven 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 Seven 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.
- -------------------------
* If applicable.
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<PAGE>
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)
B-2
LAW OFFICES
WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP
Twelfth Floor Packard Building
111 South 15th Street
Philadelphia, PA 19102-2678
EXHIBIT 5
October 20, 1997
Toll Brothers, Inc.
3103 Philmont Avenue
Huntingdon Valley, PA 19006
Toll Corp.
3103 Philmont Avenue
Huntingdon Valley, PA 19006
RE: Toll Corp.
Toll Brothers, Inc.
Registration Statement on Form S-3
----------------------------------
Gentlemen:
As counsel for Toll Brothers, Inc., a Delaware corporation (the "Company")
and Toll Corp., a Delaware corporation ("Toll"), we have reviewed a Registration
Statement on Form S-3 (together with all exhibits thereto and documents
incorporated by reference therein, the "Registration Statement") in the form
proposed to be filed by the Company and Toll with the Securities and Exchange
Commission (the "Commission"). The Registration Statement relates to the
issuance and sale from time to time, pursuant to Rule 415 of the General Rules
and Regulations of the Commission promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), of the following securities of the Company
with an aggregate initial public offering price of up to $289,000,000 or the
equivalent thereof in one or more foreign currencies or units of two or more
foreign currencies or composite currencies including the European Currency Unit:
(i) debt securities of Toll, consisting of debentures, notes and/or other
unsecured evidences of indebtedness in one or more series (the "Debt
Securities"), guaranteed by the Company, which in each case are to be issued
under an indenture (an "Indenture" and, collectively with any other indentures
relating to other Debt Securities, the "Indentures") to be entered into among
the Company, Toll and an institution to be designated prior to the issuance of
any Debt Securities under such Indenture to serve as trustee thereunder (a
"Trustee" and, collectively with the trustees, if any, under other Indentures,
the "Trustees"); (ii) Guarantees of the Company ("Guarantees") guaranteeing
payment of the Debt Securities; (iii) shares of the Company's common stock, $.01
par value (the "Common Stock"); and (iv) shares of the Company's preferred
stock, $.01 par value (the "Preferred Stock"), in one or more series. The
<PAGE>
Toll Brothers, Inc.
Toll Corp.
October 20, 1997
Page 2
Debt Securities, the Guarantees, the Common Stock and the Preferred Stock are
collectively referred to herein as the "Offered Securities."
This opinion is being delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K promulgated under the Securities Act.
For the purpose of rendering this opinion, we have examined (i) the
Registration Statement relating to the Offered Securities; (ii) the form of
Indenture being filed as an exhibit to the Registration Statement; (iii) the
Certificates of Incorporation of the Company and of Toll as currently in effect
(the "Certificates of Incorporation"); (iv) the Bylaws of the Company and of
Toll as currently in effect (the "Bylaws"); and (v) certain resolutions adopted
by the Boards of Directors of the Company and of Toll (the "Boards of
Directors") relating to the issuance of the Offered Securities. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company and of Toll, and such agreements,
certificates of public officials, certificates of officers or other
representatives of the Company, Toll and others and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed without independent verification (i)
the legal capacity of all natural persons, (ii) the genuineness of all
signatures, (iii) the authenticity of all documents submitted to us as
originals, (iv) the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such latter documents and (v) the power and authority of all
persons other than the Company and Toll signing such documents to execute,
deliver and perform such documents, and the valid authorization, execution and
delivery of such documents by such other persons. As to any facts material to
the opinions expressed herein which were not independently established or
verified, we have relied upon oral or written statements and representations of
officers or other representatives of the Company and Toll and others.
We are admitted to practice before the bar in the Commonwealth of
Pennsylvania and in the States of New Jersey and Delaware and we do not express
any opinion as to the laws of any other jurisdiction other than the federal laws
of the United States of America to the extent referred to specifically herein.
In rendering this opinion, we have assumed that there will be no changes in
applicable law between the date of this opinion and any date of issuance or
delivery of the Offered Securities, including without limitation, any securities
that may be issued upon conversion or exchange of any of the Offered Securities.
Based upon and subject to the foregoing and such examinations of law and
such other matters as we have deemed relevant under the circumstances, it is our
opinion that:
1. The form of Indenture filed as an exhibit to the Registration
Statement (the "Basic Indenture") has been duly authorized by the
Boards of
<PAGE>
Toll Brothers, Inc.
Toll Corp.
October 20, 1997
Page 3
Directors of the Company and of Toll. The Basic Indenture and each
other Indenture in the form of the Basic Indenture, as modified in
accordance with duly adopted resolutions of the Boards of Directors of
the Company and of Toll to reflect the additional terms applicable to
the Debt Securities to which such Indenture relates, when executed and
delivered by the Company and Toll, will be a valid and binding
agreement, enforceable against the Company and Toll in accordance with
its terms, except to the extent that enforcement thereof may be
limited by (a) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, (b) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), (c) requirements that
a claim with respect to any Debt Securities denominated other than in
United States dollars (or a judgment denominated other than in United
States dollars in respect of such claim) be converted into United
States dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law and (d) governmental authority to limit,
delay or prohibit the making of payments outside the United States or
in foreign currency or composite currency.
2. With respect to any series of Debt Securities (the "Offered Debt
Securities"), when (i) if the Offered Debt Securities are to be sold
pursuant to a firm commitment underwritten offering, the underwriting
agreement with respect to the Offered Debt Securities (the "Debt
Underwriting Agreement") has been duly authorized, executed and
delivered by the Company and Toll and the other parties thereto; (ii)
if the Offered Debt Securities are to be sold on an agency basis, the
distribution agreement with respect to the Offered Debt Securities
(the "Debt Distribution Agreement") has been duly authorized, executed
and delivered by the Company and Toll and the other parties thereto;
(iii) the Boards of Directors of the Company and of Toll, including
any appropriate committees appointed thereby, and appropriate officers
of the Company and of Toll have taken all necessary corporate action
to approve the issuance and terms of the Offered Debt Securities and
related matters; (iv) the terms of the Offered Debt Securities and of
their issuance and sale have been duly established in conformity with
the Indenture relating thereto so as not to violate any applicable
law, the Certificate of Incorporation or Bylaws of the Company or of
Toll or result in a default under or breach of any agreement or
instrument binding upon the Company or Toll and so as to comply with
any requirement or restriction imposed by any court or governmental
body having jurisdiction over the Company or Toll; (v) the applicable
Indenture has been duly executed and
<PAGE>
Toll Brothers, Inc.
Toll Corp.
October 20, 1997
Page 4
delivered by the Company, Toll and the Trustee thereunder; and (vi)
the Offered Debt Securities have been duly executed and authenticated
in accordance with the provisions of the applicable Indenture and duly
delivered to the purchasers thereof upon payment of the agreed-upon
consideration therefor as contemplated by the Registration Statement,
the prospectus contained therein and the applicable prospectus
supplement, the Offered Debt Securities, when issued and sold in
accordance with the applicable Indenture and the related Debt
Underwriting Agreement or Debt Distribution Agreement, if any, or any
other duly authorized, executed and delivered applicable purchase
agreement, will be valid and binding obligations of Toll, enforceable
against Toll in accordance with their respective terms, except to the
extent that enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity), (c) requirements that a claim with respect to any
Offered Debt Securities denominated other than in United States
dollars (or a judgment denominated other than in United States dollars
in respect of such claim) be converted into United States dollars at a
rate of exchange prevailing on a date determined pursuant to
applicable law and (d) governmental authority to limit, delay or
prohibit the making of payments outside the United States or in
foreign currency or composite currency.
We note that, as of the date hereof, a judgment for money in an action
based on a Debt Security denominated in a foreign currency, currency
unit or composite currency in a federal or state court in the United
States ordinarily would be enforced in the United States only in
United States dollars. The date used to determine the rate of
conversion of the foreign currency, currency unit or composite
currency in which a particular Debt Security is denominated into
United States dollars will depend upon various factors, including
which court renders the judgment.
3. With respect to the Guarantees relating to any Offered Debt Securities
(the "Offered Guarantees"), when (i) the terms of the Offered
Guarantees and of their issuance have been duly established in
conformity with the Indenture relating thereto so as not to violate
any applicable law, the Certificate of Incorporation or Bylaws of the
Company or result in a default under or breach of any agreement or
instrument binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or governmental body
having jurisdiction over the Company;
<PAGE>
Toll Brothers, Inc.
Toll Corp.
October 20, 1997
Page 5
(ii) the Board of Directors of the Company, including any appropriate
committee appointed thereby, and appropriate officers of the Company
have taken all necessary corporate action to approve the issuance and
terms of the Offered Guarantees and related matters; and (iii) the
Offered Debt Securities to which the Offered Guarantees relate have
been duly issued and sold and the purchase price therefore has been
received by Toll, the Offered Guarantees will be valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms, except to the extent that
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally, (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity), (c)
requirements that a claim with respect to any Offered Guarantees
denominated other than in United States dollars (or a judgment
denominated other than in United States dollars in respect of such
claim) be converted into United States dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law and (d)
governmental authority to limit, delay or prohibit the making of
payments outside the United States or in foreign currency or composite
currency.
4. With respect to any shares of Common Stock (the "Offered Common
Stock"), when (i) if the Offered Common Stock is to be sold pursuant
to a firm commitment underwritten offering, the underwriting agreement
with respect to the Offered Common Stock (the "Common Stock
Underwriting Agreement") has been duly authorized, executed and
delivered by the Company and the other parties thereto; (ii) if the
Offered Common Stock is to be sold on an agency basis, the
distribution agreement with respect to the Offered Common Stock (the
"Common Stock Distribution Agreement") has been duly authorized,
executed and delivered by the Company and the other parties thereto;
(iii) the Board of Directors of the Company, including any appropriate
committee appointed thereby, and appropriate officers of the Company
have taken all necessary corporate action to approve the issuance and
terms of issuance of the shares of Offered Common Stock in conformity
with the Certificate of Incorporation and Bylaws of the Company, so as
not to violate any applicable law, the Certificate of Incorporation or
Bylaws of the Company or result in a default under or breach of any
agreement or instrument binding upon the Company and so as to comply
with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company; and (iv)
certificates representing the shares of the Offered Common Stock are
duly executed, countersigned, registered and
<PAGE>
Toll Brothers, Inc.
Toll Corp.
October 20, 1997
Page 6
delivered upon payment of the agreed-upon consideration therefor, the
shares of the Offered Common Stock, when issued and sold in accordance
with the related Common Stock Underwriting Agreement or Common Stock
Distribution Agreement, if any, or any other duly authorized, executed
and delivered applicable purchase agreement, will be duly authorized,
validly issued, fully paid and nonassessable, provided that the
consideration therefor is not less than the par value thereof.
5. With respect to the shares of any series of Preferred Stock (the
"Offered Preferred Stock"), when (i) if the Offered Preferred Stock is
to be sold pursuant to a firm commitment underwritten offering, the
underwriting agreement with respect to the shares of the Offered
Preferred Stock (the "Preferred Stock Underwriting Agreement") has
been duly authorized, executed and delivered by the Company and the
other parties thereto; (ii) if the Offered Preferred Stock is to be
sold on an agency basis, the distribution agreement with respect to
the Offered Preferred Stock (the "Preferred Stock Distribution
Agreement") has been duly authorized, executed and delivered by the
Company and the other parties thereto; (iii) the Board of Directors of
the Company, including any appropriate committee appointed thereby,
and appropriate officers of the Company have taken all necessary
corporate action to approve the issuance and terms of the shares of
the Offered Preferred Stock and related matters, including the
adoption of a certificate of designations for the Offered Preferred
Stock in the form required by applicable law (the "Certificate of
Designations"); (iv) the filing of the Certificate of Designations
with the Secretary of State of the State of Delaware has duly
occurred; (v) the terms of the Offered Preferred Stock and of their
issuance and sale have been duly established in conformity with the
Certificate of Incorporation, the Certificate of Designations and the
Bylaws of the Company, so as not to violate any applicable law, the
Certificate of Incorporation, the Certificate of Designations or the
Bylaws of the Company or result in a default under or breach of any
agreement or instrument binding upon the Company and so as to comply
with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company; and (vi)
certificates representing the shares of the Offered Preferred Stock
are duly executed, countersigned, registered and delivered upon
payment of the agreed-upon consideration therefor, the shares of the
Offered Preferred Stock, when issued and sold in accordance with the
related Preferred Stock Underwriting Agreement or Preferred Stock
Distribution Agreement, if any, or any other duly authorized, executed
and delivered applicable purchase agreement, will be duly authorized,
validly issued, fully paid and nonassessable, provided that the
consideration therefor is not less than the par value thereof.
<PAGE>
Toll Brothers, Inc.
Toll Corp.
October 20, 1997
Page 7
We hereby consent to the reference to our firm in the Registration
Statement under the Prospectus captioned "Legal Matters" and to the inclusion of
this opinion as an exhibit to the Registration Statement. In giving this
consent, we do not admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act.
Very truly yours,
WOLF, BLOCK, SCHORR and SOLIS-COHEN LLP
<PAGE>
EXHIBIT 12
STATEMENT OF COMPUTATION OF RATIOS
TOLL BROTHERS, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands, except ratios)
<TABLE>
<CAPTION>
Year Ended October 31, Nine Months
------------------------------------------------------ Ended
1992 1993 1994 1995 1996 July 31, 1997
------- ------- ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes and extraordinary gain
(loss) and change in accounting ........................ $28,864 $43,928 $56,840 $ 79,739 $ 85,793 $68,535
Homebuilding:
Interest expense: .................................... 16,048 17,129 20,136 22,473 24,646 20,083
Rent expense ......................................... 46 57 71 93 151 142
Amortization ......................................... 495 671 785 801 705 509
Collateralized mortgage financing:
Interest expense ..................................... 2,989 1,469 624 376 300 176
Amortization ......................................... 240 199 157 29 -- --
------- ------- ------- -------- -------- -------
$48,682 $63,453 $78,673 $103,511 $111,595 $89,445
======= ======= ======= ======== ======== =======
Fixed charges:
Homebuilding:
Interest incurred: ................................... $14,757 $20,929 $21,701 $ 25,780 $ 27,695 $26,250
Rent expense ......................................... 46 57 71 93 151 142
Amortization ........................................... 495 671 785 801 705 509
Collateralized mortgage financing:
Interest incurred .................................... 2,989 1,469 624 376 300 176
Amortization ......................................... 240 199 157 29 -- --
------- ------- ------- -------- -------- -------
$18,527 $23,325 $23,338 $ 27,079 $ 28,851 $27,077
======= ======= ======= ======== ======== =======
Ratio, including collateralized mortgage financing(1)... 2.63 2.72 3.37 3.82 3.87 3.30
======= ======= ======= ======== ======== =======
</TABLE>
- ----------
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes, extraordinary gain (loss) and change
in accounting plus interest expense and fixed charges except interest
incurred. Fixed charges consist of interest incurred (whether expensed or
capitalized), the portion of rent expense that is representative of the
interest factor, and amortization of debt discount and issuance costs.
<PAGE>
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 Nos. 333-00000 and 333-00000-01) and related
Prospectus of Toll Corp. and Toll Brothers, Inc. for the registration of Debt
Securities of Toll Corp. and Common Stock, Preferred Stock and Guarantees of
Toll Brothers, Inc. and to the incorporation by reference therein of our report
dated December 10, 1996, with respect to the consolidated financial statements
and schedule of Toll Brothers, Inc. included in the Annual Report (Form 10-K) of
Toll Brothers, Inc. for the year ended October 31, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
October 16, 1997
<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM T-1
-----------------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
-----------------------------
NBD BANK
---------------------------------------------------
(Exact name of Trustee as specified in its charter)
611 Woodward Avenue
Detroit, Michigan 48226 38-0864715
--------------------- ---------- -------------------
(Address of principal (Zip Code) (I.R.S. Employer
executive offices) Identification No.)
TOLL CORP.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 23-2485860
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3103 Philmont Avenue
Huntingdon Valley, Pennsylvania 19006
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
TOLL BROTHERS, INC.
-----------------------------------------------------
(Exact name of guarantor as specified in its charter)
Delaware 23-2416878
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3103 Philmont Avenue
Huntingdon Valley, Pennsylvania 19006
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
DEBT SECURITIES
-------------------------------
(Title of Indenture Securities)
===============================================================================
<PAGE>
Item 1 GENERAL INFORMATION. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject:
o State of Michigan Financial Institutions Bureau, Lansing, MI
o Federal Reserve Bank of Chicago, Chicago, Illinois
o Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
Item 2 AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
No such affiliation exists.
Item 3 Not applicable
Item 4 TRUSTEESHIPS UNDER OTHER INDENTURES
The Trustee also serves as Trustee under an Indenture dated as of
March 15, 1993 under which the Company issued $75,000,000 9 1/2%
Senior Subordinated Notes due 2003.
The Trustee also serves as Trustee under an Indenture dated as of
November 12, 1996 under which the Company issued $100,000,000 8 3/4%
Senior Subordinated Notes due 2006, and $100,000,000 7 3/4% Senior
Subordinated Notes due 2007.
Item 5
through
Item 15 Not applicable
Item 16 LIST OF EXHIBITS:
EXHIBIT (1) A COPY OF THE ARTICLES OF INCORPORATION OF THE TRUSTEE
NOW IN EFFECT
Incorporated by reference to Exhibit (1) to Item 16 of Form T-1 filed
as Exhibit 25 to Registration Statement, Securities and Exchange
Commission, Registration No. 33-51775.*
EXHIBIT (2) CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS
Incorporated by reference to Exhibit (2) to Item 16 of Form T-1 filed
with Amendment No. 1, Securities and Exchange Commission,
Registration No. 22-4501.*
EXHIBIT (3) AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST
POWERS
Incorporated by reference to Exhibit (3) to Item 16 of Form T-1 filed
with Amendment No. 1, Securities and Exchange Commission,
Registration No. 22-4501.*
2
<PAGE>
EXHIBIT (4) BY-LAWS OF THE TRUSTEE, AS PRESENTLY IN EFFECT
Incorporated by reference to Exhibit (4) to Item 16 of Form T-1 filed
as Exhibit 25 to Registration Statement, Securities and Exchange
Commission, Registration No. 33-51775.*
EXHIBIT (5) Not Applicable.
EXHIBIT (6) CONSENT BY THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE
ACT.
Incorporated by reference to Exhibit (6) to Item 16 of Form T-1,
filed with Amendment No. 1, Securities and Exchange Commission,
Registration No. 22-4501.*
EXHIBIT (7) A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE
PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS
SUPERVISING OR EXAMINING AUTHORITY.
EXHIBIT (8) Not applicable.
EXHIBIT (9) Not applicable.
* Exhibits thus designated are incorporated herein by reference Exhibits
bearing identical numbers in Item 16 of the Form T-1 filed by the Trustee
with the Securities and Exchange Commission with the specific references
noted.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
Trustee, NBD Bank, a Michigan banking corporation organized and existing under
the laws of the State of Michigan, has duly caused this Statement of Eligibility
and Qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Detroit, State of Michigan on the 15th day of
October, 1997.
NBD BANK, Trustee
By: /s/ James D. Khami
------------------------
James D. Khami
Assistant Vice President
3
EXHIBIT 7
Charter No. 13671 Comptroller of the Currency District
REPORT OF CONDITION CONSOLIDATING
DOMESTIC AND FOREIGN SUBSIDIARIES OF THE
NBD BANK
in the State of Michigan, at the close of business on June 30, 1997 published in
response to call made by Comptroller of the Currency, under title 12, United
States Code, Section 161.
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
----------
<S> <C>
Cash and balances due from depository institutions
Noninterest-bearing balances and currency and coin......................... 1,909,459
Interest-bearing balances.................................................. 0
Securities:
Held-to-maturity securities................................................ 0
Available-for-sale securities.............................................. 1,904,231
Federal funds sold and securities purchased under agreements to resell......... 835,150
Loans and lease financing receivables:
Loans and leases, net of unearned income................................... 16,936,546
LESS: Allowance for loan and lease losses.................................. 276,101
Loans and leases, net of unearned income and allowance..................... 16,660,445
Assets held in trading accounts................................................ 84,677
Premises and fixed assets (including capitalized leases)....................... 332,160
Other real estate owned........................................................ 3,690
Investments in unconsolidated subsidiaries and associated companies............ --
Customers' liability to this bank on acceptances outstanding................... 57,768
Intangible assets.............................................................. 52,248
Other assets................................................................... 534,622
-----------
Total assets................................................................... 22,374,450
===========
LIABILITIES
Deposits:
In domestic offices......................................................... 16,914,136
Noninterest-bearing.................................................... 5,409,464
Interest-bearing....................................................... 11,504,672
In foreign offices, Edge and Agreement subsidiaries, and IBFs............... 208,166
Noninterest-bearing.................................................... 0
Interest-bearing....................................................... 208,166
Federal funds purchased and securities sold under agreements to repurchase..... 511,451
Demand notes issued to the U.S. Treasury....................................... 400,001
Trading liabilities............................................................ 40,978
Other borrowed money:
With remaining maturity of one year or less............................ 898,572
With remaining maturity of more than one year through three years...... 55,957
With remaining maturity of more than three years....................... 4,966
Bank's liability on acceptances executed and outstanding....................... 57,768
Notes and debentures subordinated to deposits.................................. 700,000
Other liabilities.............................................................. 373,375
-----------
Total liabilities.............................................................. 20,165,370
-----------
EQUITY CAPITAL
Common stock................................................................... 111,858
Surplus........................................................................ 646,600
Undivided profits and capital reserves......................................... 1,451,330
Net unrealized holding gains (losses) on available-for-sale securities......... (708)
Cumulative foreign currency translation adjustments............................ 0
-----------
Total equity capital........................................................... 2,209,080
-----------
Total liabilities and equity capital........................................... 22,374,450
===========
</TABLE>
I, Jason N. Hansen, Vice President of the above-named bank do hereby
declare that this Report of Condition is true and correct to the best of my
knowledge and belief.
JASON N. HANSEN
July 28, 1997
We, the undersigned directors, attest to the correctness of this statement
of resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
THOMAS H. JEFFS II
VERNICE D. ANTHONY
DON H. BARDEN
Directors
<PAGE>
