Joint Resolutions Adopted by
the Board of Directors
of
Toll Corp.
and by
the Shelf Terms Committee
of
Toll Brothers, Inc.
As of April 13, 1999
Relating to $100,000,000 Principal Amount of
8% Senior Subordinated Notes
of Toll Corp. due 2009 and
Guaranteed on a Senior Subordinated Basis by Toll Brothers, Inc.
WHEREAS, Toll Brothers, Inc. (the "Guarantor") and Toll Corp. (the
"Company") previously filed a Registration Statement on Form S-3 (File Nos.
333-38347 and 333-38347-01) with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), relating
to the "shelf registration" of the Guarantor's Common Shares, Preferred Shares,
and Guarantees and the Company's Debt Securities for a proposed public offering
or offerings in the aggregate amount up to $300,000,000 (the "Shelf
Registration Statement"), including, pursuant to Rule 429 under the Act,
$11,000,000 of securities previously registered by the Guarantor and the Issuer
pursuant to a Registration Statement on Form S-3 (File Nos. 333-51775 and
333-51775-01);
WHEREAS, the Shelf Registration Statement was declared effective by the
Commission on December 3, 1997; and
WHEREAS, the Company and the Guarantor desire to sell $100,000,000 principal
amount of a new series of Senior Subordinated Notes of the Company, guaranteed
on a senior subordinated basis by the Guarantor (the "Securities"), which series
may be reopened for issuances of additional Securities of such series not to
exceed the principal amount of $75,000,000, pursuant to the Shelf Registration
Statement and any subsequent shelf registration statement.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Company (the "Toll Board") and the Shelf Terms Committee of the Board of
Directors of the Guarantor (the "Shelf Committee") hereby approve the
establishment and the issuance of the Securities to be issued as a series
pursuant to an Indenture among the Company, as the issuer, the
Guarantor, as the Guarantor, and NBD Bank, a Michigan banking corporation, as
Trustee (the "Trustee"), (the "Base Indenture"), executed in the form included
as Exhibit 4.1 to the Shelf Registration Statement, as the same is supplemented
by these resolutions.
RESOLVED, FURTHER, that the Toll Board and the Shelf Committee hereby
approve, ratify and confirm the appointment of NBD Bank, a Michigan banking
corporation, as trustee under the Indenture relating to the Securities.
RESOLVED, FURTHER, that the Toll Board and the Shelf Committee hereby
approve the following terms and provisions which shall supplement the terms and
provisions of the Base Indenture (said supplemented terms and provisions and the
Base Indenture are hereinafter collectively referred to as the "Indenture" and
each reference herein to the "Indenture" is a reference to the Base Indenture as
the same is supplemented by the terms and provisions of these joint
resolutions):
Paragraph 1. The title of the Securities shall be "8% Senior Subordinated
Notes due 2009".
Paragraph 2. The aggregate principal amount at maturity of the Securities
which may be authenticated and delivered under the Indenture shall be $100,000,
000 (except for any Securities authenticated and delivered upon registration of
the transfer of, or in exchange for, or in lieu of other Securities pursuant to
the terms of the Indenture); provided, however, that this
series of Securities may be reopened for issuances of additional Securities not
to exceed the principal amount of $75,000,000. The Securities will be issued
only in registered form in denominations of $1,000 and integral multiples
thereof.
Paragraph 3. The principal amount of the Securities is due and payable in
full on May 1, 2009, subject to earlier redemption as referred to in the
Indenture.
Paragraph 4. The Securities shall bear interest at the rate of 8% per
annum (computed on the basis of a 360-day year of twelve 30-day months), from
April 16, 1999 to maturity or early redemption; and interest will be payable
semi-annually on May 1 and November 1 in each year, commencing November 1, 1999,
to the persons in whose name such Securities are registered at the close of
business on April 15 or October 15, as the case may be, preceding such interest
payment date.
Paragraph 5. The Securities are redeemable, in whole or in part from
time to time on or after May 1, 2004 and prior to maturity, at the option of
the Company upon not less than 30 nor more than 60 days' notice mailed by
first-class mail to each Holder of record at such Holder's last address as it
appears on the registration books of the Registrar. Redemption of the
Securities made at the election of the Company shall be made at the following
respective redemption prices (expressed as a percentage of principal amount),
plus accrued and unpaid interest to the redemption date, if redeemed during the
12-month period beginning May 1 of the years indicated:
Year Percentage
2004 104.000%
2005 102.667%
2006 101.333%
2007 and thereafter 100.000%
Paragraph 6. Principal of and interest on the Securities shall be
payable in accordance with Section 4.01 of the Indenture.
Paragraph 7. The Securities shall not be convertible into the
Company's or the Guarantor's Common Stock.
Paragraph 8. The payment of the principal of, premium, if any, and
interest on the Securities is subordinated in right of payment, in the manner
and to the extent set forth in the Indenture, to the prior payment in full of
all senior indebtedness of the Company (referred to in the Indenture as "Senior
Indebtedness of the Company" and as further defined herein) whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed.
The term "Senior Indebtedness of the Company" as used in the Indenture shall
mean: (i) the principal of, and premium, if any, and interest on, any
indebtedness, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed by the Company, (a) under the
Revolving Credit Agreement (as defined in the Indenture), (b) for money
borrowed from others (including, for this purpose, all obligations incurred
under capitalized leases or purchase money mortgages or under letters of credit
or similar commitments), or (c) in connection with the acquisition by it of any
other business, property or entity and, in each case,
all renewals, extensions and refundings thereof, unless the terms of the
instrument creating or evidencing such indebtedness expressly provide that such
indebtedness is not superior in right of payment to the payment of the principal
of, and premium, if any, and interest on, the Securities. Senior Indebtedness
of the Company, as such term is used in the Indenture, shall not include (a)
indebtedness or amounts owed for compensation to employees, for goods or
materials purchased in the ordinary course of business, or for services, (b)
indebtedness of the Company to the Guarantor or any Subsidiary (as defined in
the Indenture) for money borrowed or advances from such entities, (c) the
Company's 8 % Senior Subordinated Notes due 2006 (which shall rank
pari passu in right of payment with the Securities), (d) the Company's 7 %
Senior Subordinated Notes due 2007 (which shall rank pari passu in right of
payment with the Securities), (e) the Company's 8 % Senior Subordinated Notes
due 2009 (which shall rank pari passu with the Securities) and (f) the
Securities. For purposes hereof, a "capitalized lease" shall be deemed to
mean a lease of real or personal property which, in accordance with generally
accepted accounting principles, has been capitalized.
Paragraph 9. The payment of the principal of, premium, if any, and
interest on the Securities pursuant to the Guarantee (as such term is defined in
the Indenture) will be subordinated in right of payment, in the manner and to
the extent set forth in the Indenture, to the prior payment in full of all
senior indebtedness of the Guarantor (referred to in the Indenture as
"Senior Indebtedness of the Guarantor" and as further defined herein), whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. The term "Senior Indebtedness of the Guarantor" as used
in the Indenture shall mean: (i) the principal of, and premium, if any, and
interest on, any indebtedness, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed by the
Guarantor, (a) under the Revolving Credit Agreement, or (b) for money borrowed
from others (including, for this purpose, all obligations incurred under
capitalized leases or purchase money mortgages or under letters of credit or
similar commitments), or (c) in connection with the acquisition by it of any
other business, property or entity, and, in each case, all renewals, extensions
and refundings thereof, unless the terms of the instrument creating or
evidencing such indebtedness expressly provide that such indebtedness is not
superior in right of payment to the payment of the Securities pursuant to the
Guarantee. Senior Indebtedness of the Guarantor, as such term is used
in the Indenture, shall not include (a) the Guarantee, (b) indebtedness of the
Guarantor to any Subsidiary for money borrowed or advances from such Subsidiary,
(c) the Guarantor's guarantee of the Company's 8 % Senior Subordinated Notes
due 2006 (which shall rank pari passu in right of payment with the Guarantee),
(d) the Guarantor's guarantee of the Company's 7% Senior Subordinated Notes
due 2007 (which shall rank pari passu in right of payment with the
Guarantee), and (e) the Company's 8 1/8% Senior Subordinated Notes due 2009
(which shall rank pari passu with the Securities). For purposes hereof, a
"capitalized lease" shall be deemed to mean a lease of real or personal
property which, in accordance with generally accepted accounting principles,
has been capitalized.
Paragraph 10. As used in the Indenture, the following terms shall
have the respective meanings set forth below:
"Consolidated Adjusted Net Worth" of the Guarantor means the
Consolidated Net Worth of the Guarantor less the stockholders' equity of each of
the Unrestricted Subsidiaries, as determined in accordance with generally
accepted accounting principles.
"Consolidated Fixed Charge Ratio" of the Guarantor means the ratio of
(i) the aggregate amount of Consolidated Net Income Available for Fixed Charges
of such Person for the four fiscal quarters for which financial information in
respect thereof is available immediately prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed
Charge Ratio (the "Transaction Date") to (ii) the aggregate Consolidated
Interest Expense of such Person for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to the Transaction
Date.
"Consolidated Income Tax Expense" of the Guarantor means, for any
period for which the determination thereof is to be made, the aggregate of the
income tax expense of the Guarantor and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense" of the Guarantor means, for any
period for which the determination thereof is to be made, the Interest Expense
of the Guarantor and its Restricted Subsidiaries for such period, determined on
a consolidated basis in accordance with generally accepted accounting
principles.
"Consolidated Net Adjusted Income" of the Guarantor means, for any
period for which the determination thereof is to be made taken as one accounting
period, the aggregate Consolidated Net Income of the Guarantor and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles, adjusted by excluding (to the
extent not otherwise excluded in calculating Consolidated Net Income) any net
extraordinary gain or any net extraordinary loss, as the case may be, during
such period.
"Consolidated Net Income" for any period means the aggregate of the
Net Income of the Guarantor and its consolidated subsidiaries for such period,
on a consolidated basis, determined in accordance with generally accepted
accounting principles, provided that (i) the Net Income of any person in which
the Guarantor or any consolidated Subsidiary has a joint interest
with a third party or which is organized outside of the United States shall
be included only to the extent of the lesser of (A) the amount of dividends or
distributions paid to the Guarantor or a consolidated subsidiary or (B) the
Guarantor's direct or indirect proportionate interest in the Net
Income of such Person, provided that, so long as the Guarantor or a consolidated
subsidiary has an unqualified legal right to require the payment of a dividend
or distribution, Net Income shall be determined solely pursuant to clause (B);
(ii) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded, and
(iii) the Net Income of any Unrestricted Subsidiary shall be included only
to the extent of the amount of dividends or distributions (the fair value of
which, if other than in cash, to be determined by the Board of Directors, in
good faith) by such Subsidiary to the Guarantor or to any of its consolidated
Restricted Subsidiaries.
"Consolidated Net Income Available for Fixed Charges" means, for any
period for which the determination thereof is to be made, the sum of the amounts
for such period of (i) Consolidated Net Adjusted Income, (ii) Consolidated
Interest Expense (excluding capitalized interest) and (iii) Consolidated Income
Tax Expense, all as determined on a consolidated basis for the Guarantor and
its Subsidiaries in conformity with generally accepted accounting principles.
"Designated Senior Debt of the Guarantor" means any single issue of
Indebtedness of the Guarantor constituting Senior Indebtedness of the Guarantor
which at the time of determination has an aggregate principal amount
outstanding of at least $25,000,000 and is specifically designated in the
instrument or instruments creating, governing or evidencing such
Senior Indebtedness of the Guarantor as "Designated Senior Debt of Toll Brothers
, Inc." (it being understood that the Guarantor's guarantee of the Revolving
Credit Agreement shall be considered a single issue of Indebtedness of the
Guarantor for purposes of this definition).
"Designated Senior Debt of the Company" means any single issue of
Indebtednessof 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).
"Excluded Debt" means any Indebtedness of the Guarantor and any
Indebtedness or preferred stock of the Company, whether outstanding on the date
of the Indenture or thereafter created, which is (i) subordinated in right of
payment to the Securities or the Guarantee (upon
liquidation or otherwise) and (ii) matures after, and is not redeemable,
mandatorily or at the option of the holder thereof prior to the date of
maturity of the Securities.
"Indebtedness," for the purpose of the covenants described in
Sections 4.07 and 4.08, and certain definitions, means without duplication (i)
any liability of any Person (a) for borrowed money or evidenced by a bond,
note, debenture or similar instrument (including a purchase money obligation)
given in connection with the acquisition of any businesses, properties or
assets of any kind (other than a trade payable or current liability arising in
the ordinary course of business) to the extent it would appear as a liability
upon a balance sheet of such Person prepared on a consolidated basis in
accordance with generally accepted accounting principles, or (b) for the
payment of money relating to a capitalized lease obligation; (ii) any
liability of any Person under any obligation incurred under letters of credit;
and (iii) any liability of others described in clause (i) or (ii) with respect
to which such Person has made a guarantee or similar arrangement, directly or
indirectly (to the extent of such guarantee or arrangement).
"Interest Expense" of any Person means, for any period for which the
determination thereof is to be made, the sum of the aggregate amount of (i)
interest in respect of indebtedness (including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing), (ii) all but the principal component of
rentals in respect of capitalized lease obligations, paid, accrued or scheduled
to be paid or accrued by such Person during such period and (iii) capitalized
interest, all as determined in accordance with generally accepted accounting
principles, minus (iv) interest expenseattributable to such Person's directly
or indirectly majority-owned mortgage finance Affiliates.
"Net Income" of any Person means the net income (loss) of such Person,
determined in accordance with generally accepted accounting principles;
excluding, however, from the determination of Net Income all gain (to the extent
that it exceeds all losses) realized upon the sale or other disposition
(including, without limitation, dispositions pursuant to sale leaseback
transactions) of any real property or equipment of such Person, which is not
sold or otherwise disposed of in the ordinary course of business, or of any
capital stock of such Person or its subsidiaries owned by such Person.
"Restricted Subsidiary" means any Subsidiary that is not an
Unrestricted Subsidiary.
"Unrestricted Subsidiary" means (a) any Subsidiary which, in
accordance with the provisions of the Indenture, has been designated in a Board
Resolution of the Guarantor as an Unrestricted Subsidiary, in each case unless
and until such Subsidiary shall, in accordance with
the provisions of the Indenture, be designated by Board Resolution as a
Restricted Subsidiary; and (b) any Subsidiary a majority of the voting stock of
which shall at the time be owned directly or indirectly by one or more
Unrestricted Subsidiaries.
"Unrestricted Subsidiary Investment" means any loan, advance, capital
contribution or transfer (including by way of guarantee or other similar
arrangement) in or to any Unrestricted Subsidiary. For the purposes of the
covenant described in Section 4.04, (i) "Unrestricted Subsidiary Investment"
shall include the fair market value of the net assets of any Subsidiary at
the time that such Subsidiary is designated an Unrestricted Subsidiary and
(ii) any property transferred to an Unrestricted Subsidiary shall be valued at
fair market value at the time of such transfer, in each case as determined by
the Board of Directors of the Guarantor in good faith. "Unrestricted Subsidiary
Investment" does not include the fair market value of the net
assets of an Unrestricted Subsidiary that is designated as a Restricted
Subsidiary (as determined by the Board of Directors of the Guarantor in good
faith), provided that such designation is then permitted pursuant to the terms
of the Indenture.
Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Indenture.
Paragraph 11. The Securities shall be entitled to the benefit of each
of the covenants in Article 4 of the Base Indenture and each of the following
additional covenants (each of which shall be deemed to be a provision of the
Indenture and, when referred to as a provision of the Indenture, shall be
identified by reference to the Section number which is set forth
immediately preceding such covenant):
Section 4.04. Limitation on Restricted Payments. The Guarantor may
not declare or pay any dividend or make any distribution or payment on its
Capital Stock or to its shareholders, as shareholders (other than dividends or
distributions payable in its Capital Stock), or purchase, redeem or otherwise
acquire or retire for value, or permit any Restricted Subsidiary
to purchase or otherwise acquire for value, any Capital Stock of the Guarantor
(collectively, "Restricted Payments"), or make or permit any Restricted
Subsidiary to make (I) any loan, advance, capital contribution or transfer other
than for fair market value (as determined by a majority of the disinterested
members of the Board of Directors of the Guarantor or the relevant
Restricted Subsidiary, which shall be evidenced by a written resolution of
such Board of Directors) in or to any Affiliate (which term does not include
joint ventures (whether in corporate, partnership or other form) with an
unaffiliated party or parties) other than a Restricted
Subsidiary or the Guarantor or (II) any Unrestricted Subsidiary Investment
(collectively, "Restricted Investments"), if, at the time of such Restricted
Payment or Restricted Investment, or after giving effect thereto, (i) a
Default or an Event of Default shall have occurred and be continuing, or (ii)
the sum of (x) the aggregate amount expended for such Restricted Payments
(the amount expended for such purposes, if other than in cash, to be determined
by the Board of Directors of the Guarantor, whose determination shall be
conclusive and evidenced by a resolution of such Board of Directors filed with
the Trustee) subsequent to October 31, 1991, and (y) the amount by which the
aggregate book value of all property (net of any previous write-downs or
reserves in respect of such property) subject to Non-Recourse Indebtedness
which has been accelerated or is in default is in excess of such Non-Recourse
Indebtedness and (z) the aggregate amount of Restricted Investments then
outstanding, shall exceed the sum of (a) 50% of the aggregate Consolidated
Net Income (or, in case such aggregate Consolidated Net Income
shall be a deficit, minus 100% of such deficit) of the Guarantor accrued on a
cumulative basis subsequent to October 31, 1991, and (b) the aggregate net
proceeds, including the fair market value of property other than cash (as
determined by the Board of Directors of the Guarantor, whose determination
shall be conclusive and evidenced by a resolution of such Board of Directors
filed with the Trustee), received by the Guarantor from the issue or sale after
October 31, 1991 of Capital Stock of the Guarantor, including capital stock of
the Guarantor issued upon the conversion of indebtedness of the Guarantor, other
than Capital Stock that is redeemable at the option of the holder or is
mandatorily redeemable and (c) $20,000,000, or (iii) the Guarantor would be
unable to incur an additional $1.00 of Indebtedness (other than Excluded
Debt) pursuant to Section 4.07; provided, however, that the foregoing shall
not prevent (A) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration the making of such
payment would have complied with the provisions of this limitation on
dividends, or (B) the retirement of any shares of the Guarantor's Capital
Stock by exchange for, or out of proceeds of the substantially concurrent sale
of, other shares of its Capital Stock (other than Capital Stock that is
redeemable at the option of the holder or is mandatorily redeemable), or (C)
the payment or advance of cash compensation or any compensation pursuant
to or in connection with any employee benefit plan of the Guarantor and the
Subsidiaries paid or payable to any Person in his or her capacity as an
employee, officer or director, and neither such retirement nor the proceeds
of any such sale or exchange nor the payment or advance of any such
compensation shall be included in any computation made under clause (ii) of
this Section 4.04.
Section 4.05. Limitation on Restrictions on Payment of Dividends by
Subsidiaries. The Guarantor will not, and will not permit any Subsidiary to,
enter into any agreement or amendment of any existing agreement if such
agreement or amendment would restrict the payment of dividends or the making
of other distributions on any Subsidiary's Capital Stock, provided that a
Subsidiary may enter into such an agreement or amendment if, immediately
prior thereto either (i) (A) the Consolidated Net Worth of the Guarantor
(excluding the Consolidated Net Worth of such Subsidiary and any other
Subsidiaries which have such agreements) is at least $50,000,000 and (B) the
Consolidated Net Worth of such Subsidiary and any other Subsidiaries which
have such agreements does not account for more than 20% of the
Consolidated Net Worth of the Guarantor (including such Subsidiary and any
other Subsidiaries which have such agreements) or (ii) the Consolidated Net
Worth of the Guarantor (excluding the Consolidated Net Worth of such Subsidiary
and any other Subsidiaries which have such agreements) is at least $70,000,000.
Section 4.06. Maintenance of Consolidated Net Worth. If the
Consolidated Net Worth of the Guarantor and its Subsidiaries at the end of any
two consecutive fiscal quarters is less than $55,000,000, then the Guarantor
shall cause the Company to offer to repurchase (the "Offer") on the last day
of the fiscal quarter next following such second fiscal quarter, or, if such
second fiscal quarter ends on the last day of the Guarantor's fiscal year,
120 days following the last day of such second fiscal quarter (the "Purchase
Date") $7,500,000 aggregate principal amount of Securities (or such lesser
amount as may be outstanding at the time, such amount being referred to as
the "Offer Amount") at a purchase price equal to their principal amount plus
accrued and unpaid interest to the Purchase Date. The Company may credit
against its obligation to offer to repurchase Securities on a Purchase Date
the principal amount of (i) Securities acquired by the Company and surrendered
for cancellation otherwise than pursuant to an Offer and (ii) Securities
redeemed or called for redemption, in each case at least 60 days before the
Purchase Date. In no event shall the failure to meet the minimum Consolidated
Net Worth stated above at the end of any fiscal quarter be counted toward the
making of more than one Offer.
The Company shall provide the Trustee with notice of the Offer at
least 60 days before any such Purchase Date and at least 10 days before the
notice of any Offer is mailed to Holders. The Company shall notify the Trustee
promptly after the occurrence of any of the events specified in this Section.
Notice of an Offer shall be mailed by the Trustee not less than 30
days nor more than 60 days prior to the Purchase Date to each Holder of the
Securities at its last registered address. The Offer shall remain open from
the time of mailing until 5 days before the Purchase Date. The notice shall
be accompanied by a copy of the information regarding the Guarantor
required to be contained in a Quarterly Report on Form 10-Q for the second
fiscal quarter referred to above if such second fiscal quarter is one of the
Guarantor's first three fiscal quarters. If such second fiscal quarter is the
Guarantor's last fiscal quarter, a copy of the information
required to be contained in an Annual Report to Shareholders pursuant to Rule
14a-3 under the Exchange Act for the fiscal year ending with such second fiscal
quarter shall either accompany the notice or be mailed to Holders not less than
15 days before the Purchase Date. The notice
shall contain all instructions and materials necessary to enable such Holders
to tender Securities pursuant to the Offer. The notice, which shall govern the
terms of the Offer, shall state:
(1) that the Offer is being made pursuant to this Section 4.06;
(2) the Offer Amount, the purchase price and the Purchase Date;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the
Offer shall cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Security purchased pursuant
to an Offer will be required to surrender the Security, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Security completed,
to the Paying Agent at the address specified in the notice at least 5 days
before the Purchase Date;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three days prior to the Purchase Date,
a telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to have
the Security purchased;
(7) that if Securities in a principal amount in excess of the
Offer Amount are tendered pursuant to the Offer, the Company shall purchase
Securities on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000
or integral multiples of $1,000 shall be acquired); and
(8) that Holders whose Securities were purchased only in part
will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
Before a Purchase Date the Company shall (i) accept for payment
Securities or portions thereof properly tendered pursuant to the Offer (on a pro
rata basis if required pursuant to paragraph (7) above), (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail or deliver to Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and mail or deliver to such Holders a new Security equal in principal
amount to any unpurchased portion of the Security surrendered. Any Securities
not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company will publicly announce the results of the Offer on
the Purchase Date. For purposes of this Section 4.06, the Trustee shall act as
the Paying Agent.
Section 4.07. Limitation on Additional Indebtedness. The Guarantor
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, incur, issue, assume, guarantee or in any other manner become
liable, contingently or otherwise, with respect to any Indebtedness (or, with
respect to Restricted Subsidiaries only, any preferred stock) (whether in
liquidation or otherwise) other than Excluded Debt, unless, after giving
effect thereto, either (A) the Consolidated Fixed Charge Ratio of the Guarantor
exceeds 1.5:1 or (B) the ratio of Indebtedness (and, if applicable, Restricted
Subsidiary preferred stock) of such Persons (excluding, for purposes of this
calculation, purchase money mortgages that are Non-Recourse Indebtedness,
obligations incurred under letters of credit, escrow agreements and surety
bonds in the ordinary course of business, Indebtedness of the Guarantor's
directly or indirectly majority-owned mortgage finance Affiliates and Excluded
Debt) to Consolidated Adjusted Net Worth of the Guarantor is less than 4.5:1.
Notwithstanding the foregoing, the Guarantor and its Restricted Subsidiaries
may incur, issue, assume, guarantee or otherwise become liable with
respect to: (I) purchase money mortgages that are Non-Recourse Indebtedness,
(ii) obligations incurred under letters of credit, escrow agreements and surety
bonds in the ordinary course of business, (iii) Indebtedness of the Guarantor's
directly or indirectly majority-owned mortgage finance Affiliates and (iv)
Indebtedness solely for the purpose of refinancing or repaying any
existing Indebtedness or Restricted Subsidiary preferred stock so long as
after giving effect to such refinancing or repayment, the sum of total
consolidated Indebtedness of the Guarantor and its Restricted Subsidiaries and
the aggregate liquidation preference of Restricted Subsidiary
preferred stock is not increased (provided that for purposes of this
subsection 4.07(iv), application of the proceeds from the sale of assets of the
Guarantor or its Restricted Subsidiaries in the ordinary course of business to
reduce Indebtedness or Restricted Subsidiary preferred stock
and the subsequent reborrowing to purchase assets in the ordinary course
of business shall be deemed to be a refinancing).
Section 4.08. Restrictions on Permitting Restricted Subsidiaries to
Become Unrestricted Subsidiaries and Unrestricted Subsidiaries to Become
Restricted Subsidiaries.
(a) The Guarantor will not permit any Restricted Subsidiary to be
designated as an Unrestricted Subsidiary unless the Guarantor and its Restricted
Subsidiaries would thereafter be permitted to (i) incur at least $1.00 of
Indebtedness (other than Excluded Debt) pursuant to Section 4.07 and (ii)
make a Restricted Payment or Restricted Investment of at least $1.00
pursuant to Section 4.04.
(b) The Guarantor will not permit any Unrestricted Subsidiary to be
designated as a Restricted Subsidiary unless such Subsidiary has outstanding no
Indebtedness except such Indebtedness as the Guarantor could permit it to become
liable for immediately after becoming a Restricted Subsidiary under the
provisions of Section 4.07.
(c) Promptly after the adoption of any Board Resolution designating
a Restricted Subsidiary as an Unrestricted Subsidiary or an Unrestricted
Subsidiary as a Restricted Subsidiary, a copy thereof shall be filed with the
Trustee, together with a Officers' Certificate stating that the provisions of
this Section have been complied with in connection with such designation.
(d) The Guarantor will not designate the Company an Unrestricted
Subsidiary.
(e) At the date of this Indenture all of the Subsidiaries are, and
shall be permitted to be, Restricted Subsidiaries.
Section 4.09. When the Company and the Guarantor May Merge, Etc.
Neither the Company nor the Guarantor shall consolidate with or merge into, or
transfer all or substantially all of its assets to, any other Person unless (i)
such other Person is a corporation organized and existing under the laws of the
United States or a state thereof 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 issued
thereunder, or the Guarantee, as the case may be; (ii) immediately after giving
effect to such transaction no Default or Event of Default shall have occurred
and be continuing; (iii) the Consolidated Net Worth of the obligor of the
Securities immediately after such transaction is not less than the Consolidated
Net Worth of the Company or the Guarantor, as applicable, immediately prior to
such transaction and (iv) the surviving corporation would be able to incur at
least an additional $1.00 of Indebtedness (other than Excluded Debt) under
Section 4.07. Thereafter all such obligations of a predecessor corporation
shall terminate.
Paragraph 12. The Securities shall initially be represented by one
or more global Securities (each a "Global Security") deposited with the Trustee
on behalf of The Depositary Trust Company ("DTC") and registered in the name of
Cede & Co. or in the name of such other nominee of DTC as is requested by an
authorized representative of DTC. Unless and until a Global Security registered
in the name of DTC or a nominee of DTC is exchanged in whole or in
part for certificated Securities in definitive form, such Global Security may
not be transferred except as a whole by DTC to a nominee of DTC or by a nominee
of DTC to DTC or another nominee of DTC. If DTC is at any time unwilling,
unable or ineligible to continue as a depositary for the Securities and a
successor depositary is not appointed by the Company within 90 days, the
Company shall cause the Trustee to issue individual Securities in definitive
form in exchange for each Global Security then registered in the name of DTC or
a nominee of DTC. The Company shall be entitled at any time and in its sole
discretion to determine not to have Global Securities and, in such event, shall
cause the Trustee to issue individual Securities in definitive form in exchange
for each Global Security then representing all such Securities. In
either instance, an owner of a beneficial interest in a Global Security
shall be entitled to physical delivery of Securities in definitive form equal in
principal amount to such beneficial interest and to have such Securities
registered in its name. Individual Securities so issued in definitive form
shall be issued in denominations of $1,000 and any larger amount that is an
integral multiple of $1,000 and shall be issued in registered form only, without
coupons. In the event a beneficial owner of a Security represented by a Global
Security requests to have such beneficially owned Security (a "DTC Withdrawn
Security") issued in definitive form in exchange for the beneficial
interest in the Global Security representing the DTC Withdrawn Security, such
owner shall be entitled to physical delivery of a Security in definitive form
equal in principal amount to such DTC Withdrawn Security and to have such
Security registered in its name. Payments of principal of and interest on a
Global Security registered in the name of DTC or a nominee of DTC shall be
made by the Company through the Trustee to DTC or its nominee, as the case may
be, as the registered owner of such Global Security. If a Global Security is
issued in the name of a depositary other than DTC or such other depositary's
nominee, the terms and provisions of this Paragraph 12 which are applicable to
DTC and its nominee shall be applicable to, and each reference to DTC and its
nominee shall be deemed to be a reference to such other depositary and
its nominee, respectively, with respect to the Global Security registered in
the name of such other depositary or its nominee.
Paragraph 13. Except as otherwise indicated, each reference herein
to a "Paragraph" shall refer to a Paragraph hereof, and each reference herein
to a "Section" shall refer to a Section of the Indenture.
FURTHER RESOLVED, that the Chairman, President, Chief Financial
Officer, Chief Accounting Officer, Vice President - Controller or Vice
President - Finance of the Company (each a "Company Designated Officer"), and
the Chairman, President, Chief Financial Officer, Chief Accounting Officer,
Vice President - Controller or Vice President - Finance of the
Guarantor (each a "Guarantor Designated Officer" and together with each Company
Designated Officer, each a "Designated Officer"), acting alone or with any other
officer, be and they hereby are, authorized and empowered, for and on behalf of
the Company and the Issuer, respectively, to execute and deliver the Terms
Agreement dated April 13, 1999 among the Company, the Guarantor and Goldman,
Sachs & Co. (the "Terms Agreement"), a copy of which is attached
hereto as Attachment B, relating to the issuance and sale of the Securities.
FURTHER RESOLVED, that any two of the Company Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the Company,
to execute and deliver a Global Security in the form attached hereto as
Attachment A, in the principal amount of $100,000,000 and payable to Cede & Co.,
with such changes thereto as such officers shall approve (the "Authorized Global
Security"), their execution of the Authorized Global Security to be conclusive
evidence of such approval;
FURTHER RESOLVED, that any two of the Company Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the Company,
to execute and deliver certificated Securities in definitive form, in
substantially the same form as the Authorized Global Security, provided,
however, that the legends appearing on the face of the
Authorized Global Security shall not be included in such certificated
Securities;
FURTHER RESOLVED, that any two of the Guarantor Designated Officers
be, and they hereby are, authorized and empowered, for and on behalf of the
Guarantor, to execute and deliver the Guarantee of the Authorized Global
Security in the form of the Guarantee included in Attachment A, with such
changes thereto as such officers shall approve (the "Authorized Guarantee"),
their execution of the Authorized Guarantee to be conclusive evidence of such
approval;
FURTHER RESOLVED, that any two of the Guarantor Designated Officers
be, and they hereby are, authorized and empowered, for and on behalf of the
Guarantor, to execute and deliver certificated Securities in definitive form, in
substantially the same form as the Authorized Global Security, provided,
however, that the legends appearing on the face of the Authorized Global
Security shall not be included in such certificated Securities;
FURTHER RESOLVED, that the Company Designated Officers be, and each of
them hereby is, authorized and directed in the name and on behalf of the Company
and under its manual or facsimile seal, and the Guarantor Designated Officers
be, and each of them hereby is, authorized and directed in the name and on
behalf of the Guarantor, to execute, acknowledge and deliver the Base
Indenture; and
FURTHER RESOLVED, that a Designated Officer, acting alone or with any
other officer of the Company or the Guarantor, as the case may be, be and he
hereby is authorized, empowered and directed with the advice of counsel, for
and on behalf of the Company or the Guarantor, as the case may be, to prepare,
execute and file any other documents, instruments, or certificates, to perform
any acts and to do any and all other things on behalf of the Company or the
Guarantor, as the case may be, that said officer shall deem appropriate in
order to effectuate the foregoing resolutions and complete and consummate the
offering of the Securities pursuant to the terms of the Terms Agreement and the
Indenture, and to qualify the Securities for sale to the public in accordance
with any law, rule or regulation of any federal or state governmental body.
AUTHORIZING RESOLUTIONS
Relating to the $100,000,000 Principal Amount of
8% Senior Subordinated Notes
Due 2009
of
Toll Corp.
Guaranteed on a Senior Subordinated Basis
by
Toll Brothers, Inc.
______________________________
Approved by the Board of Directors
of Toll Corp.
and the Shelf Terms Committee
of Toll Brothers, Inc.
______________________________
As of April 13, 1999
ATTACHMENT A
Form of Global Security
Joint Action by Unanimous Consent in Writing
of the Board of Directors of
Toll Corp.
and of the
Shelf Terms Committee of Toll Brothers, Inc.
As of April 13, 1999
The undersigned, constituting all of the Directors of Toll Corp., a
Delaware corporation, and all of the members of the Shelf Terms Committee of
Toll Brothers, Inc., a Delaware corporation, by joint consent in writing
pursuant to the authority contained in the General Corporation Law of Delaware,
as amended, without the formality of convening a meeting, do hereby consent to
the authorization, adoption and approval of the Authorizing Resolutions in
the form attached hereto and incorporated herein.
TOLL CORP.
BOARD OF DIRECTORS
_____________________ ____________________
Robert I. Toll Zvi Barzilay
_____________________
Joel H. Rassman
TOLL BROTHERS, INC.
SHELF TERMS COMMITTEE
_____________________ ____________________
Robert I. Toll Bruce E. Toll
_____________________
Carl B. Marbach