Exhibit 4.2
AUTHORIZING RESOLUTIONS
Relating to the $100,000,000 Principal Amount of
8 3/4% Senior Subordinated Notes
Due 2006
of
Toll Corp.
Guaranteed on a Senior Subordinated Basis
by
Toll Brothers, Inc.
------------------------------
Approved by the Board of Directors
of Toll Corp.
and the Shelf Terms Committee
of Toll Brothers, Inc.
------------------------------
As of November 6, 1996
Joint Resolutions Adopted by
the Board of Directors
of
Toll Corp.
and by
the Shelf Terms Committee
of
Toll Brothers, Inc.
As of November 6, 1996
Relating to $100,000,000 Principal Amount of
8 3/4% Senior Subordinated Notes
of Toll Corp. Due 2006 and
Guaranteed on a Senior Subordinated Basis by Toll Brothers, Inc.
WHEREAS, Toll Brothers, Inc. (the "Guarantor") and Toll Corp. (the
"Company") previously filed a Registration Statement on Form S-3 (File Nos.
33-51775 and 33-51775-01) with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, relating to the "shelf registration" of the
Guarantor's Common Shares, Preferred Shares, and Guarantees and the Company's
Debt Securities for a proposed public offering or offerings in the aggregate
amount up to $250,000,000 (the "Shelf Registration Statement"); and
WHEREAS, in January 1994,the Company sold $57,500,000 principal amount
of 4 3/4% Convertible Senior Subordinated Notes of the Company, guaranteed on a
senior subordinated basis by the Guarantor pursuant to the Shelf Registration
Statement.
WHEREAS, the Company and the Guarantor desire to sell $100,000,000
principal amount of a new series of Senior Subordinated Notes of the Company,
guaranteed on a senior subordinated basis by the Guarantor (the "Securities"),
pursuant to the Shelf Registration Statement.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Company (the "Toll Board") and the Shelf Terms Committee of the Board of
Directors of the Guarantor (the "Shelf Committee") hereby approve the
establishment and the issuance of the Securities to be issued as a series
pursuant to an Indenture, in the form included as Exhibit 4.1 to the Shelf
Registration Statement, to be dated as of November 12, 1996, among the Company,
as the issuer, the Guarantor, as the Guarantor, and NBD Bank, a Michigan banking
corporation, as Trustee (the "Trustee"), (the "Base Indenture"), as the same is
supplemented by these resolutions.
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RESOLVED, FURTHER, that the Toll Board and the Shelf Committee hereby
approve the following terms and provisions which shall supplement the terms and
provisions of the Base Indenture (said supplemented terms and provisions and the
Base Indenture are hereinafter collectively referred to as the "Indenture" and
each reference herein to the "Indenture" is a reference to the Base Indenture as
the same is supplemented by the terms and provisions of these joint
resolutions):
PARAGRAPH 1. The title of the Securities shall be "8 3/4% Senior
Subordinated Notes due 2006".
PARAGRAPH 2. The aggregate principal amount at maturity of the
Securities which may be authenticated and delivered under the Indenture shall be
$100,000,000 (except for any Securities authenticated and delivered upon
registration of the transfer of, or in exchange for, or in lieu of other
Securities pursuant to the terms of the Indenture). The Securities will be
issued only in registered form in denominations of $1,000 and integral multiples
thereof.
PARAGRAPH 3. The principal amount of the Securities is due and payable
in full on November 15, 2006, subject to earlier redemption as referred to in
the Indenture.
PARAGRAPH 4. The Securities shall bear interest at the rate of 8 3/4%
per annum (computed on the basis of a 360-day year of twelve 30-day months),
from November 12, 1996 to maturity or early redemption; and interest will be
payable semi-annually on May 15 and November 15 in each year, commencing May 15,
1997, to the persons in whose name such Securities are registered at the close
of business on the May 1 or November 1, as the case may be, preceding such
interest payment date.
PARAGRAPH 5. The Securities are redeemable, in whole or in part from
time to time on or after November 15, 2001 and prior to maturity, at the option
of the Company upon not less than 30 nor more than 60 days' notice mailed by
first-class mail to each Holder of record at such Holder's last address as it
appears on the registration books of the Registrar. Redemption of the Securities
made at the election of the Company shall be made at the following respective
redemption prices (expressed as a percentage of principal amount), plus accrued
and unpaid interest to the redemption date, if redeemed during the 12-month
period beginning November 15 of the years indicated:
Year Percentage
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2001................................. 104.375%
2002................................. 102.917%
2003................................. 101.458%
2004 and thereafter.................. 100.000%
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PARAGRAPH 6. Principal of and interest on the Securities shall be
payable in accordance with Section 4.01 of the Indenture.
PARAGRAPH 7. The Securities shall not be convertible into the Company's
or the Guarantor's Common Stock.
PARAGRAPH 8. The payment of the principal of, premium, if any, and
interest on the Securities is subordinated in right of payment, in the manner
and to the extent set forth in the Indenture, to the prior payment in full of
all senior indebtedness of the Company (referred to in the Indenture as "Senior
Indebtedness of the Company" and as further defined herein) whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. The term "Senior Indebtedness of the Company" as used in the
Indenture shall mean: (i) the principal of, premium, if any, and interest on any
indebtedness, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed by the Company, (a) under the Revolving
Credit Agreement (as defined in the Indenture), (b) for money borrowed from
others (including, for this purpose, all obligations incurred under capitalized
leases or purchase money mortgages or under letters of credit or similar
commitments), or (c) in connection with the acquisition by it of any other
business, property or entity and, in each case, all renewals, extensions and
refundings thereof, unless the terms of the instrument creating or evidencing
such indebtedness expressly provide that such indebtedness is not superior in
right of payment to the payment of the principal of, premium, if any, and
interest on the Securities. Senior Indebtedness of the Company, as such term is
used in the Indenture, shall not include (a) indebtedness or amounts owed for
compensation to employees, for goods or materials purchased in the ordinary
course of business, or for services, (b) indebtedness of the Company to the
Guarantor or any Subsidiary for money borrowed or advances from such entities,
(c) the Company's 10 1/2% Senior Subordinated Notes due 2002 (which shall rank
pari passu in right of payment with the Securities), (d) the Company's 9 1/2%
Senior Subordinated Notes due 2003 (which shall rank pari passu in right of
payment with the Securities), (e) the Company's 4 3/4% Convertible Senior
Subordinated Notes due 2004 (which shall rank pari passu in right of payment
with the Securities), and (f) the Securities. For purposes hereof, a
"capitalized lease" shall be deemed to mean a lease of real or personal property
which, in accordance with generally accepted accounting principles, has been
capitalized.
PARAGRAPH 9. The payment of the principal of, premium, if any, and
interest on the Securities pursuant to the Guarantee (as such term is defined in
the Indenture) will be subordinated in right of payment, in the manner and to
the extent set forth in the Indenture, to the prior payment in full of all
senior indebtedness of the Guarantor (referred to in the Indenture as "Senior
Indebtedness of the Guarantor" and as further defined herein), whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. The term "Senior Indebtedness of the Guarantor" as used
in the Indenture shall mean: (i) the principal of, premium, if any, and interest
on any indebtedness, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed or guaranteed by the Guarantor, (a) under
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the Revolving Credit Agreement, or (b) for money borrowed from others
(including, for this purpose, all obligations incurred under capitalized leases
or purchase money mortgages or under letters of credit or similar commitments),
or (c) in connection with the acquisition by it of any other business, property
or entity, and, in each case, all renewals, extensions and refundings thereof,
unless the terms of the instrument creating or evidencing such indebtedness
expressly provide that such indebtedness is not superior in right of payment to
the payment of the Securities pursuant to the Guarantee. Senior Indebtedness of
the Guarantor, as such term is used in the Indenture, shall not include (a) the
Guarantee, (b) indebtedness of the Guarantor to any Subsidiary for money
borrowed or advances from such Subsidiary, (c) the Guarantor's guarantee of the
Company's 10 1/2% Senior Subordinated Notes due 2002 (which shall rank pari
passu in right of payment with the Guarantee), (d) the Guarantor's guarantee of
the Company's 9 1/2% Senior Subordinated Notes due 2003 (which shall rank pari
passu in right of payment with the Guarantee) and (e) the Guarantor's guarantee
of the Company's 4 3/4% Convertible Senior Subordinated Notes due 2004 (which
shall rank pari pasu in right of payment with the Guarantee). For purposes
hereof, a "capitalized lease" shall be deemed to mean a lease of real or
personal property which, in accordance with generally accepted accounting
principles, has been capitalized.
PARAGRAPH 10. As used in the Indenture, the following terms shall have
the respective meanings set forth below:
"Consolidated Adjusted Net Worth" of the Guarantor means the
Consolidated Net Worth of the Guarantor less the stockholders' equity of each of
the Unrestricted Subsidiaries, as determined in accordance with generally
accepted accounting principles.
"Consolidated Fixed Charge Ratio" of the Guarantor means the ratio of
(i) the aggregate amount of Consolidated Net Income Available for Fixed Charges
of such Person for the four fiscal quarters for which financial information in
respect thereof is available immediately prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Ratio (the
"Transaction Date") to (ii) the aggregate Consolidated Interest Expense of such
Person for the four fiscal quarters for which financial information in respect
thereof is available immediately prior to the Transaction Date.
"Consolidated Income Tax Expense" of the Guarantor means, for any
period for which the determination thereof is to be made, the aggregate of the
income tax expense of the Guarantor and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense" of the Guarantor means, for any period
for which the determination thereof is to be made, the Interest Expense of the
Guarantor and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with generally accepted accounting principles.
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"Consolidated Net Adjusted Income" of the Guarantor means, for any
period for which the determination thereof is to be made taken as one accounting
period, the aggregate Consolidated Net Income of the Guarantor and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles, adjusted by excluding (to the extent not
otherwise excluded in calculating Consolidated Net Income) any net extraordinary
gain or any net extraordinary loss, as the case may be, during such period.
"Consolidated Net Income" for any period means the aggregate of the Net
Income of the Guarantor and its consolidated subsidiaries for such period, on a
consolidated basis, determined in accordance with generally accepted accounting
principles, provided that (i) the Net Income of any person in which the
Guarantor or any consolidated Subsidiary has a joint interest with the third
party or which is organized outside of the United States shall be included only
to the extent of the lesser of (A) the amount of dividends or distributions paid
to the Guarantor or a consolidated subsidiary or (B) the Guarantor's direct or
indirect proportionate interest in the Net Income of such Person, provided that,
so long as the Guarantor or a consolidated subsidiary has an unqualified legal
right to require the payment of a dividend or distribution, Net Income shall be
determined solely pursuant to clause (B); (ii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, and (iii) the Net Income of any
Unrestricted Subsidiary shall be included only to the extent of the amount of
dividends or distributions (the fair value of which, if other than in cash, to
be determined by the Board of Directors, in good faith) by such Subsidiary to
the Guarantor or to any of its consolidated Restricted Subsidiaries.
"Consolidated Net Income Available for Fixed Charges" means, for any
period for which the determination thereof is to be made, the sum of the amounts
for such period of (i) Consolidated Net Adjusted Income, (ii) Consolidated
Interest Expense (excluding capitalized interest) and (iii) Consolidated Income
Tax Expense, all as determined on a consolidated basis for the Guarantor and its
Subsidiaries in conformity with generally accepted accounting principles.
"Designated Senior Debt of the Guarantor" means any single issue of
Indebtedness of the Guarantor constituting Senior Indebtedness of the Guarantor
which at the time of determination has an aggregate principal amount outstanding
of at least $25,000,000 and is specifically designated in the instrument or
instruments creating, governing or evidencing such Senior Indebtedness of the
Guarantor as "Designated Senior Debt of Toll Brothers, Inc." (it being
understood that the Guarantor's guarantee of the Revolving Credit Agreement
shall be considered a single issue of Indebtedness of the Guarantor for purposes
of this definition).
"Designated Senior Debt of the Company" means any single issue of
Indebtedness of the Company constituting Senior Indebtedness of the Company
which at the time of determination has an aggregate principal amount outstanding
of at least $25,000,000 and is specifically designated in the instrument or
instruments creating, governing or evidencing such
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Senior Indebtedness of the Company as "Designated Senior Debt of Toll Corp." (it
being understood that the Company's guarantee of the Revolving Credit Agreement
shall be considered a single issue of Indebtedness of the Company for purposes
of this definition).
"Excluded Debt" means any Indebtedness of the Guarantor and any
Indebtedness or preferred stock of the Company, whether outstanding on the date
of the Indenture or thereafter created, which is (i) subordinated in right of
payment to the Securities or the Guarantee (upon liquidation or otherwise) and
(ii) matures after, and is not redeemable, mandatorily or at the option of the
holder thereof prior to the date of maturity of the Securities.
"Indebtedness," for the purpose of the covenants described in Sections
4.07 and 4.08, and certain definitions, means without duplication (i) any
liability of any Person (a) for borrowed money or evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation) given in
connection with the acquisition of any businesses, properties or assets of any
kind (other than a trade payable or current liability arising in the ordinary
course of business) to the extent it would appear as a liability upon a balance
sheet of such Person prepared on a consolidated basis in accordance with
generally accepted accounting principles, or (b) for the payment of money
relating to a capitalized lease obligation; (ii) any liability of any Person
under any obligation incurred under letters of credit; and (iii) any liability
of others described in clause (i) or (ii) with respect to which such Person has
made a guarantee or similar arrangement, directly or indirectly (to the extent
of such guarantee or arrangement).
"Interest Expense" of any Person means, for any period for which the
determination thereof is to be made, the sum of the aggregate amount of (i)
interest in respect of indebtedness (including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing), (ii) all but the principal component of rentals in
respect of capitalized lease obligations, paid, accrued or scheduled to be paid
or accrued by such Person during such period and (iii) capitalized interest, all
as determined in accordance with generally accepted accounting principles, minus
(iv) interest expense attributable to such Person's directly or indirectly
majority-owned mortgage finance Affiliates.
"Net Income" of any Person means the net income (loss) of such Person,
determined in accordance with generally accepted accounting principles;
excluding, however, from the determination of Net Income all gain (to the extent
that it exceeds all losses) realized upon the sale or other disposition
(including, without limitation, dispositions pursuant to sale leaseback
transactions) of any real property or equipment of such Person, which is not
sold or otherwise disposed of in the ordinary course of business, or of any
capital stock of such Person or its subsidiaries owned by such Person.
"Restricted Subsidiary" means any Subsidiary that is not an
Unrestricted Subsidiary.
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"Unrestricted Subsidiary" means (a) any Subsidiary which, in accordance
with the provisions of the Indenture, has been designated in a Board Resolution
of the Guarantor as an Unrestricted Subsidiary, in each case unless and until
such Subsidiary shall, in accordance with the provisions of the Indenture, be
designated by Board Resolution as a Restricted Subsidiary; and (b) any
Subsidiary a majority of the voting stock of which shall at the time be owned
directly or indirectly by one or more Unrestricted Subsidiaries.
"Unrestricted Subsidiary Investment" means any loan, advance, capital
contribution or transfer (including by way of guarantee or other similar
arrangement) in or to any Unrestricted Subsidiary. For the purposes of the
covenant described in Section 4.04, (i) "Unrestricted Subsidiary Investment"
shall include the fair market value of the net assets of any Subsidiary at the
time that such Subsidiary is designated an Unrestricted Subsidiary and (ii) any
property transferred to an Unrestricted Subsidiary shall be valued at a fair
market value at the time of such transfer, in each case as determined by the
Board of Directors of the Guarantor in good faith. "Unrestricted Subsidiary
Investment" does not include the fair market value of the net assets of an
Unrestricted Subsidiary that is designated as a Restricted Subsidiary (as
determined by the Board of Directors of the Guarantor in good faith), provided
that such designation is then permitted pursuant to the terms of the Indenture.
Capitalized terms not otherwise defined herein shall have the meanings
given to them in the Indenture.
PARAGRAPH 11. The Securities shall be entitled to the benefit of each
of the covenants in Article 4 of the Base Indenture and each of the following
additional covenants (each of which shall be deemed to be a provision of the
Indenture and, when referred to as a provision of the Indenture, shall be
identified by reference to the Section number which is set forth immediately
preceding such covenant):
SECTION 4.04. Limitation on Restricted Payments. The Guarantor may not
declare or pay any dividend or make any distribution or payment on its Capital
Stock or to its shareholders, as shareholders (other than dividends or
distributions payable in its Capital Stock), or purchase, redeem or otherwise
acquire or retire for value, or permit any Restricted Subsidiary to purchase or
otherwise acquire for value, any Capital Stock of the Guarantor (collectively,
"Restricted Payments"), or make or permit any Restricted Subsidiary to make (I)
any loan, advance, capital contribution or transfer other than for fair market
value (as determined by a majority of the disinterested members of the Board of
Directors of the Guarantor or the relevant Restricted Subsidiary, which shall be
evidenced by a written resolution of such Board of Directors) in or to any
Affiliate (which term does not include joint ventures (whether in corporate,
partnership or other form) with an unaffiliated party or parties) other than a
Restricted Subsidiary or the Guarantor or (II) any Unrestricted Subsidiary
Investment (collectively, "Restricted Investments"), if, at the time of such
Restricted Payment or Restricted Investment, or after giving effect thereto, (i)
a Default or an Event of Default shall have occurred and be
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continuing, or (ii) the sum of (x) the aggregate amount expended for such
Restricted Payments (the amount expended for such purposes, if other than in
cash, to be determined by the Board of Directors of the Guarantor, whose
determination shall be conclusive and evidenced by a resolution of such Board of
Directors filed with the Trustee) subsequent to October 31, 199l, and (y) the
amount by which the aggregate book value of all property (net of any previous
write-downs or reserves in respect of such property) subject to Non-Recourse
Indebtedness which has been accelerated or is in default is in excess of such
Non-Recourse Indebtedness and (z) the aggregate amount of Restricted Investments
then outstanding, shall exceed the sum of (a) 50% of the aggregate Consolidated
Net Income (or, in case such aggregate Consolidated Net Income shall be a
deficit, minus 100% of such deficit) of the Guarantor accrued on a cumulative
basis subsequent to October 31, 1991, and (b) the aggregate net proceeds,
including the fair market value of property other than cash (as determined by
the Board of Directors of the Guarantor, whose determination shall be conclusive
and evidenced by a resolution of such Board of Directors filed with the
Trustee), received by the Guarantor from the issue or sale after October 31,
1991 of Capital Stock of the Guarantor, including capital stock of the Guarantor
issued upon the conversion of indebtedness of the Guarantor, other than Capital
Stock that is redeemable at the option of the holder or is mandatorily
redeemable and (c) $20,000,000, or (iii) the Guarantor would be unable to incur
an additional $1.00 of Indebtedness (other than Excluded Debt) pursuant to
Section 4.07; provided, however, that the foregoing shall not prevent (A) the
payment of any dividend within 60 days after the date of declaration thereof, if
at said date of declaration the making of such payment would have complied with
the provisions hereof, (B) the retirement of any shares of the Guarantor's
Capital Stock by exchange for, or out of proceeds of the substantially
concurrent sale of, other shares of its Capital Stock (other than Capital Stock
that is redeemable at the option of the holder or is mandatorily redeemable), or
(C) the payment or advance of cash compensation or any compensation pursuant to
or in connection with any employee benefit plan of the Guarantor and the
Subsidiaries paid or payable to any person in his or her capacity as an
employee, officer or director, and neither such retirement nor the proceeds of
any such sale or exchange nor the payment or advance of any such compensation
shall be included in any computation made under clause (ii) of this Section
4.04.
SECTION 4.05. Limitation on Restrictions on Payment of Dividends by
Subsidiaries. The Guarantor will not, and will not permit any Subsidiary to,
enter into any agreement or amendment of any existing agreement if such
agreement or amendment would restrict the payment of dividends or the making of
other distributions on any Subsidiary's Capital Stock, provided that a
Subsidiary may enter into such an agreement or amendment if, immediately prior
thereto either (i) (A) the Consolidated Net Worth of the Guarantor (excluding
the Consolidated Net Worth of such Subsidiary and any other Subsidiaries which
have such agreements) is at least $50,000,000 and (B) the Consolidated Net Worth
of such Subsidiary and any other Subsidiaries which have such agreements does
not account for more than 20% of the Consolidated Net Worth of the Guarantor
(including such Subsidiary and any other Subsidiaries which have such
agreements) or (ii) the Consolidated Net Worth of the Guarantor (excluding the
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Consolidated Net Worth of such Subsidiary and any other Subsidiaries which have
such agreements) is at least $70,000,000.
SECTION 4.06. Maintenance of Consolidated Net Worth. If the
Consolidated Net Worth of the Guarantor and its Subsidiaries at the end of any
two consecutive fiscal quarters is less than $55,000,000, then the Guarantor
shall cause the Company to offer to acquire (the "Offer") on the last day of the
fiscal quarter next following such second fiscal quarter, or, if such second
fiscal quarter ends on the last day of the Guarantor's fiscal year, 120 days
following the last day of such second fiscal quarter (the "Purchase Date")
$7,500,000 aggregate principal amount of Securities (or such lesser amount as
may be outstanding at the time, such amount being referred to as the "Offer
Amount") at a purchase price equal to their principal amount plus accrued and
unpaid interest to the Purchase Date. The Company may credit against its
obligation to offer to repurchase Securities on a Purchase Date the principal
amount of (i) Securities acquired by the Company and surrendered for
cancellation otherwise than pursuant to this Section and (ii) Securities
redeemed or called for redemption, in each case at least 60 days before such
Purchase Date. In no event shall the failure to meet the minimum Consolidated
Net Worth stated above at the end of any fiscal quarter be counted toward the
making of more than one Offer.
The Company shall provide the Trustee with notice of the Offer at least
60 days before any such Purchase Date and at least 10 days before the notice of
any Offer is mailed to Holders. The Company shall notify the Trustee promptly
after the occurrence of any of the events specified in this Section.
Notice of an Offer shall be mailed by the Trustee not less than 30 days
nor more than 60 days before the Purchase Date to the Holders of the Securities
at their last registered address. The Offer shall remain open from the time of
mailing until 5 days before the Purchase Date. The notice shall be accompanied
by a copy of the information regarding the Guarantor required to be contained in
a Quarterly Report on Form 10-Q for the second fiscal quarter referred to above
if such second fiscal quarter is one of the Guarantor's first three fiscal
quarters. If such second fiscal quarter is the Guarantor's last fiscal quarter,
a copy of the information required to be contained in an Annual Report to
Shareholders pursuant to Rule 14a-3 under the Exchange Act for the fiscal year
ending with such second fiscal quarter shall either accompany the notice or be
mailed to Holders not less than 15 days before the Purchase Date. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer. The notice, which shall govern the
terms of the Offer, shall state:
(1) that the Offer is being made pursuant to this Section 4.06;
(2) the Offer Amount, the purchase price and the Purchase Date;
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(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Offer shall
cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Security purchased pursuant to an
Offer will be required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in
the notice at least 5 days before the Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than three days prior to the
Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Security the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have the Security
purchased;
(7) that if Securities in a principal amount in excess of the Offer
Amount are tendered pursuant to the Offer, the Company shall
purchase Securities on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples of $1,000 shall be
acquired); and
(8) that Holders whose Securities were purchased only in part will be
issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
Before a Purchase Date the Company shall (i) accept for payment
Securities or portions thereof properly tendered pursuant to the Offer (on a pro
rata basis if required pursuant to paragraph (7) above), (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail or deliver to Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and mail or deliver to such Holders a new Security equal in principal amount to
any unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Offer on the
Purchase Date. For purposes of this Section 4.06, the Trustee shall act as the
Paying Agent.
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SECTION 4.07. Limitation on Additional Indebtedness. The Guarantor will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
incur, issue, assume, guarantee or in any other manner become liable,
contingently or otherwise, with respect to any Indebtedness (or, with respect to
Restricted Subsidiaries only, any preferred stock) (whether in liquidation or
otherwise) other than Excluded Debt, unless, after giving effect thereto, either
(A) the Consolidated Fixed Charge Ratio of the Guarantor exceeds 1.5:1 or (B)
the ratio of Indebtedness (and, if applicable, Restricted Subsidiary preferred
stock) of such Persons (excluding, for purposes of this calculation, purchase
money mortgages that are Non-Recourse Indebtedness, obligations incurred under
letters of credit, escrow agreements and surety bonds in the ordinary course of
business, Indebtedness of the Guarantor's directly or indirectly majority-owned
mortgage finance Affiliates and Excluded Debt) to Consolidated Adjusted Net
Worth of the Guarantor is less than 4.5:1. Notwithstanding the foregoing, the
Guarantor and its Restricted Subsidiaries may incur, issue, assume, guarantee or
otherwise become liable with respect to: (i) purchase money mortgages that are
Non-Recourse Indebtedness, (ii) obligations incurred under letters of credit,
escrow agreements and surety bonds in the ordinary course of business, (iii)
Indebtedness of the Guarantor's directly or indirectly majority-owned mortgage
finance Affiliates and (iv) Indebtedness solely for the purpose of refinancing
or repaying any existing Indebtedness or Restricted Subsidiary preferred stock
so long as after giving effect to such refinancing or repayment, the sum of
total consolidated Indebtedness of the Guarantor and its Restricted Subsidiaries
and the aggregate liquidation preference of Restricted Subsidiary preferred
stock is not increased (provided that for purposes of this subsection 4.07(iv),
application of the proceeds from the sale of assets of the Guarantor or its
Restricted Subsidiaries in the ordinary course of business to reduce
Indebtedness or Restricted Subsidiary preferred stock and the subsequent
reborrowing to purchase assets in the ordinary course of business shall be
deemed to be a refinancing).
SECTION 4.08. Restrictions on Permitting Restricted Subsidiaries to
Become Unrestricted Subsidiaries and Unrestricted Subsidiaries to Become
Restricted Subsidiaries.
(a) The Guarantor will not permit any Restricted Subsidiary to be
designated as an Unrestricted Subsidiary unless the Guarantor and its Restricted
Subsidiaries would thereafter be permitted to (i) incur at least $1.00 of
Indebtedness (other than Excluded Debt) pursuant to Section 4.07 and (ii) make a
Restricted Payment or Restricted Investment of at least $1.00 pursuant to
Section 4.04.
(b) The Guarantor will not permit any Unrestricted Subsidiary to be
designated as a Restricted Subsidiary unless such Subsidiary has outstanding no
Indebtedness except such Indebtedness as the Guarantor could permit it to become
liable for immediately after becoming a Restricted Subsidiary under the
provisions of Section 4.07.
(c) Promptly after the adoption of any Board Resolution designating a
Restricted Subsidiary as an Unrestricted Subsidiary or an Unrestricted
Subsidiary as a Restricted
-12-
Subsidiary, a copy thereof shall be filed with the Trustee, together with a
Officers' Certificate stating that the provisions of this Section have been
complied with in connection with such designation.
(d) The Guarantor will not designate the Company an Unrestricted
Subsidiary.
(e) At the date of this Indenture all of the Subsidiaries are, and
shall be permitted to be, Restricted Subsidiaries.
SECTION 4.09. When the Company and the Guarantor May Merge, Etc.
Neither the Company nor the Guarantor shall consolidate with or merge into, or
transfer all or substantially all of its assets to, any other person unless (i)
such other Person is a corporation organized and existing under the laws of the
United States or a State thereof of the District of Columbia and expressly
assumes by supplemental indenture all the obligations of the Company or the
Guarantor under the Indenture and either the Securities or the Guarantee, as the
case may be; (ii) immediately after giving effect to such transaction no Default
or Event of Default shall have occurred and be continuing; (iii) the
Consolidated Net Worth of the surviving corporation is equal to or greater than
the Consolidated Net Worth of the Company or the Guarantor, as the case may be,
immediately prior to such merger or transfer of assets and (iv) the surviving
corporation would be able to incur at least an additional $1.00 of Indebtedness
(other than Excluded Debt) under Section 4.07. Thereafter all such obligations
of a predecessor corporation shall terminate.
PARAGRAPH 12. The Securities shall initially be represented by one or
more global Securities (each a "Global Security") deposited with the Trustee on
behalf of The Depositary Trust Company ("DTC") and registered in the name of
Cede & Co. or in the name of such other nominee of DTC as is requested by an
authorized representative of DTC. Unless and until a Global Security registered
in the name of DTC or a nominee of DTC is exchanged in whole or in part for
certificated Securities in definitive form, such Global Security may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC. If DTC is at any time unwilling, unable or
ineligible to continue as a depositary for the Securities and a successor
depositary is not appointed by the Company within 90 days, the Company shall
cause the Trustee to issue individual Securities in definitive form in exchange
for each Global Security then registered in the name of DTC or a nominee of DTC.
The Company shall be entitled at any time and in its sole discretion to
determine not to have Global Securities and, in such event, shall cause the
Trustee to issue individual Securities in definitive form in exchange for each
Global Security then representing Securities. In either instance, an owner of a
beneficial interest in a Global Security shall be entitled to physical delivery
of Securities in definitive form equal in principal amount to such beneficial
interest and to have such Securities registered in its name. Individual
Securities so issued in definitive form shall be issued in denominations of
$1,000 and any larger amount that is an integral multiple of $1,000 and shall be
issued in registered form only, without coupons. In the event the Trustee
-13-
receives the written request of a beneficial owner of a Security represented by
a Global Security to have such beneficially owned Security (a "DTC Withdrawn
Security") issued in definitive form in exchange for the beneficial interest in
the Global Security representing the DTC Withdrawn Security, such owner shall be
entitled to physical delivery of a Security in definitive form equal in
principal amount to such DTC Withdrawn Security and to have such Security
registered in its name. Payments of principal of and interest on a Global
Security registered in the name of DTC or a nominee of DTC shall be made by the
Company through the Trustee to DTC or its nominee, as the case may be, as the
registered owner of such Global Security. If a Global Security is issued in the
name of a depositary other than DTC or such other depositary's nominee, the
terms and provisions of this Paragraph 12 which are applicable to DTC and its
nominee shall be applicable to, and each reference to DTC and its nominee shall
be deemed to be a reference to such other depositary and its nominee,
respectively, with respect to the Global Security registered in the name of such
other depositary or its nominee.
PARAGRAPH 13. Except as otherwise indicated, each reference herein to a
"Paragraph" shall refer to a Paragraph hereof, and each reference herein to a
"Section" shall refer to a Section of the Indenture.
FURTHER RESOLVED, that the Chairman, President, Chief Financial Officer
or Chief Accounting Officer of the Company (each a "Company Designated
Officer"), and the Chairman, President, Chief Financial Officer or Chief
Accounting Officer of the Guarantor (each a "Guarantor Designated Officer" and
together with each Company Designated Officer, each a "Designated Officer"),
acting alone or with any other officer, be and they hereby are, authorized and
empowered, for and on behalf of the Company and the Issuer, respectively, to
execute and deliver the Terms Agreement dated November 6, 1996 among the
Company, the Guarantor, Salomon Brothers Inc and BT Securities Corporation (the
"Terms Agreement") relating to the issuance and sale of the Securities.
FURTHER RESOLVED, that any two of the Company Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the Company,
to execute and deliver a Global Security in the form attached hereto as
Attachment A, in the principal amount of $100,000,000 and payable to Cede & Co.,
with such changes thereto as such officers shall approve (the "Authorized Global
Security"), their execution of the Authorized Global Security to be conclusive
evidence of such approval;
FURTHER RESOLVED, that any two of the Company Designated Officers be,
and they hereby are, authorized and empowered, for and on behalf of the Company,
to execute and deliver certificated Securities in definitive form, in
substantially the same form as the Authorized Global Security, provided,
however, that the legends appearing on the face of the Authorized Global
Security shall not be included in such certificated Securities;
-14-
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.
-15-
ATTACHMENT A
CUSIP No. 889479AE1
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Toll Corp., or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. 1
TOLL CORP.
promises to pay to Cede & Co.
or registered assigns
the principal sum of One Hundred Million Dollars on November 15, 2006
8 3/4% SENIOR SUBORDINATED NOTE DUE 2006
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Authenticated: Dated: November 12, 1996
TOLL CORP.
[Seal]
By:
-------------------------------
Joel H. Rassman
Chief Financial Officer
NBD Bank,
as Trustee, certifies that this
is one of the Securities referred
to in the within mentioned Indenture. By:
-------------------------------
Joseph R. Sicree
Chief Accounting Officer
By:
------------------------------
Authorized Signatory
-16-
(REVERSE OF SECURITY)
TOLL CORP.
8 3/4% SENIOR SUBORDINATED NOTES DUE 2006
1. Interest.
Toll Corp. (the "Company"), a Delaware corporation, promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semi-annually on November 15 and May
15 of each year (the "Interest Payment Date"), commencing on May 15, 1997.
Interest on the Security will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from November 12, 1996, provided
that, if there is no existing default in the payment of interest, and if this
Security is authenticated between a record date referred to on the face hereof
(the "Record Date") and the next succeeding Interest Payment Date, interest
shall accrue from such Interest Payment Date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment.
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities at
the close of business on the Record Date next preceding the Interest Payment
Date. Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by wire
transfer or by its check payable in such money. It may mail an interest check to
a holder's registered address.
3. Paying Agent and Registrar.
Initially, NBD Bank, a Michigan banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-registrar without notice. The Company or any of
its subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as
of November 12, 1996, among the Company, Toll Brothers, Inc. (the "Guarantor")
and the Trustee, as supplemented by the Authorizing Resolutions approved by the
Company and the Guarantor on November 6, 1996 (collectively, the "Indenture").
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss.77aaa-77bbbb) (the "Trust Indenture Act") as in effect on the date of
the Indenture and as may be amended from time to time. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Trust Indenture Act for a
statement of them. Payment of the Securities is guaranteed on a senior
subordinated basis by the Guarantor (the "Guarantee").
5. Optional Redemption.
The Company may redeem the Securities at any time on or after
November 15, 2001 in whole, or in part from time to time, at the following
redemption prices (expressed as a percentage of principal amount), plus accrued
and unpaid interest to the redemption date:
If redeemed during the 12-month period beginning November 15,
Year Percentage
---- ----------
2001 . . . . . . . . . . . . . . . . . 104.375%
2002 . . . . . . . . . . . . . . . . . 102.917%
2003 . . . . . . . . . . . . . . . . . 101.458%
2004 and thereafter . . . . . . . . . 100.000%
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of Securities to be
redeemed at its, his or her registered address. Securities in denominations
larger than $1,000 may be redeemed in part. On and after the redemption date
interest ceases to accrue on Securities or portions of them called for
redemption, provided that if the Company shall default in the payment of such
Security at the redemption price together with accrued interest, interest shall
continue to accrue at the rate borne by the Securities.
7. Selection for Redemption.
If less than all of the Securities are to be redeemed,
selection of the Securities to be redeemed will be made by the Trustee, if the
Securities are listed on a national securities exchange, in accordance with the
rules of such exchange, or if the Securities are not so listed, on either a pro
rata basis or by lot or by another method that the Trustee deems fair and
appropriate.
8. Subordination.
The Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company (as defined in
the Indenture). The Guarantee will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor (as defined in
the Indenture).
-2-
9. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples thereof. A holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Securities selected
for redemption. Also, it need not transfer or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed is scheduled.
10. Person Deemed Owner.
The registered holder of a Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, holders entitled to the money must look
to the Company or, if applicable, the Guarantor for payment unless an abandoned
property law designates another person.
12. Discharge Prior to Redemption or Maturity.
The Indenture will be discharged and canceled except for
certain Sections thereof, subject to the terms of the Indenture, upon the
payment of all the Securities or upon the deposit with the Trustee, within not
more than one year prior to the maturity or redemption of the Securities, of
funds sufficient for such payment or redemption. In the case of such a deposit,
Securityholders must look to the deposited money for payment.
13. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the holders of at least a
majority in principal amount of the Securities, and any past default or
compliance with any provision may be waived with the consent of the holders of a
majority in principal amount of the Securities. Without the consent of any
Securityholder, the Company may amend or supplement the Indenture or the
Securities to cure any ambiguity, defect or inconsistency; to comply with
Article 5 of the Indenture (providing for the assumption of the obligations of
the Company or the Guarantor under the Indenture by a successor corporation); to
provide for uncertificated Securities in addition to or in place of certificated
Securities; or to make any change that does not adversely affect the rights of
any Securityholder.
-3-
14. Successor Corporation.
When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.
15. Defaults and Remedies.
An Event of Default is: (i) failure of the Company or the
Guarantor to pay (whether or not prohibited by any subordination provision)
interest for 30 days or principal or premium, if any, when due; (ii) failure of
the Company or Guarantor to perform any other covenant under the Indenture for
60 days after receipt of notice; (iii) default in the payment of indebtedness of
the Company, the Guarantor or any Subsidiary under the terms of the instrument
evidencing or securing such indebtedness permitting the holder thereof to
accelerate the payment of in excess of an aggregate of $2,000,000 in principal
amount of such indebtedness (after the lapse of applicable grace periods) or, in
the case of non-payment defaults, acceleration of any such indebtedness if such
acceleration is not rescinded or annulled within 10 days after such
acceleration, provided that, subject to the terms of the Indenture, the term
"indebtedness" shall not include an acceleration of or default on certain
Non-Recourse Indebtedness (as defined in the Indenture); (iv) entry of a final
judgment for the payment of money in an amount in excess of $2,000,000 against
the Company, the Guarantor or any Subsidiary which remains undischarged or
unstayed for a period of 60 days after the date on which the right to appeal has
expired, provided the term "final judgment" at such time as the Company's
10 1/2% Senior Subordinated Notes due 2002 (and any related guarantee) are no
longer outstanding, shall not include a Non-Recourse Judgment (as defined in
the Indenture) unless the book value of all property (net of any previous
write-downs or reserves in respect of such property) subject to such
Non-Recourse Judgment exceeds the amount of such Non-Recourse Judgment by more
than $5,000,000; (v) certain events of bankruptcy, insolvency or reorganization
with respect to the Company or the Guarantor; or (vi) the Guarantee shall for
any reason (other than pursuant to its terms) cease to be in full force and
effect.
The Indenture provides that the Trustee will, within 90 days
after the occurrence of a Default known to the Trustee, give the Holders notice
of the Default (the term "Default" to include the events specified above,
without grace or notice), provided that, except in the case of Default in the
payment of principal of or interest on any of the Securities, the Trustee shall
be protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the Securityholders.
In case an Event of Default (other than an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization with
respect to the Company or the Guarantor) occurs and is continuing, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding, by notice in writing to the Company (and to the
Trustee if given by the Securityholders), may declare the unpaid principal of
and accrued and unpaid interest on all the Securities to be due and payable (i)
if (a) no
-4-
Designated Senior Debt of the Company or the Guarantor (as defined in the
Indenture) is outstanding, or (b) the Securities are not subordinated to other
indebtedness of the Company, immediately, or (ii) if Designated Senior Debt of
the Company or the Guarantor is outstanding and the Securities are subordinated
to other indebtedness of the Company, upon the earlier of (A) ten days after
such Acceleration Notice is received by the Company and (B) the acceleration of
any Senior Indebtedness of the Company or the Guarantor. In case an Event of
Default arising out of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or the Guarantor occurs and is
continuing, the outstanding principal of and accrued and unpaid interest on the
Securities shall ipso facto become and be due and payable immediately, without
declaration or any further act on the part of the Trustee or any Securityholder.
Such declaration or acceleration and its consequences may be
rescinded by holders of a majority in principal amount of outstanding Securities
if all existing Events of Default have been cured and waived (except non-payment
of principal or interest that has become due solely because of the acceleration)
and if the rescission would not conflict with any judgment or decree.
Defaults (except a default in payment of principal of, or
premium, if any, or interest on the Securities or a default with respect to a
provision which cannot be modified under the terms of the Indenture without the
consent of each Securityholder affected) may be waived on behalf of all holders
by the holders of a majority in principal amount of outstanding Securities upon
the conditions provided in the Indenture.
The Indenture requires the Guarantor to file periodic reports
with the Trustee as to the absence of defaults.
16. Trustee, Dealings with Company.
NBD Bank, a Michigan banking corporation, the Trustee under
the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company, the Guarantor or
their affiliates, and may otherwise deal with the Company, the Guarantor or
their affiliates, as if it were not Trustee.
17. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or the Guarantor shall not have any liability for any obligations of the
Company or the Guarantor under the Securities, the Guarantee or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
18. Authentication.
-5-
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
19. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture. Requests may be made to:
Secretary, Toll Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley,
Pennsylvania 19006.
-6-
OPTION OF HOLDER TO ELECT PURCHASE
If you want to have this Security purchased by the Company pursuant to
Section 4.06 of the Indenture, check the box / /
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 of the Indenture, state the amount: $
Date: Your Signature:
----------------------- ----------------------------------
(sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:
------------------------------------
Note: Signature(s) must be guaranteed by a member firm of a major stock exchange
or a commercial bank or trust company.
-7-
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
----------------------- -----------------------------------
(sign exactly as your name appears
on the other side of this Security)
Note: Signature(s) must be guaranteed by a member firm of a major stock exchange
or a commercial bank or trust company.
-8-
GUARANTEE
Toll Brothers, Inc. (hereinafter referred to as the "Guarantor," which
term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed), has
unconditionally guaranteed on a senior subordinated basis (i) the due and
punctual payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal of and interest, if any, on the Securities, to the
extent lawful, and the due and punctual performance of all other obligations of
the Company to the Holders or the Trustee under the Indenture and the Security
all in accordance with the terms set forth in Article 7 of the Indenture and
(ii) in case of any extension of time of payment or renewal of any Securities or
any of such other obligations, that the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holders of the Securities and
to the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth and are expressly subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor, to the extent
and in the manner provided in Article 7 of the Indenture and reference is hereby
made to the Indenture for the precise terms of the Guarantee and the
subordination thereof therein made.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under the
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which this Guarantee is
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
TOLL BROTHERS, INC.
By
--------------------------------
Joel H. Rassman
Chief Financial Officer
By
--------------------------------
Joseph R. Sicree
Chief Accounting Officer
(Seal)
-9-